Summary
A proposal to:
- increase the wstETH supply cap on Aave V3’s Polygon deployment.
wstETH
Motivation
wstETH has nearly reached its supply cap on Polygon following new deposits.
Supply Distribution
Most of the top suppliers are looping WETH and wstETH, putting these positions at limited danger of liquidations.
WETH is the most commonly borrowed asset against wstETH collateral, though some users have borrowed stablecoins.
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.
Recommendation
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.
Specification
| 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.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0