Summary
A proposal to:
- Increase RLUSD’s borrow cap on the Ethereum Core instance.
- Increase weETH’s supply cap on the Ethereum Core instance.
- Increase PT-sUSDE-31JUL2025’s supply cap on the Ethereum Core 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.
RLUSD (Ethereum Core)
RLUSD has reached its borrow cap following significant new borrowing activity.
Supply Distribution
Supply is well distributed, with the largest five suppliers accounting for 60% of the total. The asset also cannot be used as collateral, significantly reducing the risk in this market.
Borrow Distribution
Borrows are somewhat concentrated, with the largest position accounting for 68% of the total. However, the total amount borrowed — $20M — is limited compared to the $114M supplied.
RLUSD has primarily been borrowed against cbBTC, and a recent increase in borrows was driven by more cbBTC collateral. cbBTC is highly liquid, and thus this does not present a risk to the protocol.
Liquidity
RLUSD’s on-chain liquidity is strong; a $10M RLUSD to cbBTC swap can be processed with less than 1% price slippage, which is sufficient to support significantly more borrowing of the asset.
Recommendation
Given user behavior and relatively strong on-chain liquidity, we recommend doubling RLUSD’s borrow cap.
weETH (Ethereum Core)
weETH has reached 98% supply cap utilization following gradual new deposits in the market.
Supply Distribution
Supply is not highly concentrated, though the largest position is large given the high USD value of the market. The largest account — Ether.Fi’s Liquid ETH token — is supplying $1.29B weETH and borrowing $1.16B WETH. While it has a health score of 1.05, the correlation between the assets and weETH’s reliance on a fundamental oracle makes liquidation unlikely.
WETH has represented virtually all of the new borrowing activity against weETH, keeping risk lower in this market.
Liquidity
weETH’s liquidity against stablecoins remains relatively strong and is sufficient to support any possible liquidations in this market.
Recommendation
Taking into account user behavior and on-chain liquidity, we recommend increasing weETH’s supply cap to 2M.
PT-sUSDE-31JUL2025 (Ethereum Core)
PT-sUSDE-31JUL2025 has once again reached full supply cap utilization following the most recent adjustment.
Supply Distribution
The supply distribution of PT-sUSDE is not concentrated, with the top supplier accounting for only 16% of the total. This user is borrowing USDT and USDC, both of which are highly correlated with the collateral asset, significantly reducing liquidation risk.
Similarly, the remaining top suppliers are also borrowing USDT, USDC, and USDS, further minimizing the likelihood of large-scale liquidations.
Liquidity & Market
Backed by on-chain liquidity in the Pendle AMM, the PT-sUSDE-31JUL2025 market currently supports swaps of up to 62M sUSDe with under 3% slippage.
The asset’s on-chain liquidity has been trending upward, with total SY liquidity rising from $55M to $63M in recent weeks.
The PT-sUSDE-31JUL2025 market has maintained a steady yield throughout the past week, consistently ranging between 9% and 10%.
Recommendation
Given user behavior, the market’s liquidity, and the high demand for the asset, we recommend increasing the supply cap by 100M PT-sUSDE-31JUL2025.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | RLUSD | 150,000,000 | - | 20,000,000 | 40,000,000 |
| Ethereum Core | weETH | 1,720,000 | 2,000,000 | 1 | - |
| Ethereum Core | PT-sUSDE-31JUL2025 | 550,000,000 | 650,000,000 | - | - |
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 AGRS recommendation.
Copyright
Copyright and related rights waived via CC0