Summary
A proposal to:
- Increase the supply cap of wrsETH on the Base Instance
- Increase the supply cap of wrsETH on the Avalanche Instance
- Increase the supply cap of PT-sUSDe-9APR2026 on the Plasma Instance
- Increase the supply cap of PT-USDe-9APR2026 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.
wrsETH (Base)
wrsETH on Base has reached 99% of its supply cap following an expansion in the second half of December.
Supply Distribution
The supply distribution of the token is highly concentrated as the market is effectively comprised of two users. Users are utilizing wrsETH in a leveraged restaking strategy by recursively collateralizing WETH debt with a yield-bearing LRT — wrsETH — thereby leveraging the spread between the intrinsic yield of wrsETH and the WETH borrow rate in the market. As can be observed, the health factors of the positions are tightly concentrated around 1.03, typical for such markets.
As the debt and collateral assets in the market are highly correlated, the current positions present minimal liquidation and bad debt risk for the protocol.
Liquidity
The majority of wrsETH liquidity on Base is currently deployed in the wrsETH/wstETH Aerodrome CLAMM pool with a TVL of $2 million, which has expanded by $800,000 in the last 48 hours. The projected slippage on a 185-token sell order currently stands at 6.25%, allowing for a moderate increase in the supply cap.
Recommendation
Considering the substantial demand to loop wrsETH on the Base instance, along with the high correlation between debt and collateral assets in the market and the minimal risk of liquidations, we recommend increasing the supply cap of wrsETH.
wrsETH (Avalanche)
wrsETH has reached its supply cap on the Avalanche instance of Aave V3, following an inflow of over 9,700 tokens in the past four days.
Supply Distribution
The wrsETH market is effectively comprised of two users, with the top user accounting for approximately 65% of the total. The suppliers are utilizing wrsETH to recursively collateralize WETH borrowing positions, thereby maximizing leverage within the restaking strategy and achieving substantial yields.
Given the high correlation of the debt and collateral assets, the probability of liquidations in the market is minimal.
Liquidity
Currently, the majority of wrsETH/WETH liquidity is concentrated in a Blackhole V2 pool with a TVL of approximately $2 million. The estimated slippage on a 375 wrsETH sell order stands at a conservative 2.5%, supporting a moderate increase in the supply cap.
Recommendation
Considering the liquidity depth available, conservative user behavior, and overall minimal risk associated with the market, we recommend raising the supply cap of wrsETH on Avalanche.
PT-sUSDe-9APR2026 (Plasma)
PT-sUSDe-9APR2026 has reached its supply cap of 100 million tokens on the Plasma instance within a couple of hours since the initial listing, indicating substantial demand to loop the asset.
Supply Distribution
The supply distribution of PT-sUSDe-9APR2026 is moderately concentrated, as the market is highly competitive, and the majority of the supply tends to be split among a few advanced users who position themselves ahead of listing. Additionally, a substantial portion of the demand can be attributed to users rolling over from the 15JAN maturity PTs, exemplified by the largest PT-sUSDe-9APR2026 supplier, which holds over 60 million PT-sUSDe-15JAN2026. As can be observed, users are primarily borrowing USDT0 and USDe against the posted collateral to maximize leveraged returns by recursively increasing the net PT-sUSDe position.
As can be expected for such markets, the distribution of health factors is clustered around 1.03, which, given the high correlation of the debt and collateral assets, presents minimal liquidation risk.
Liquidity
At the time of writing, Pendle’s AMM can facilitate a sell order of over 25 million PT-sUSDe-9APR2026 for USDT0 at a conservative 1.8% slippage, allowing for a substantial increase of the supply cap.
Recommendation
Considering the elevated demand to loop April-expiry sUSDe principal tokens, safe user behavior, low liquidation risk, and strong revenue-generating properties of the asset, we recommend expanding the supply cap of PT-sUSDe-9APR2026 on the Plasma instance.
PT-USDe-9APR2026 (Plasma)
Akin to its staked counterpart, PT-USDe-9APR2026 has reached over 90% of its supply cap. While, at the time of writing, the supply cap is not fully exhausted, we expect the demand to persist despite the relatively lower current implied APY of USDe vs sUSDe Principal tokens.
Supply Distribution
The supply distribution of PT-USDe-9APR2026 exhibits a high level of concentration as the market is effectively comprised of two large users, which borrow USDT0 and USDe. As can be observed, the health factors of the users are extremely conservative (1.5 and 1.16), which minimizes the risk of liquidations in the market.
Liquidity
Pendle’s AMM currently has over $6.5 million of liquidity for PT-USDe-9APR2026, which can facilitate a sell order of approximately 6 million tokens with a conservative 2% slippage.
Recommendation
Considering the rapidly filled caps, which indicate substantial outstanding demand, conservative user behavior, along with minimal liquidation risk, we recommend increasing the supply cap of PT-USDe-9APR2026 on Plasma.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Base | wrsETH | 13,000 | 20,000 |
| Avalanche | wrsETH | 20,000 | 25,000 |
| Plasma | PT-sUSDe-9APR2026 | 100,000,000 | 200,000,000 |
| Plasma | PT-USDe-9APR2026 | 40,000,000 | 80,000,000 |
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.