[ARFC] Use Risk Stewards to Increase wstETH Supply Cap

Title: [ARFC] Use Risk Stewards to Increase wstETH Supply Cap
Author: @JMac
Date: 2023-06-06

There is still a huge amount of demand for supply for wstETH on the Arbitrum network, as shown by how quickly the previous supply cap(s) have filled. This proposal seeks to increase the cap to allow for more supplier to utilize the Aave platform.

By increasing the LSTs on L2 pools, smaller users who are not able to efficiently utilize L1 due to higher transaction fees are still able to utilize Aave, and make DeFi more accessible for all.

The proposed change is a 25% increase in the Supply Cap of stETH on Arbitrum network, from 15k to 18.75k.

The reason for proposing just a 25% increase is twofold. First, by utilizing the new Risk Stewards to enforce these changes, increase can happen much quicker than in previous months.
Second, 18.75k would bring the stETH Supply Cap slightly higher than on the Optimism, which has a current cap of 18k, and is at 90.24% utilization.

Next Steps
See what the Aave community has for feedback, and make sure this proposal is in line with the risk management standards of Aave.
I would like to become a more active member of the Aave community, so any and all feedback on this proposal is encouraged.


hello @JMac and thanks for your proposal.

feel free to add a disclaimer & copyright section on your ARFC.

The ACI is supportive of the proposal and invites the risk service providers to provide feedback.

1 Like

We support an increase of up to 2X the current supply cap.
Once we receive feedback from @Gauntlet on the above recommendations, we will be able to move forward to implement these updates via the Risk Steward process.

Utilizing our supply cap methodology, we conducted stress tests simulating depeg scenarios (up to 15%), yielding the results in the graphs below. With a 2X increase of the supply cap and current liquidity levels, such depeg scenario materializing could lead to protocol losses of ~$500K.

Gauntlet supports the 25% from 15k to 18.75k for wstETH supply cap on Arbitrum.

We’ve prepared the payload to be executed via the Risk Steward process for this proposal.

The update to wstETH supply cap on Arbitrum has been executed via Risk Steward.

This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.