Summary
This ARFC proposes to increase the wstETH supply cap to 4,650 on Aave V3 Arbitrum.
Motivation
wstETH is currently at 100% utilization of its supply cap on Aave V3 Arbitrum. This increase happened over the past couple of days after the supply cap was doubled from 1,200 to 2,400.
To calculate the new cap, we have utilized our supply cap methodology. As wstETH is in the ETH-correlated emode, we have simulated a 15% drop in its price to evaluate the amount that would be liquidated, and assessed the on-chain liquidity that would allow for profitable liquidations under the 2% LP configured for the emode.
| Supply Cap | Extreme Liquidation Amount | Max Amount Liquidated | R | Recommended Supply Cap | |
|---|---|---|---|---|---|
| wstETH | 2,400 | $621,000 | $1,080,000 | 1.93 | 4,650 |
The proposal represents a near 100% increase from the current caps, making this ARFC compliant with the “direct-to-AIP” framework.
Specification
Ticker: wstETH (wstETH)
Contract Address: 0x5979D7b546E38E414F7E9822514be443A4800529
| Parameter | Current | Proposed |
|---|---|---|
| Supply Cap | 2,400 | 4,650 |
| Borrow Cap | 190 | 400 |
