[ARFC] - Chaos Labs Supply and Borrow Cap Updates - Aave V3 Polygon - 2023.03.16

[ChaosLabs]

Simple Summary

This ARFC proposes to increase the MAI (mimatic) supply cap to 2.2M and the borrow cap to 1.2M on Aave V3 Polygon.

Motivation

MAI is currently at ~80% utilization of its supply cap and ~85% utilization of its borrow cap on Aave V3 Polygon.

Given the on-chain liquidity levels and the current conservative caps set, we recommend doubling the supply and borrow cap.

The proposal represents a near 100% increase from the current caps, making this ARFC compliant with the “direct-to-AIP” framework.

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Additional Assets

We want to flag that the following assets are at >75% of their supply or borrow cap. However, we do not recommend increasing these caps at this time due to current liquidity levels:

1. GHST
   

   

2. SUSHI
   

   

3. BAL
   

   

4. EURS
   

   

5. LINK
   

   

Specification

Ticker: MAI (mimatic)

Contract Address: 0xa3Fa99A148fA48D14Ed51d610c367C61876997F1

Parameter	Current	Proposed
Supply Cap	1.1M	2.2M
Borrow Cap Cap	600K	1.2M

[Llamaxyz]

Hi @ChaosLabs

The CRV proposal went live yesterday on Polygon v3 and the Supply Cap is at 100% utilisation within 24hours.

The stMATIC Supply Cap was recently increased, a couple of days ago, and during this time the utilisation has increased from 50% to 70% without incentives. LDO rewards are expected to start imminently. If it is possible to increase this cap ahead of the LDO rewards distribution starting, can we do so ?

If we can not increase the stMATIC Supply Cap just now and the utilisation continues to increase, then this will discourage LDO incentives from being distributed across the stMATIC reserve and without sufficient deposit capacity, it will likely become a blocker to starting the LDO reward distribution.

Given the time it takes to implement an AIP on Polygon, it is best to be early and proactive with this particular change.

[ChaosLabs]

thanks @Llamaxyz.
We do not recommend increasing the supply cap for CRV in this proposal due to its low on-chain liquidity. We will analyze further and share recommendations outside the “direct to AIP” proposal here.

Regarding stMATIC, to be proactive and given on-chain liquidity and a total circulating supply of ~45M alongside the redeemability of the token, we recommend doubling the current supply and setting a new supply cap at 21M.

To summarize, we recommend the following changes to supply/borrow caps on V3 Polygon:

Asset	Current Supply Cap	Recommended Supply Cap	Current Borrow Cap	Recommended Borrow Cap
MAI	1,100,000	2,200,000	600,000	1,200,000
stMATIC	15,000,000	21,000,000	N/A	N/A

[seawolf]

Here are Gauntlet’s Conservative and Aggressive recommendations for stMATIC via our Methodology. If the community believes it is a strategic asset, they may adopt our Aggressive calculation.

Symbol	Current Supply Cap	Conservative Cap	Aggressive Cap	Chaos Rec
stMATIC	15,000,000	13,538,000	22,563,000	21,000,000

[ChaosLabs]

We have published AIP-186 for community members to vote on, starting in 24h.

Thank you in advance for your participation in the vote.

Aave - Open Source Liquidity Protocol