[ARFC] Chaos Labs Risk Stewards - Increase Supply Cap for wstETH on V3 Polygon - 04.16.2024


A proposal to:

  • increase the wstETH supply cap on Aave V3’s Polygon deployment.



wstETH has nearly reached its supply cap on Polygon following new deposits.

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Supply Distribution

Most of the top suppliers are looping WETH and wstETH, putting these positions at limited danger of liquidations.

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WETH is the most commonly borrowed asset against wstETH collateral, though some users have borrowed stablecoins.

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Borrow Distribution

wstETH borrows are limited; the largest is a user who is borrowing against MATIC collateral, putting this position at risk of liquidation should MATIC’s price drop or ETH’s price increase.

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As per community decision, the upper bound on LST supply caps is 75% of circulating supply on a given chain. This limits us to recommend an increase in wstETH’s supply cap to 5.75K with no change in borrow cap.


Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Polygon wstETH 5,250 5,750 570 No Change

Next Steps

We will move forward and implement these updates via the Risk Steward process.


Chaos Labs has not been compensated by any third party for publishing this ARFC.


Copyright and related rights waived via CC0


The transaction for this proposal has now been executed.

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