[ARFC] Gauntlet Recommendation to Increase v3 Ethereum Caps, 2023-10-18

Governance
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Gauntlet Borrow and Supply Cap Recommendations for Ethereum v3 2023-10-18

Gauntlet recommends borrow and supply cap changes for Ethereum v3.

Per Gauntlet’s supply and borrow cap methodology, we recommend increasing WSTETH supply cap to 1.1m and increasing BAL supply cap to 700k on Ethereum v3.

Specifications

Chain Asset Cap Current Recommended
Ethereum WSTETH Supply 850k 1.1m
Ethereum BAL Supply 350k 700k

Motivation

BAL supply cap usage is at ~99%

WSTETH supply cap usage is at ~85%

Next Steps

Once we receive feedback from @ChaosLabs on the above recommendations, we will move forward with Risk Steward.

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Chaos Labs supports the recommended cap increase for BAL.

Our stress tests indicate an increase in VaR with higher supply caps of WSTETH. Therefore, we recommend not to increase the supply cap at this point. Acknowledging the potential benefit to the protocol, we will keep monitoring usage, DEX liquidity, and market changes in order to recommend another increase of supply caps when possible.

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We’ve queued the BAL cap increase via Risk Steward for this proposal here: Safe{Wallet} – Transaction queue

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The update has been executed via Risk Steward.

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