[ARFC] Supply Cap increase - wstETH

Governance
1

title: [ARFC] Supply Cap increase - wstETH
author: Alice Rozengarden @Alice - Aave-chan initiative
date: 2023-08-08

Summary:

This proposal seeks to increase the supply cap for the wstETH token on the following markets:

  • Arbitrum V3
  • Polygon V3
  • Optimism V3

This proposal is compatible with the Direct-to-AIP framework.

Motivation:

On the Arbitrum V3, Optimism V3, and Polygon V3 markets, the utilization of the supply cap reached 77%, 90%, and 100% respectively. Augmenting those caps would allow for a higher TVL resulting in a better experience for the user of Aave and the ecosystem built around the LSD yield leveraging. This would also increase protocol revenue via more borrowing of WETH on those diverse platforms.

Along with the utilization of the supply cap, the Total supply of this asset increased as well, which would allow the increase of those caps without compromising on the 75% of the total supply threshold.

Specification:

The following parameters would be modified for the wstETH token:

Token Current supply cap Proposed supply cap Increase Total Supply Total Supply (%)
wstETH Arbitrum V3 30k 45k 50% 80k 56.25%
wstETH Optimism V3 23k 34.5k 50% 46k 75%
wstETH Polygon V3 2.7k 3.45k ~28% 4.6k 75%

Contract:

Disclaimer:

This proposal is powered by Skyward.
The author doesn’t possess wstETH tokens at the time of writing and isn’t compensated by LIDO for this ARFC.

Next step:

This proposal is compatible with the Direct-to-AIP framework, meaning the next steps are:

  1. Get approval from at least one risk provider
  2. Publish an AIP

Copyright:

Copyright and related rights waived via CC0.

5 Likes
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Utilizing our LSD supply cap methodology , and given the Community Preference for Supply Cap Limits for LSTs, we support this proposal.

For wstETH on Arbitrum, given the current supply, we recommend a more modest increase of 50% to 45K in this proposal.
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Following @ChaosLabs feedback the proposed increase for the supply cap of wstETH on arbitrum has been modified as follows:

  • Before:
Token Current supply cap Proposed supply cap Increase Total Supply Total Supply (%)
wstETH Arbitrum V3 30k 60k 100% 80k 75%
  • After:
Token Current supply cap Proposed supply cap Increase Total Supply Total Supply (%)
wstETH Arbitrum V3 30k 45k 50% 80k 56.25%

The original post has been modified accordingly

1 Like
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We support raising the supply cap for wstETH on Arbitrum to 40k instead of 45k.

Our LST methodology does not support increases in supply cap beyond 50% circulating supply until the killswitch is implemented. In the meantime, if the community would like to raise the wstETH supply cap for Optimism and Polygon, it should go through AIP rather than risk steward.

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