Summary
A proposal to:
- Increase the supply cap of PT-sUSDe-7MAY2026 on the Ethereum Core Instance
- Increase the supply cap of cbBTC on the Ethereum Core Instance
- Increase the borrow cap of USDe on the Plasma 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-7MAY2026
PT-sUSDe-7MAY2026 has reached its supply cap of 100 million tokens, despite a modest recent decline in implied yield. As the cap has been reached in a relatively short period, the market is signaling excess demand, prompting an increase in the supply cap.
Supply Distribution
The supply distribution of PT-sUSDe-7MAY2026 is highly concentrated, as the market is primarily composed of two major users that account for over 90% of the PT-sUSDe-7MAY2026 supply capacity. As shown in the plot below, users are primarily borrowing USDe, with other stablecoins accounting for approximately 30% of the outstanding debt. The suppliers are recursively collateralizing stablecoin debt with yield-accruing collateral to increase the notional size of the position, thereby increasing earnings from the spread between the PT-sUSDe implied yield and stablecoin borrowing rates. Common to such markets, the health factors are clustered around 1.02, which, given the substantial correlation between debt and collateral assets and, in some cases, shared underlying — USDe —, presents minimal liquidation risk.
As mentioned previously, USDe accounts for approximately 60% of the borrowed funds; this choice of debt asset is, to a large extent, motivated by the increased capital efficiency provided by the PT-sUSDe-7MAY2026 USDe E-Mode, which allows for less conservative risk parameters due to the shared underlying.
Liquidity
At the time of writing, PT-sUSDe-7MAY2026’s liquidity within the Pendle AMM is sufficient to perform a sell order of 15 million tokens at sub 2% slippage, supporting an increase of the asset’s supply cap.
Recommendation
Given the strong lending demand for the asset, substantial on-chain liquidity, and minimal liquidation risk, we recommend increasing the supply cap for PT-sUSDe-7MAY2026 on the Ethereum Core instance.
cbBTC
cbBTC has reached 97% of its 28,000 token supply cap following an inflow of over 5,000 tokens over the past week, indicating increasing demand to collateralize stablecoin debt with the asset on the Ethereum Core instance.
Supply Distribution
The supply distribution of cbBTC is moderately concentrated, with the top user accounting for approximately 15% of the market and the top six users accounting for 57%. As can be observed, user positioning is highly conservative as the health factors are clustered in a wide 1.40-1.89 range, presenting limited liquidation risk.
cbBTC is primarily used to collateralize uncorrelated stablecoin debt; specifically, USDC, PYUSD, USDT, and RLUSD account for over 90% of all debt.
Liquidity
At the time of writing, on-chain liquidity is sufficient to facilitate a sell order of 500 cbBTC at under 6% slippage, supporting a conservative increase of the supply cap.
Recommendation
Considering the recently materialized demand to collateralize stablecoin positions with cbBTC, along with highly conservative user positioning, we recommend a modest increase in cbBTC’s supply cap on the Ethereum Core instance.
USDe (Plasma)
USDe has reached over 99% of its supply on the Plasma instance recently. The uplift in activity is attributed to the increased leveraged looping activity stemming from the PT-sUSDe-9APR2026 loop with USDe, facilitated by the highly capital-efficient E-Mode.
Supply Distribution
As can be observed on the plot below, the borrowing of USDe is moderately concentrated; the top 4 positions account for approximately 27% of the market. Users are primarily collateralizing USDe debt by PT-sUSDe-9APR2026; typical for such markets, users are participating in leveraged looping strategies. The yield-bearing collateral is used to underwrite stablecoin, thereby increasing the notional spread between the yield of the collateral and the borrowing cost of stablecoin.
As the assets are highly correlated and share the same underlying — USDe, the liquidation risk in the market is minimal.
Liquidity
PT-sUSDe-9APR2026 currently has over 30 million in on-chain liquidity, which is primarily concentrated in the Pendle AMM pool. At the time of writing, the price impact on a 10 million PT-sUSDe-9APR2026 sell order for USDe implies a 130 basis points. Supporting a moderate expansion of the USDe borrow cap to facilitate further lending activity.
Recommendation
Considering the relatively conservative borrow cap as compared to the supply, along with strong revenue-generating properties of USDe, along with conservative user behavior and minimal liquidation risk, we recommend expanding the borrow cap of USDe on the Plasma instance.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | PT-sUSDe-7MAY2026 | 100,000,000 | 200,000,000 | - | - |
| Ethereum Core | cbBTC | 28,000 | 32,000 | 1,440 | - |
| Plasma | USDe | 1,750,000,000 | - | 400,000,000 | 600,000,000 |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclosure
Chaos Labs has not been compensated by any third party for publishing this AGRS recommendation.
Copyright
Copyright and related rights waived via CC0.