Summary
A proposal to:
- Increase supply cap for ezETH on the Arbitrum 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.
ezETH (Arbitrum)
ezETH has reached 100% supply cap utilization, following an inflow of over 1K on September 8.
Supply Distribution
ezETH’s supply distribution is concentrated, with the top supplier accounting for 73% of the total. However, since this user does not currently have any borrowing activity, we do not view this as presenting any immediate liquidation risk.
The liquidation risk among the remaining top suppliers is also limited. They either have no borrowing activity, are borrowing correlated assets such as WETH and wstETH, or maintain relatively high health scores—all of which substantially mitigate liquidation risk.
The borrowed asset distribution is consistent with top supplier behavior, with wstETH and WETH representing the largest shares. This high correlation between collateral and debt significantly reduces liquidation risk.
Liquidity
Currently, selling 250 ezETH into USDC would incur less than 3% price slippage, supporting a supply cap increase.
Recommendation
Given user behavior and on-chain liquidity, we recommend increasing the supply cap for ezETH.
Specification
| Instance | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Arbitrum | ezETH | 1,750 | 3,500 | - | - |
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.