Thanks @Michigan_Blockchain and @lbsblockchain for the questions - as we have stated previously, Gauntlet prefers to wait until community alignment on potential killswitch options before increasing supply caps beyond what our original methodology recommends. These killswitch options necessarily help reduce risk when an LST depeg event occurs, something that we cannot predict in terms of likelihood, point in time, nature, duration, or magnitude.
For instance, one lever we explore helps to freeze the depegging LST and setting the LTV → 0 to prevent additional supply and BASE borrowing in the event of a depeg and uncertain fair values. Currently, if market price depegs from fair value of LST / BASE, users can continue to supply/borrow at high LT, against the without liquidation fear. If the depeg is realized, and the fair value of LST / BASE declines below LT, then insolvencies may occur.
The CSPA update has enabled LSTs to be priced from their BASE asset * the exchange rate, so liquidation risks are reduced, especially from transient depegs that are are just due to market variance. This is very important to facilitate borrowing the BASE asset. However, like we mentioned before, permanent depegs are impossible to predict, which is why Gauntlet recommends alignment on killswitch options first before increasing caps above our aggressive cap methodology recommendations.