# \[ARFC\] Increase Supply Caps for LSTs on AAVE V3 **URL:** \ **Category:** Governance\ **Created:** [May 29, 2023, 8:33am UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240 "2023-05-29T08:33:15Z")\ **Posts on this page:** 16\ **Page:** 1
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [May 29, 2023, 8:33am UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/1 "2023-05-29T08:33:15Z")
> Proposal updated to include @ChaosLabs feedback * * * ## title: [ARFC] Increase Supply Caps for LSTs on AAVE V3 author: @marczeller - Aave Chan Initiative created: 2023-05-29 # Summary This ARFC proposes a increase in the supply caps for several Liquid Staking Tokens (LSTs) across multiple networks, including stETH, rETH, and sAVAX. The proposed changes are within the limits of the Risk Stewards and are requested for enforcement by them. # Abstract The supply caps for several LSTs have reached or are nearing their current limits. To ensure the continued smooth operation of the protocol and to accommodate growing demand, this ARFC proposes to increase these caps. The proposed increases range from 50% to 100%, depending on the asset and network. # Motivation The motivation behind these changes is to accommodate the growing demand for these LSTs in the Aave protocol. By increasing the supply caps, we can ensure that the protocol can continue to serve its users effectively. Furthermore, LSTs in L2 pools are essential for users who can’t afford the transaction fees on L1. DeFi should be inclusive and is meant for everyone, and L2s are important to reach this goal. # Specification The proposed changes are as follows: | Asset | Network | Current Cap | Current Supplied Liquidity | Utilization | Proposed Cap Increase | New Cap | New Utilization | | --- | --- | --- | --- | --- | --- | --- | --- | | stETH | Ethereum L1 | 200.00K | 200.00K | 100% | 50% | 300.00K | 67% | | rETH | Ethereum L1 | 20K | 20K | 100% | 100% | 40K | 50% | | stETH | Arbitrum | 9.30K | 9.30K | 100% | 61% | 15K | 62% | | stETH | Optimism | 12K | 12K | 100% | 100% | 18K | 67% | | stETH | Polygon | 2.4K | 2.4K | 100% | 68% | 4.05K | 60% | | sAVAX | Avalanche | 2M | 1.77M | 88% | 50% | 3M | 60% | We request the Risk Stewards to enforce these changes. This proposal is compliant with the [Aave V3 Caps Update Framework](https://governance.aave.com/t/arfc-aave-v3-caps-update-framework/11937), and since the [AIP-234](https://app.aave.com/governance/proposal/234/) vote, the Risk Council via the Risk Steward can enforce this framework. # Next Steps Collect feedback from the community & Risk service providers. If the feedback is positive, the Risk Stewards will enforce the proposed changes. We encourage all Aave users to participate in this discussion and provide their feedback. # Disclaimer The Aave Chan Initiative (ACI) is not associated with or compensated by Lido, Rocket Pool, Avalanche, BenQI, or any other third party for publishing this ARFC. # Copyright Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain/zero/1.0/). note: please consider that StETH & rETH L1 update and StETH OP update reflect @Llamaxyz work on it and already reached consensus, it has been cited here for easier understanding of upcoming supply caps changes. ---
**Author:** ![Kene\_Anode](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/kene_anode/32/13773_2.png) [@Kene\_Anode](https://governance.aave.com/u/Kene_Anode)\ **Post date:** [May 29, 2023, 1:34pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/2 "2023-05-29T13:34:09Z")
This proposal is necessary for Aave to continue leveraging the demand for LSTs to create value for its users and the protocol in general. ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [May 29, 2023, 7:03pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/3 "2023-05-29T19:03:56Z")
Thanks for putting this forward @MarcZeller. 1. For wstETH and rETH on Ethereum and wstETH on Optimism, we support the updates above, as we recommended [here](https://governance.aave.com/t/arfc-ethereum-v3-supply-cap-update-18-05-2023/13127/3) and [here](https://governance.aave.com/t/arfc-optimism-v3-supply-cap-update-20-05-2023/13141/2) 2. For wstETH on Polygon and Arbitrum, we’ve provided our analysis here and recommend a more modest increase: | Network | Asset | Current Supply Cap | Recommendation | | --- | --- | --- | --- | | Arbitrum | wstETH | 9,300 | 15,000 | | Polygon | wstETH | 2,400 | 4,050 | 1. For sAVAX, following our analyses [here](https://governance.aave.com/t/arc-supply-cap-update-savax-avalanche-v3/11904), we support increasing the supply cap to 3M. The updated data regarding on-chain liquidity and the composition of position (e-mode vs non e-mode) can be found below: ![349219332_164952413003507_4238894627219339487_n](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/a74273893af5d55b2f4d14061e40a01bed1f8cff.webp) ![Untitled - 2023-05-29T145216.451](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/1/16f5f4f1f9eea3fab019f2224d7c6f45cce1c2cd.jpeg) ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [May 30, 2023, 7:18am UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/4 "2023-05-30T07:18:39Z")
thanks @ChaosLabs for your feedback, we updated the proposal to include it, ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [May 30, 2023, 5:28pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/5 "2023-05-30T17:28:38Z")
We’ve prepared the payloads to be executed via the [Risk Steward](https://governance.aave.com/t/bgd-risk-steward-phase-1-capsplusrisksteward/12602) process for this proposal. Upon receiving approval from @Gauntlet for the above recommendations, we will be able to move forward to implement these updates. ---
**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/gauntlet/32/4064_2.png) [@Gauntlet](https://governance.aave.com/u/Gauntlet)\ **Post date:** [May 30, 2023, 7:20pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/6 "2023-05-30T19:20:39Z")
Per the current implementation of LST pricing and our existing LST supply cap methodology, Gauntlet supports the cap increases for - wstETH on Ethereum (300k), Arbitrum (15k), and Optimism (18k) - rETH on Ethereum (40k) Regarding wstETH on Polygon and sAVAX on Avalanche - - Raising the cap to 4000 will be premature. 4000 supply cap of wstETH is 75% of the supply cap. To reiterate, our LST supply cap thresholds supply caps to 50% of the circulating supply. wstETH pricing must first move to the [synchronized price adapter solution](https://governance.aave.com/t/bgd-operational-oracles-update/13213), and the community align on [potential “killswitches”](https://governance.aave.com/t/gauntlet-synchronicity-price-adapter-killswitch-functionality-for-lst-emode/13224) in the event of wstETH depeg, for this cap increase to not add excess market risk. - sAVAX must first move to the synchronized price adapter solution. As a result, our methodology supports a more modest increase to 2.2m. Again, sAVAX must move to the synchronized price adapter solution and the community align on potential “killswitches” in the event of sAVAX depeg, for this cap increase to not add excess market risk. ---
**Author:** ![MarcZeller](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/marczeller/32/7124_2.png) [@MarcZeller](https://governance.aave.com/u/MarcZeller)\ **Post date:** [May 30, 2023, 7:25pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/7 "2023-05-30T19:25:03Z")
We thanks Gauntlet for their Reply, We invite the Risk council to execute payloads that reached consensus from both risk service providers > [@Gauntlet](#): > > - wstETH on Ethereum (300k), Arbitrum (15k), and Optimism (18k) > - rETH on Ethereum (40k) wsETH on polygon will revert to next governance process via an AIP vote. or be implemented via steward with supply cap to 2700 as it’s the common denominator between risk providers sAVAX is postponed for oracle upgrade and killswitch decision. ---
**Author:** ![gohawi8287](https://avatars.discourse-cdn.com/v4/letter/g/e0b2c6/32.png) [@gohawi8287](https://governance.aave.com/u/gohawi8287)\ **Post date:** [May 30, 2023, 8:22pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/8 "2023-05-30T20:22:32Z")
![](https://media.giphy.com/media/yx400dIdkwWdsCgWYp/giphy.gif) @Gauntlet @ChaosLabs ---
**Author:** ![Deepcryptodive](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/deepcryptodive/32/2740_2.png) [@Deepcryptodive](https://governance.aave.com/u/Deepcryptodive)\ **Post date:** [May 30, 2023, 9:15pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/9 "2023-05-30T21:15:02Z")
Great to see the Risk Steward process in action! I’m a big fan of the extra speed and efficiency this brings. I’m curious about the best way to follow the executions of the payloads: - Is there a Risk Council multisig we can monitor to see the pending signatures and queued transactions in real-time? - Should we be monitoring the respective CapsPlusRiskStewards contracts? I’m asking these questions because I believe in the importance of transparency and the ability for all community members to monitor the actions of the Risk Council. Having real-time visibility not only increases trust, but also promotes active involvement in the Aave community. Particularly in this case, I believe this information could be of great interest to fellow governance and LST enthusiasts (enjoyoooors) who are eagerly waiting to deposit more collateral. * * * UPDATE: After a little digging I found that the relevant Gnosis Safes can be found by reading the `RISK_COUNCIL` function on the respective `CapsPlusRiskStewards` contracts (which are listed [here](https://app.aave.com/governance/proposal/234/)). Example for Optimism: [Risk Council Gnosis Safe tx Queue](https://app.safe.global/transactions/queue?safe=oeth:0xCb86256A994f0c505c5e15c75BF85fdFEa0F2a56) The transaction has been queued but still requires a second confirmation before it can be executed. Prior to execution, someone will also need to top up these accounts with some ETH since nonce of the signers have funds to pay for gas on Optimism. ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [May 31, 2023, 9:09pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/10 "2023-05-31T21:09:31Z")
The following updates were executed via the Risk Steward process: | Asset | Network | Old Cap | New Cap | | --- | --- | --- | --- | | stETH | Ethereum L1 | 200.00K | 300.00K | | rETH | Ethereum L1 | 20K | 40K | | stETH | Arbitrum | 9.30K | 15K | | stETH | Optimism | 12K | 18K | ---
**Author:** ![sakulstra](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/sakulstra/32/2002_2.png) [@sakulstra](https://governance.aave.com/u/sakulstra)\ **Post date:** [May 31, 2023, 9:55pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/11 "2023-05-31T21:55:04Z")
> [@Deepcryptodive](#): > > UPDATE: After a little digging I found that the relevant Gnosis Safes can be found by reading the `RISK_COUNCIL` function on the respective `CapsPlusRiskStewards` contracts (which are listed [here](https://app.aave.com/governance/proposal/234/)). You can also find the addresses here: [aave-address-book/src at main · bgd-labs/aave-address-book · GitHub](https://github.com/bgd-labs/aave-address-book/tree/main/src) if you don’t want to dig trough proposals. > [@ChaosLabs](#): > > The following updates were executed via the Risk Steward process: > > | Asset | Network | Old Cap | New Cap | > | --- | --- | --- | --- | > | stETH | Ethereum L1 | 200.00K | 300.00K | > | rETH | Ethereum L1 | 20K | 40K | > | stETH | Arbitrum | 9.30K | 15K | > | stETH | Optimism | 12K | 18K | For cases like on wstETH on polygon were risk providers opinions on the cap diverge I think it would be reasonable to implement the more conservative suggestion instead of waiting for an aip. Also it’s important to note that on arbitrum the dynamics are now a bit scewed as weth borrow cap on arbitrum is 100% utilized at a 3.5% apy. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/ac5235b5b7fea8011998082dc68f478033c3d3d1.png) ---
**Author:** ![pcx](https://avatars.discourse-cdn.com/v4/letter/p/a9a28c/32.png) [@pcx](https://governance.aave.com/u/pcx)\ **Post date:** [June 4, 2023, 11:56am UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/12 "2023-06-04T11:56:25Z")
> [@MarcZeller](#): > > We invite the Risk council to execute payloads that reached consensus from both risk service providers Is there a panel that can openly and transparently display the progress of these cap updates ？ In particular these updates are not shown in the polling area. ---
**Author:** ![sakulstra](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/sakulstra/32/2002_2.png) [@sakulstra](https://governance.aave.com/u/sakulstra)\ **Post date:** [June 4, 2023, 12:03pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/13 "2023-06-04T12:03:49Z")
You can monitor execution here: **mainnet** : [Safe{Wallet} – Transaction queue](https://app.safe.global/transactions/queue?safe=eth:0x47c71dFEB55Ebaa431Ae3fbF99Ea50e0D3d30fA8) **polygon** : [Safe{Wallet} – Transaction queue](https://app.safe.global/transactions/queue?safe=matic:0x2C40FB1ACe63084fc0bB95F83C31B5854C6C4cB5) **avalanche** : [Safe{Wallet} – Transaction queue](https://app.safe.global/transactions/queue?safe=avax:0xca66149425e7dc8f81276f6d80c4b486b9503d1a) **arbitrum** : [Safe{Wallet} – Transaction queue](https://app.safe.global/transactions/queue?safe=arb1:0x3Be327F22eB4BD8042e6944073b8826dCf357Aa2) **optimism** : [Safe{Wallet} – Transaction queue](https://app.safe.global/transactions/queue?safe=oeth:0xcb86256a994f0c505c5e15c75bf85fdfea0f2a56) **metis** : 0x0f547846920C34E70FBE4F3d87E46452a3FeAFfa ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [June 8, 2023, 10:35pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/14 "2023-06-08T22:35:21Z")
> [@Gauntlet](#): > > sAVAX must first move to the synchronized price adapter solution. As a result, our methodology supports a more modest increase to 2.2m. Again, sAVAX must move to the synchronized price adapter solution and the community align on potential “killswitches” in the event of sAVAX depeg, for this cap increase to not add excess market risk. Following up on this proposal, as there is consensus on increasing the supply cap for sAVAX, We’ve prepared the payload to increase the supply cap from 2M to 2.2M, to be executed via the Risk Steward process. > **[Safe{Wallet}](https://app.safe.global/transactions/tx?id=multisig_0xCa66149425E7DC8f81276F6D80C4b486B9503D1a_0xb672742b17a33591cd53c7e7f653278253f71e577824b02a33f68880d3a4ba81&safe=avax:0xCa66149425E7DC8f81276F6D80C4b486B9503D1a)** > > Safe (prev. Gnosis Safe) is the most trusted platform to manage digital assets on Ethereum and multiple EVMs. Over $40B secured. ---
**Author:** ![Gauntlet](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/gauntlet/32/4064_2.png) [@Gauntlet](https://governance.aave.com/u/Gauntlet)\ **Post date:** [June 9, 2023, 6:04pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/15 "2023-06-09T18:04:03Z")
The update to sAVAX on Avalanche has been executed via Risk Steward. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [July 9, 2023, 6:04pm UTC](https://governance.aave.com/t/arfc-increase-supply-caps-for-lsts-on-aave-v3/13240/16 "2023-07-09T18:04:24Z")
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