Summary
A proposal to:
- Increase PT-sUSDE-31JUL2025’s supply cap on the Ethereum Core instance.
- Increase USDC’s Base on the Aave V3 Base instance.
All cap increases are backed by Chaos Labs’ risk simulations, which consider user behavior, on-chain liquidity, and price impact, ensuring that higher caps do not introduce additional risk to the platform.
PT-sUSDE-31JUL2025 (Ethereum Core)
PT-sUSDE-31JUL2025 has reached full utilization of its supply cap after the latest increase.
Supply Distribution
The supply distribution of PT-sUSDE remains relatively dispersed, with the top supplier holding 9.3% of the total and the top 10 collectively accounting for 55%. The largest suppliers are currently borrowing USDT, USDC, and USDS, all of which are closely correlated with the collateral asset, helping to mitigate liquidation risk. Notably, as the supply cap increases, the concentration of the top supplier’s holdings has been decreasing.
Liquidity and Market
The PT-sUSDE-31JUL2025 market now supports swaps of up to 90M sUSDe with less than 3% slippage.
The asset’s on-chain liquidity has recently declined from over $120 million to $110 million, while total SY liquidity has stabilized around $90 million, continuing to exhibit an upward trend.
The PT-sUSDE-31JUL2025 market yield, which previously ranged between 9% and 10%, has slightly decreased and is now stabilizing between 8.5% and 9%.
Recommendation
Given user behavior, the market’s liquidity, and the high demand for the asset, we recommend increasing the supply cap by 300M PT-sUSDE-31JUL2025.
USDC IR Update on Base
Motivation
Over the past month, borrowing demand for USDC on Base instance has increased, with total borrow volume rising from approximately $100 million to $133 million.
Currently, the interest rate configuration offers a stable rate environment, but a modest upward adjustment would enhance competitiveness and further support optimal utilization while attracting inflows from Spark’s Liquidity Layer (SLL). While utilization levels remain elevated, the current slope setting results in a borrow rate that is marginally below the effective level required to sustain deposit rates near 5% at the Uoptimal. A timely adjustment would position Aave to accommodate growing demand and facilitate the expected liquidity rebalancing.
Recommendation
We recommend increasing USDC’s Base by 25 basis points to better align the borrow rate with prevailing market conditions and encourage SLL inflows. This change is minimal in magnitude but strategically important to maintaining Aave’s rate competitiveness.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | PT-sUSDE-31JUL2025 | 1,000,000,000 | 1,300,000,000 | - | - |
| Market | Asset | Current Base | Recommended Base |
|---|---|---|---|
| Base | USDC | 0.00% | 0.25% |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this AGRS recommendation.
Copyright
Copyright and related rights waived via CC0