[ARFC] wMATIC Supply & Borrow Cap Increase Polygon v3 16.05.2023

title: [ARFC] wMATIC Supply & Borrow Cap Increase Polygon v3
shortDescription: Increase Supply & Borrow Cap wMATIC on Polygon v3
author: @llama - @TokenLogic
created: 2023-05-16


This publication proposes increasing the wMATIC Supply and Borrow Cap on Polygon v3. This will enable Balancer linear pools to deposit wMATIC into Aave Protocol.


With strong deposit flows from the Balancer bb-a-wMATIC integration and the continual growth of the yield maximising strategy, the Supply and Borrow Cap of wMATIC are both experiencing strong utilised.

This publication enables the continued growth of wMATIC deposits as Balancer Liquidity Providers migrate to the new gauges and users continue to migrate from Aave v2 to v3. As wMATIC deposits grow so does the demand for borrowing wMATIC. Subsidised borrowing costs of wMATIC has lead to significant demand for wMATIC and TVL growth for Aave.

Increasing the Supply and Borrow Caps as outlined in this publication will continue to provide confidence to builders who are providing tooling to automate the management of yield maximising strategies.


With several Balancer liquidity pools depositing wMATIC into Aave v3 on Polygon, the utilisation of the Supply Cap has increased to 100%. This is currently preventing the Balancer linear pools from depositing into the wMATIC reserve.

Currently, there is around 5,294,939 and 1,228,487 units of wMATIC not yet migrated to the new gauges. The wMATIC Supply Cap is at 100% utilisation. This prevents the Balancer Linear Pools from depositing into wMATIC Reserve.

There is also 15.13M units of wMATIC on Aave v2 that has not yet migrated to v3.

Collectively, this represents around 21.65M units of wMATIC relative to a Supply Cap. This publication intends to provide sufficent capacity for the 21.65M units to be deposited into the wMATIC reserve by increasing the Supply Cap from 66M units to 90M units, a 24M unit increase. The utilisation of the pool will be 73.33% after the Supply Cap is implemented.

With several teams offering yield maximising strategies, despite the large inflow of wMATIC deposits, demand for wMATIC has continued to grow. The current Borrow Cap has reached 74.50% utilisation. The newly proposed Borrow Cap 50M units is equivalent to 25% increase and represents 62.5% of the Supply Cap.

With reference to the new ARFC Aave V3 Caps update Framework it is possible to ship several upgrades to gradually increasing Aave’s exposure to wMATIC over time.


The following risk parameters have been proposed by @Llamaxyz for the community to review and discuss in the comments section.

Ticker: wMATIC

Contract: polygon: 0x0d500b1d8e8ef31e21c99d1db9a6444d3adf1270

Parameter Current Value Proposed Value
SupplyCap 66.00M units 90M units
BorrowCap 39.95M units 50M units


Copyright and related rights waived via CC0.

Chaos Labs supports the proposed supply and borrow cap increases in this proposal.

Utilizing our supply cap methodology, we conducted stress tests encompassing both moderate and severe scenarios.
For the moderate stress scenario, we employed the price trajectory of MATIC during the LUNA crash, while for the severe stress scenario, we utilized the price trajectory of LUNA.
Outlined below are the results of the simulations.

In the moderate case, no additional simulated protocol loss is observed,

In the severe case, the simulated protocol losses amount to ~$80K.


Hi Everyone :wave:

A brief update here, Llama will be submitting the payload to @bgdlabs for peer review shortly. The proposal will be submitted for voting upon completion of the review.

Per Gauntlet’s Borrow and Supply Cap Methodology, we support the supply cap increase to 90M and and borrow cap increase to 50M for wMATIC on Polygon v3.

I see it prudent to increase the loan supply for Matic, I support this proposal.