[ARFC] increase supply cap for wstETH Aave arbitrum V3

Governance
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title: [ARFC] [ARFC] increase supply cap for wsETH Aave arbitrum V3

Author: @marczeller - Aave Chan Initiative

Dated: 2023-03-04

Summary

wstETH is a decentralized liquid staking derivative minted by Lido.

wstETH is minted by Lido when users stake ETH.

For more information about wstETH, please refer to wstETH Arbitrum V3 ARC.

This ARFC presents the Aave governance with the opportunity to increase the wstETH supply cap on the Aave V3 Arbitrum market.

Abstract

This ARFC proposes to increase the wstETH Supply cap to 2400 wstETH to reflect market demand for depositing this asset.

Motivation

wstETH has reached approximately 95% of its supply cap on Aave V3 Arbitrum.

Increasing this supply cap will enable new Aave users to utilize Aave V3 and allow current users to increase the size of their positions.

The proposed increase is set at a level that allows the market to find a new equilibrium while maintaining a conservative approach.

Additionally, it represents a 100% increase from the current cap, making this ARFC compliant with the “direct-to-AIP” framework and enabling a rapid response to the current high demand for wstETH on Aave.

Specification

Ticker: wstETH (wstETH)

Contract Address: 0x5979d7b546e38e414f7e9822514be443a4800529

Parameter Current Proposed
Supply Cap 1200 2400

Disclaimer

The Aave-Chan Initiative is not affiliated with or paid by Lido to publish this ARFC.

The ACI supports LSD diversity as part of its delegate platform.

At the time of writing, Marc Zeller, the founder of ACI, holds a significant amount of wstETH on the Aave V3 Ethereum Pool, worth approximately $1.1 million.

Copyright

Copyright and related rights waived via CC0,

2 Likes
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I am in full support of this proposal. Great proactive work @MarcZeller.

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Thanks @MarcZeller. Gauntlet is analyzing and will let the community know of our recommendation.

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4

Based on Gauntlet’s methodology, we support this cap increase from a market risk perspective.

2 Likes
5

Chaos Labs also support the proposed supply cap increase. Great to see the “direct-to-AIP” framework in action for a quick turnaround.

2 Likes
6

The ACI is grateful for this quick response from the community, the AIP code will be ready for review shortly, and after tech greenlight published to allow the governance to vote on it.

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This proposal is now published under the name AIP-169 and will be live for voting tomorrow.

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Hi Marc,

Thanks for bringing up the wstETH supply cap. There is no other lending protocol on arbitrum that accept wstETH, I feel that the current 2400 might still be a bit small to represent the demand by comparing to the TVL and transaction growth happening on arbitrum now to other mainnet and L2s.
I also observe that OP has 6000 supply cap and it it not fully utilized. Would you consider raise the supply cap at leaset the same as OP?

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Hello, a 100% supply cap increase was the maximum allowed by a “direct-to-AIP” guideline.

Raising more would have resulted in the need to greenlight the proposal during a snapshot vote before an AIP vote adding 4 more days to the process minimum.

The ACI is currently writing new governance guidelines to increase caps management efficiency. No worries.

1 Like
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Yeah, I see the codes are going to deploy soon and we will soon have 2400 supply cap. 1200 to 2400 is still a good improvement! Looking forward to seeing higher supply cap for wstETH after that. Thanks for the explanation.

1 Like