[ARFC] Chaos Labs Risk Stewards - Increase Supply Cap for WETH on V3 Metis - 04.16.2024


A proposal to increase the WETH supply cap on Aave V3’s Metis deployment.


WETH has reached its supply cap on Metis following significant growth in deposits.

Supply Distribution

Following the weekend’s volatility, the top supplier has deposited $2.27M WETH and borrowed $1.4M USDC against it, for a health score of 1.28.

This position is at risk of liquidation should ETH’s price fall. However, collateral at risk does not increase significantly until ETH drops to $2,400.

Borrow Distribution

WETH borrows on Metis (excluding the aforementioned WETH-WETH position) are relatively limited because the Metis market does not contain any LSTs, which drive demand for WETH borrowing from looping strategies.


As per our methodology, we recommend limiting the supply caps to 50% of the on-chain circulating supply of a given token. Currently, there are 3,627 WETH on Metis; based on the on-chain liquidity and user behavior, we recommend increasing the supply cap to 1,800 WETH, while not adjusting the borrow cap.

Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Metis WETH 1,400 1,800 720 No Change
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The transaction for this proposal has now been executed

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