Summary
A proposal to:
- Increase tETH’s supply cap on the Ethereum Prime 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.
tETH (Ethereum Prime)
tETH reached 100% supply cap utilization.
Supply Distribution
The supply of tETH is highly concentrated in a single top supplier, who holds 94% of the total distribution, which introduces a concentration risk. However, since this user is borrowing wstETH, a closely correlated asset, we do not view this as a significant concern at present. That said, we will continue to closely monitor this position moving forward.
Liquidity
tETH’s liquidity is sufficient to support a supply cap increase. At present, selling 1500 tETH to USDT would result in less than 2% price slippage.
Recommendation
Based on the observed user behavior and current on-chain liquidity conditions, we recommend raising the supply cap for tETH.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum Core | tETH | 20,000 | 40,000 | - | - |
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