Summary:
Gauntlet recommends increasing supply and borrow caps for the following assets that have utilization rate of above 75%.
| Asset | Chain ID | Current Supply Cap | New Supply Cap | Current Borrow Cap | New Borrow Cap |
|---|---|---|---|---|---|
| USDT | Ethereum | 600,000,000 | No Change | 500,000,000 | 550,000,000 |
| wstETH | Polygon | 4,370 | No Change | 285 | 570 |
| wstETH | Arbitrum | 55,000 | 60,000 | 2,400 | No Change |
Motivation:
Gauntlet proposes to increase supply/borrow caps for the assets below in order to meet the increasing demand.
Specifications:
USDT on Ethereum Aave v3
We propose an increase in Borrow cap for USDT by 10% in line within our borrow/supply cap framework which considers tokens needed to break-even for a long attack as well as overall circulating supply
| Asset | Chain ID | Current Supply Cap | New Supply Cap | Current Borrow Cap | New Borrow Cap |
|---|---|---|---|---|---|
| USDT | Ethereum | 600,000,000 | No Change | 500,000,000 | 550,000,000 |
wstETH on Polygon Aave v3
We do not propose an increase in supply cap for wstETH on polygon. The current cap at 4,370 already accounts for 67% of circulating supply on Polygon and might lead to increased concentration risk. Furthermore, the 25% liquidity depth doesn’t scale well with increase in supply caps. However, we recommend increasing the borrow cap to 570.
| Asset | Chain ID | Current Supply Cap | New Supply Cap | Current Borrow Cap | New Borrow Cap |
|---|---|---|---|---|---|
| wstETH | Polygon | 4,370 | No Change | 285 | 570 |
wstETH on Arbitrum Aave v3
We propose an increase in Supply cap for wstETH on Arbitrum to 60,000 based on on-chain circulating supply and cross-chain liquidity.
| Asset | Chain ID | Current Supply Cap | New Supply Cap | Current Borrow Cap | New Borrow Cap |
|---|---|---|---|---|---|
| wstETH | Arbitrum | 55,000 | 60,000 | 2,400 | No Change |
Next Steps
Once we receive feedback from @ChaosLabs on the above recommendations, we will move forward with Risk Steward actions.