Summary
A proposal to:
- Increase the supply cap of PT-sUSDe-9APR2026 on the Plasma Instance
- Increase the supply cap of PT-sUSDe-5FEB2026 on the Ethereum Core Instance
- Increase the supply cap of osETH 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.
PT-sUSDe-9APR2026 (Plasma)
PT-sUSDe-9APR2026 has hit 90% of its supply cap on the Plasma instance following an inflow of over 300 million tokens, indicating substantial demand to loop the asset.
Supply Distribution
The supply distribution of PT-sUSDe-9APR2026 is moderately concentrated, with the top user accounting for 14% of the market. As can be observed in the plot below, users are using the asset to recursively collateralize USDT0 and USDe debt to maximize net exposure to the rate differential between the underlying implied rate of PT-sUSDe and borrowing costs. Typical for such markets, the health factors are clustered around 1.02, which, given the high correlation among the assets, implies minimal risk.
Liquidity
According to the Pendle AMM estimates, a sell order of 30 million principal tokens for USDT0 is currently limited to 36 basis points of slippage, supported by over $31 million in TVL for the AMM pool.
Recommendation
Given the growing market demand, the high correlation between asset prices, and favorable liquidity conditions, we recommend increasing the supply cap for PT-sUSDe-9APR2026 on the Plasma instance.
PT-sUSDe-5FEB2026 (Ethereum Core)
PT-sUSDe-5FEB2026 has reached 92% of its supply cap on the Ethereum Core instance following an inflow of over 120 million tokens in the past 12 days, indicating expanding demand for the looping asset.
Supply Distribution
The supply distribution of PT-sUSDe-5FEB2026 is moderately concentrated, with the top user representing 17.5% of the market, and the top seven wallets accounting for approximately 77%. As is the case with PT-sUSDe-9APR2026 on Plasma, PT-sUSDe-5FEB2026 suppliers are primarily utilizing the asset to underwrite USDe and USDT debt, therefore leveraging the exposure to the rate spread. Given the specifics of the market, namely, high correlation of debt and collateral, the distribution of health factors presents minimal risk.
Liquidity
PT-sUSDe-5FEB2026’s liquidity profile on Pendle has remained stable with over $38 million in liquidity. At the time of writing, the price impact on a 40 million PT-sUSDe sell order is limited to 9 basis points, supporting a meaningful increase of the supply cap.
Recommendation
Given the demand to loop the asset, its deep and stable liquidity profile, and conservative user behavior, we recommend raising the supply cap of PT-sUSDe-5FEB2026 on the Ethereum Core instance.
osETH
Following up on the proposal to reduce the supply cap of osETH, prompted by the Balancer v2 exploit and a significant contraction of the asset’s liquidity profile, we recommend raising the supply cap on the Ethereum Core instance of Aave v3. At the time of writing, the supply of osETH is fully utilized at 152,000 tokens.
Supply Distribution
The distribution of osETH is moderately concentrated, with the top wallet accounting for 18% of the market, and the top 11 users representing 67% of the total. The distribution of the health factors is typical for highly correlated LST markets, with the majority of users in safe positions and the health factors clustered around 1.02. As can be observed in the chart below, the majority of users are utilizing osETH in leveraged staking strategies by recursively collateralizing WETH debt with osETH to increase the net exposure to the LST implied rate and the WETH borrow rate differential.
Liquidity
According to DEX aggregator estimates, a sell order of 5,000 osETH for WETH is currently limited to 90 basis points of slippage, which, given the constrained probability of liquidations in the market, provides a meaningful liquidity buffer protecting the protocol from the risk of bad debt.
Recommendation
Given the reestablishment of osETH’s liquidity profile, along with conservative and predictable supplier behavior and minimal liquidation risk, we recommend increasing the asset’s supply cap.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Plasma | PT-sUSDe-9APR2026 | 800,000,000 | 1,200,000,000 |
| Ethereum Core | PT-sUSDe-5FEB2026 | 480,000,000 | 720,000,000 |
| Ethereum Core | osETH | 152,000 | 200,000 |
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.