[ARFC] Increase Supply Caps for LSTs on AAVE V3

Governance
6

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, and the community align on potential “killswitches” in the event of wstETH depeg, for this cap increase to not add excess market risk.

    • We support a more modest increase in supply cap to 2700.

  • 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.

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