# Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 03.05.25

**URL:** <https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-and-borrow-caps-on-aave-v3-03-05-25/21287>\
**Category:** Governance\
**Created:** [March 5, 2025, 10:13pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-and-borrow-caps-on-aave-v3-03-05-25/21287 "2025-03-05T22:13:20Z")\
**Posts on this page:** 2\
**Page:** 1

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**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\
**Post date:** [March 5, 2025, 10:13pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-and-borrow-caps-on-aave-v3-03-05-25/21287/1 "2025-03-05T22:13:20Z")

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# **Summary**

A proposal to:

- Increase osETH’s supply cap on the Ethereum Core instance.

All increases are backed by [Chaos Labs’ risk simulations](https://cdn.sanity.io/files/zmh9mnff/production/130e1060165f7ab0766bb4c70cc2ec41c1d1e458.pdf), which consider user behavior, on-chain liquidity, and price impact, ensuring that higher caps do not introduce additional risk to the platform

## osETH (Ethereum Core)

The supply cap utilization of osETH has reached 96%.

 ![Screenshot 2025-03-05 at 9.27.02 AM](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/d/d658b7079bf14c4f82ea0c23b43c2ebe69289ed6.png)

 ![Screenshot 2025-03-05 at 9.30.18 AM](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/7/7818408d4b5e3bffb108e6630a5939904de20f72.png)

### Supply Distribution

The supply distribution of osETH poses limited liquidation risk at this time. All top osETH suppliers are currently borrowing WETH, which is highly correlated with osETH, significantly reducing liquidation risk.

 ![Screenshot 2025-03-05 at 9.27.56 AM](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/b/b4114be15920b4faa27fec9fc32150dd4e4e1666.png)

The largest borrowed asset against osETH is WETH, accounting for 99% of the total distribution. This strong correlation significantly reduces the likelihood of large-scale liquidations.

 ![Screenshot 2025-03-05 at 9.32.37 AM](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/8/8b66995901d6ce84f40672c44923fd1c4f382733.png)

### Liquidity

osETH’s liquidity has remained stable over the past three months, with a 10K osETH sell incurring less than 3% price slippage.

 ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/8/8f42a187afb97aef06aaed4b834a06784e77aa45.png)

### Recommendation

Given user behavior and on-chain liquidity, we recommend increasing the supply cap to 144K osETH.

# **Specification**

| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
| --- | --- | --- | --- | --- | --- |
| Ethereum Core | osETH | 120,000 | 144,000 | - | - |

# **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 ARFC.

# **Copyright**

Copyright and related rights waived via [CC0](https://creativecommons.org/publicdomain)

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<div class="post-metadata">

**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\
**Post date:** [April 4, 2025, 10:13pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-and-borrow-caps-on-aave-v3-03-05-25/21287/2 "2025-04-04T22:13:53Z")

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Closed on April 4, 2025, 10:13pm UTC

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