Chaos Labs supports the proposal to increase the supply caps for rETH and wstETH on V3 Ethereum, with the following modification:
| Network | Asset | Current Supply Cap | Recommendation |
|---|---|---|---|
| Arbitrum | wstETH | 9,300 | 15,000 |
| Polygon | wstETH | 2,400 | 4,050 |
Utilizing our supply cap methodology , we conducted stress tests simulating depeg scenarios yielding the results in the graphs below. For wstETH, we recommend a more modest increase in the supply cap than originally proposed.
Polygon
For wstETH on Polygon, we recommend capping the supply cap at 75% of the on-chain circulating supply as voted on by the community (currently 5,400)
Arbitrum
On Arbitrum, with current liquidity, our depeg stress case scenarios show a risk of protocol losses given a range of increases in supply. Although the scenarios are relatively conservative (depeg up to 15%), we recommend a more modest increase of the cap by 1.6X.
