# Chaos Labs Risk Stewards - Increase Supply Caps on Aave V3 - 05.15.25 **URL:** \ **Category:** Governance\ **Created:** [May 15, 2025, 6:31pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-caps-on-aave-v3-05-15-25/22077 "2025-05-15T18:31:23Z")\ **Posts on this page:** 2\ **Page:** 1
**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:** [May 15, 2025, 6:31pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-caps-on-aave-v3-05-15-25/22077/1 "2025-05-15T18:31:23Z")
# **Summary** A proposal to: - Increase PT-sUSDE-31JUL2025’s supply cap on the Ethereum Core instance. - Increase PT-eUSDE-29MAY2025’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. ## PT-sUSDE-31JUL2025 (Ethereum Core) PT-sUSDE-31JUL2025 has reached its full supply cap utilization 3 days after the cap was raised. ![Screenshot 2025-05-15 at 13.24.55](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/8/801010eba285e45934069b68ea0649223f25980f.png) ![Screenshot 2025-05-15 at 13.25.31](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/1/1a7498462ac3885e5d7ff23adb5451943fbc71e7.png) ### Supply Distribution Following the recent supply cap increase, the supply concentration of the largest position has improved, with its share dropping from 35% to 24% of the total supply. Additionally, all the top positions continue to borrow USDC and USDT, which are both highly correlated with PT-sUSDE, further mitigating the risk of liquidations. ![Screenshot 2025-05-15 at 13.26.51](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/c/cf3fd391a2c74826ae144f6d62b3a94352be1bd2.png) The distribution of total borrowed assets is highly concentrated in stablecoins, with zero exposure to other assets. ![Screenshot 2025-05-15 at 13.45.07](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0c29a3cc16123d4ec87bb2630c6d659ffb297d36.png) ### Liquidity & Market Backed by on-chain liquidity in the Pendle AMM, the PT-sUSDE-31JUL2025 market currently supports swaps of up to 55M sUSDe with under 3% slippage. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/f/f184145f4b43beb767aa9d97aff1915fab9cc4f3.png) The on-chain liquidity for the asset has been in an upward trend, with total SY liquidity increasing from 40 million to 55 million in recent weeks. ![image (1)](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/7/73572c2abc24556ceca97ad975aeccc81f3282b2.png) The PT-sUSDE market has shown consistent yield growth over the past few days, reaching a peak of 9.8% before settling around 9.2% currently. ![Screenshot 2025-05-15 at 13.51.36](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/1/1830ac4545227f2dc67970dc3aaf787d842860d2.png) ### Recommendation Given user behavior, the market’s liquidity, and the high demand for the asset, we recommend increasing the supply cap by 110M PT-sUSDE-31JUL2025. ## PT-eUSDE-29MAY2025 (Ethereum Core) PT-eUSDE-29MAY2025’s supply cap utilization has reached 94%. ![Screenshot 2025-05-15 at 13.33.16](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/7/702da828927af36811c048239eda834503fbf483.png) ![Screenshot 2025-05-15 at 13.34.05](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/2/20611cfdf4cf4c5e086880e9ee2946821971ee5a.png) ### Supply Distribution The asset’s distribution is moderately concentrated, with the largest supplier holding around 15% of the total supply. However, this position is not a significant concern at the moment, as it is primarily borrowing USDT, which has a strong correlation with PT-eUSDE. ![Screenshot 2025-05-15 at 13.34.23](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/9/91de9f120d19f7f3a82a2361fc368a7511ba0713.png) The remaining suppliers also do not present significant risk, as they are borrowing USDT and USDC assets that are highly correlated with PT-eUSDE, thereby substantially reducing liquidation risk. Currently, 66% of PT-collateralized debt is denominated in USDT, which significantly reduces the risk of large-scale liquidations. ![Screenshot 2025-05-15 at 13.34.58](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/6b86c63bbc9f48a0d70083b720338146c368e977.png) ### Liquidity & Market Backed by on-chain liquidity in the Pendle AMM, the PT-eUSDE-29MAY2025 market currently supports swaps of up to 175M with under 3% slippage. ![image (2)](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/4/41564ffc02242e17488cb7fda99dca24e19371ec.png) ### Recommendation Given the market’s liquidity, overall safe user behavior, and the asset’s approaching maturity, we recommend increasing the supply cap by 180 million PT-eUSDE-29MAY2025. # **Specification** | **Instance** | **Asset** | **Current Supply Cap** | **Recommended Supply Cap** | **Current Borrow Cap** | **Recommended Borrow Cap** | | --- | --- | --- | --- | --- | --- | | Ethereum Core | PT-sUSDE-31JUL2025 | 340,000,000 | 450,000,000 | - | - | | Ethereum Core | PT-eUSDE-29MAY2025 | 550,000,000 | 730,000,000 | - | - | # **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) ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [June 14, 2025, 6:31pm UTC](https://governance.aave.com/t/chaos-labs-risk-stewards-increase-supply-caps-on-aave-v3-05-15-25/22077/2 "2025-06-14T18:31:49Z")
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