Summary
A proposal to:
- Increase cbBTC’s supply cap on Aave’s V3 Ethereum deployment.
- Increase cbBTC’s supply cap on Aave’s V3 Base deployment.
- Increase AAVE.e’s supply cap on Aave’s V3 Avalanche deployment.
cbBTC (Ethereum)
cbBTC has reached 100% supply cap utilization on Ethereum, and its borrow cap is at 0% capacity.
Supply Distribution
Most of the top cbBTC suppliers borrow USDC or USDT. The biggest wallet represents an outsized portion of the total supply. Given its low health score and the assets used, the top wallet poses a moderate liquidation risk. The other top wallets maintain safe health scores and pose little liquidation risk.
Overall, USDC represents 82% of the value borrowed against cbBTC.
Recommendation
Given users’ behavior and on-chain liquidity, we recommend increasing the supply cap to 1,200 cbBTC.
cbBTC (Base)
cbBTC has reached 100% supply cap utilization on Base, and its borrow cap is at 2% capacity.
Supply Distribution
Most of the top cbBTC suppliers borrow WETH or USDC. The biggest wallet represents an outsized portion of the total supply. The top wallet poses a low liquidation risk, given the position’s safe health score. The other top wallets maintain safe health scores and pose little liquidation risk.
Overall, WETH represents 67% of the value borrowed against cbBTC.
Recommendation
Given users’ behavior and on-chain liquidity, we recommend increasing the supply cap to 800 cbBTC.
AAVE.e (Avalanche)
AAVE.e has reached 92% supply cap utilization on Base.
Supply Distribution
Some of the top AAVE.e suppliers borrow USDC or USDT, while others maintain a supply-only position. The distribution of AAVE.e supply among the top wallets is not heavily concentrated. All the top wallets maintain a safe health score and a varied choice of collateral, so they pose little to no risk of liquidation.
Overall, USDC represents 38% of the value borrowed against AAVE.e.
Recommendation
Given users’ behavior and on-chain liquidity, we recommend increasing the supply cap to 7,200 AAVE.e
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum | cbBTC | 900 | 1,200 | 45 | - |
| Base | cbBTC | 400 | 800 | 20 | - |
| Avalanche | AAVE.e | 5,800 | 7,200 | - | - |
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