Summary
A proposal to:
- Increase wstETH’s supply cap on Aave V3’s Scroll deployment
- Increase weETH’s supply cap on Aave V3’s Scroll deployment
wstETH (Scroll)
wstETH has reached its supply cap while its borrow cap is 69% utilized.
Supply Distribution
The top suppliers are all looping wstETH with WETH, reducing the likelihood of large scale liquidation events given the correlation between the assets.
Overall, less than $750K of stablecoins are borrowed against wstETH collateral.
Recommendation
Given on-chain liquidity and user distribution, we recommend increasing the supply cap, noting that we are limited by wstETH’s supply on Scroll.
weETH (Scroll)
weETH has reached its supply cap while its borrow cap is 53% utilized.
Supply Distribution
This market is concentrated, with a single depositor accounting for 64.5% of the total supply. However, this user is looping weETH and wstETH collateral with WETH, making liquidations unlikely.
Only ETH-correlated assets are borrowed against weETH.
Recommendation
Given on-chain liquidity and user behavior, we recommend doubling the supply cap.
Specification
| Chain | Asset | Current Supply Cap | Rec. Supply Cap | Current Borrow Cap | Rec. Borrow Cap |
|---|---|---|---|---|---|
| Scroll | wstETH | 19,000 | 20,500 | 4,200 | - |
| Scroll | weETH | 2,000 | 4,000 | 400 | - |
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