Summary
A proposal to:
- Increase osETH’s supply cap on the Ethereum Core instance.
- Increase PT-sUSDE-31JUL2025’s supply cap on the Ethereum Core instance.
All 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.
osETH (Ethereum-Core)
osETH has reached 93% of its supply cap utilization.
Supply Distribution
The osETH distribution presents limited liquidation risk, as all top suppliers are engaged in looping strategies—collateralizing osETH and borrowing WETH, which is highly correlated with osETH.
The largest borrowed asset against osETH is WETH, accounting for 99% of the total distribution, which aligns with our analysis above.
Liquidity
osETH’s liquidity has remained stable over the past three months, with a current 11K osETH sell incurring less than 5% price slippage.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing osETH’s supply cap.
PT-sUSDE-31JUL2025 (Ethereum Core)
PT-sUSDE-31JUL2025 has once again reached full supply cap utilization just three days after the most recent adjustment, and we anticipate continued strong demand for the asset in the coming days.
Supply Distribution
This asset is concentrated, with a single position accounting for 48% of the total supply, equivalent to 83M. However, given that the position is borrowing USDC and USDT—both highly correlated with PT-sUSDE—the risk of liquidation is significantly reduced.
The remaining top positions are also borrowing USDT and USDC, which significantly reduces the risk of liquidations.
Liquidity & Market
Backed by on-chain liquidity in the Pendle AMM, the PT-sUSDE-31JUL2025 market currently supports swaps of up to $40M with under 3% slippage.
The PT-sUSDE market has maintained a consistently stable yield over the past week, ranging between 7.5% and 8%, with a maximum variation of just 37 bps.
Recommendation
Given safe user behavior, the market’s liquidity, and the high demand for the asset, we recommend increasing the supply cap to 240M PT-sUSDE-31JUL2025. The supply cap increase was quantified in order to minimize the price impact and yield rate volatility caused by looping demand, while maintaining the asset’s supply cap close to the floating supply of the asset.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | PT-sUSDE-31JUL2025 | 170,000,000 | 240,000,000 | - | - |
| Ethereum Core | osETH | 200,000 | 260,000 | - | - |
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