# \[ARFC\] Increase stMATIC Supply Cap

**URL:** <https://governance.aave.com/t/arfc-increase-stmatic-supply-cap/12038>\
**Category:** Governance\
**Created:** [February 23, 2023, 9:00pm UTC](https://governance.aave.com/t/arfc-increase-stmatic-supply-cap/12038 "2023-02-23T21:00:01Z")\
**Posts on this page:** 1\
**Showing post:** 4

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**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\
**Post date:** [February 27, 2023, 9:26pm UTC](https://governance.aave.com/t/arfc-increase-stmatic-supply-cap/12038/4 "2023-02-27T21:26:47Z")

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Hi @sakulstra, we agree on the importance of proactivity. However, we think there is some misunderstanding of what it means to be proactive in this context.

> [@sakulstra](#):
>
> Would be great if @gauntlet and @ChaosLabs would be a bit more pro-active. On polygon essentially for weeks now CRV/bal/maticx and now also stMatic have been at 100% supply cap making this pool quite ineffective. Having 100% reached should be a rare case, not the norm imo.

> [@ChaosLabs](#):
>
> We propose updated caps when a supply or borrow cap reaches 85% utilization, increasing up to 2X the current supply.

From a risk management perspective, we do not agree that caps should consistently be increased. More specifically, our process is not “let’s continuously increase caps to allow for more growth over time.” This is not proper risk management.

Instead, our process is “let’s first determine what the max size of the market should be (which depends on research, methodology, and community strategic preference). After we determine the max size, we can then progressively update the cap up until the max size.”

In other words, without first determining the maximum acceptable size of the market, it would be premature for Gauntlet and the risk managers to recommend increasing caps.

This is why we have spent months conducting research on how the introduction of supply/borrow cap mechanisms impacts our holistic risk management [methodology](https://governance.aave.com/t/gauntlet-methodologies-borrow-and-supply-cap/11487) under different assumptions. Our research discovered that many markets have already grown too large, and for those markets, the cap should be increased _ **only if** _ the community has an Aggressive preference. It would not be transparent to the community if we increased these caps without first hearing the community’s risk preference, and we are especially cautious around [non-Ethereum mainnet chains](https://governance.aave.com/t/arc-gauntlet-borrow-supply-cap-updates-for-aave-v3-op-and-aave-v3-avax-2023-01-27/11488#:~:text=TL%3BDR%20%2D%20if,the%20risk%20tradeoffs.). Now that we have proactively researched and developed a [methodology](https://governance.aave.com/t/gauntlet-methodologies-borrow-and-supply-cap/11487), and aligned on [community risk preference](https://snapshot.org/#/aave.eth/proposal/0xb4c756ac701b5cbc0ec2d832652e4f1c820aa40f7d9be18eb81f87080a52c5f1) (which concluded last week), we can propose paths forward to scale up the size of markets in accordance with the community’s updated strategic preferences.

We hope that this helps align expectations. Moving forward, for assets nearing utilization (e.g., 75% of the supply cap), Gauntlet will provide Conservative and Aggressive recommendations, which should be interpreted as “hard cap” figures.

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_[View the full topic](https://governance.aave.com/t/arfc-increase-stmatic-supply-cap/12038)._