Supply/Borrow Cap Updates V3 Arbitrum
01Summary
Proposal to increase supply and borrow caps for WBTC and WETH on Aave V3 Arbitrum. WBTC supply cap doubles from 2,100 to 4,200 with no borrow cap change. WETH supply cap increases from 45,000 to 70,000 and borrow cap doubles from 11,165 to 22,000.
- Type
- parameter change
Key changes
- WBTC supply cap increased from 2,100 to 4,200 (100% increase)(high)
- WETH supply cap increased from 45,000 to 70,000 (55.6% increase)(high)
- WETH borrow cap increased from 11,165 to 22,000 (97.1% increase)(high)
- WBTC borrow cap remains unchanged(low)
Notable concerns
- Parameter adjustments were derived from Chaos Labs' Updated Supply and Borrow Cap Methodology
Generated by Kvorum
02Description
Simple Summary
A proposal to adjust three (3) total risk parameters, including Supply Cap and Borrow Cap, across two (2) Aave V3 Arbitrum assets.
Motivation
The objective of this proposal is to recommend updated supply and borrow caps for V3 assets that have reached high utilization of either cap. The recommendations provided in this proposal were derived using Chaos Labs’ Updated Supply and Borrow Cap Methodology
The respective governance forum discussion is linked below:
Specification
The following risk parameter proposal is presented below:
Arbitrum
| Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|
| WBTC | 2,100 | 4,200 | 1,115 | No Change |
| WETH | 45,000 | 70,000 | 11,165 | 22,000 |
References
Forum Post: Arbitrum Post
Test: Arbitrum Test
Proposal payload implementation: Arbitrum Payload
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows Aave's standard governance pattern: a single top-level `execute(address)` call on the governance executor that delegatecalls into a payload contract containing the actual `setSupplyCap`/`setBorrowCap` logic. The decoded calldata here only surfaces this outer execute() call and the payload address (0xC4421...), not the internal calls the payload makes. This is expected and typical for Aave V3 cross-chain proposals — the granular parameter changes live inside the payload contract's bytecode, which is separately referenced and auditable via the 'Proposal payload implementation' and 'Test' links in the description (AaveV3ArbSupplyCapsUpdate_20230330.sol). Since the target address in the decoded action is consistent with what the description points to as the payload implementation, and no other actions, transfers, or unrelated calls are present, there is no evidence of a target mismatch, extra action, or omitted action at the level we can observe. However, because the specific cap values (4200 WBTC supply cap, 70000/22000 WETH caps) cannot be independently verified from the flat decoded calldata (they're inside the payload's internal logic), confidence is medium rather than high. No numeric or targeting discrepancy is evident from the available data, so this proposal is treated as consistent with the description, contingent on the payload matching its referenced source code.
Generated by Kvorum
04Actions
- Target
- 0x5f5c…6711
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0xC4421Eaf9087aa0B8f453C130Dc024c3Eb3A34D7" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- [ARFC] Chaos Labs Supply and Borrow Cap Updates - 03.30.2023 ↗discourse · high confidence
Arguments for
- Applying the Aave V3 Caps Framework methodology, several assets (WBTC, WETH, wstETH on Arbitrum and Optimism) have reached over 75-100% utilization of their caps and warrant increases to avoid constraining supply/borrow activity.— ChaosLabs
- Raising the wstETH Optimism supply cap now would support ongoing efforts with Lido DAO to bring OP and LDO incentives to wstETH on Optimism, avoiding the need for a separate future proposal.— MatthewGraham
- A more conservative version of some cap increases (e.g., WETH supply cap, WBTC supply cap) is still warranted even amid caution, per Gauntlet's own methodology.— Pauljlei
Arguments against
- Increasing the wstETH supply cap or WETH borrow cap ahead of the Shanghai Upgrade is risky because whales may aggressively pursue the wstETH-wETH trade to capture staking rewards before the upgrade, and on-chain liquidity on Arbitrum may not support large liquidations for these positions.— Pauljlei
- Given the Ethereum-correlated eMode pool on Arbitrum (90% LTV, 93% LT) for wstETH/wETH, large cap increases pose heightened liquidation risk, echoing concerns previously raised about cbETH supply cap increases on Ethereum mainnet.— Pauljlei
- wstETH supply cap increases should be postponed on both Arbitrum and Optimism until after the Shanghai Upgrade (April 12) to reassess risk for all Ethereum-derived assets post-upgrade.— Pauljlei
Unresolved concerns
- Disagreement between Chaos Labs and Gauntlet on appropriate wstETH and WETH borrow/supply cap sizes, with no consensus reached, leading to the proposal being postponed rather than resolved.— ChaosLabs, Pauljlei
- Whether Arbitrum's on-chain liquidity can adequately support large liquidations of wstETH/WETH positions if caps are increased before the Shanghai Upgrade remains unresolved.— Pauljlei
- The final decision on wstETH Optimism cap increase requested by MatthewGraham to support Lido DAO incentive efforts was deferred pending post-upgrade review, leaving that specific ask unresolved.— MatthewGraham, Pauljlei
Notable participants
- ChaosLabsProposal author who presented cap increase recommendations and methodology, updated the proposal in response to community feedback, and ultimately paused the fast-track process due to lack of risk provider consensus.
- MatthewGrahamCommunity member who requested an additional cap increase for wstETH on Optimism to support Lido DAO incentive efforts.
- PauljleiPresented Gauntlet's competing risk analysis and more conservative cap recommendations, raising concerns about pre-Shanghai Upgrade risks that led to the proposal being postponed.
Generated by Kvorum
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