[ARFC] Increase cbETH Supply Cap - 03-26

Title: [ARFC] Increase cbETH Supply Cap - 03-26
Author: @marczeller - Aave Chan Initiative
Date: 2023-03-26


This ARFC proposes to increase the cbETH supply cap on the Aave V3 Ethereum market from the current 30k cbETH to 60k cbETH. The proposal aims to accommodate the growing market demand for depositing this asset and provide additional capacity for users.


The ARFC proposes increasing the cbETH supply cap from the existing 30k cbETH to 60k cbETH to meet the ongoing market demand for depositing the asset. This increase will enable new Aave users to join Aave V3 and allow existing users to expand their positions.


Since the recent execution of the previous ARFC to raise the cbETH supply cap to 30k, the cap has been reached within less than 48 hours, demonstrating the strong demand for depositing cbETH on the Aave V3 platform. By increasing the cap to 60k cbETH, we can continue to accommodate this growing demand and provide additional capacity for users. The proposed cap of 60k cbETH offers a balance between meeting demand and maintaining a conservative approach while doubling the current cap. This ARFC is compliant with the direct-to-AIP framework. Furthermore, with the upcoming Shanghai upgrade on April 12th, Liquid Staking Tokens such as cbETH should become increasingly more resilient, and their secondary liquidity less of a concern. LSTs on the Polygon PoS, such as MaticX and stMatic, serve as good examples of what a “post-Shanghai upgrade” environment will look like in terms of asset peg resilience.


Ticker: cbETH (cbETH)
Contract Address: 0xbe9895146f7af43049ca1c1ae358b0541ea49704

Parameter Current Value Proposed Value
Supply Cap 30,000 60,000


The Aave-Chan Initiative is not affiliated with or paid by Coinbase to publish this ARFC. At the time of writing, the author holds a position in cbETH worth ~$17k.


Copyright and related rights waived via CC0.


Thanks for putting forward this ARFC @MarcZeller
Chaos Labs supports increasing the supply cap for cbETH to 60K, utilizing our supply and borrow cap methodology with the liquidity and liquidation data below.

It’s worth noting that our analysis considers a 15% price drop between cbETH and ETH, which leads to the majority of the liquidations, as can be seen in the images below (the first simulation dropping the price of cbETH only, and the second simulating a drop in price of both cbETH and WETH). This is a conservative assumptions as our primary assumption for setting the LT on E-Mode configurations is maintaining a reasonable spread between asset prices.

Source: Chaos Labs Risk Dashboard

Source: Chaos Labs Risk Dashboard

1 Like

this proposal has been escalated to AIP stage

For accuracy, wanted to clarify a typo in the AIP. Gauntlet was not involved in collaboration here (we did not provide any risk recommendations on this proposal).