LST Supply Cap Increase Polygon & Arbitrum
01Summary
Proposal to increase supply caps for three assets across Aave v3: stMATIC on Polygon from 25M to 30M units, wstETH on Polygon from 1,800 to 2,400 units, and wstETH on Arbitrum from 4,650 to 9,300 units. All assets are at or near 100% utilization. Changes have been endorsed by risk service providers.
- Type
- parameter change
Key changes
- stMATIC Supply Cap on Polygon increased from 25M to 30M units (20% increase, representing 58.08% of total supply)(high)
- wstETH Supply Cap on Polygon increased from 1,800 to 2,400 units (33% increase, representing 59.49% of total supply)(high)
- wstETH Supply Cap on Arbitrum increased from 4,650 to 9,300 units (100% increase)(high)
Notable concerns
- All three assets currently at or nearing 100% utilization before increase
- stMATIC supply cap reached within days of previous increase from 21M to 25M units
- Proposal relies on adequate liquidity for liquidations, particularly for wstETH holdings
Generated by Kvorum
02Description
Summary
This AIP increasing the following Supply Caps:
- stMATIC Supply Cap on Polygon from 25.0M to 30M units
- wstETH on Polygon v3 from 1,800 units to 2,400 units
- wstETH on Abritrum from 4.65k unit to 9,300 units
Abstract
This publication present the community the opportunity to increase three Supply Caps across two Aave v3 deployments. Each asset is currently at, or nearing, 100% utilisation. Some assets are receiving deposit rewards from Lido DAO.
Increasing the Supply Caps will enable users to enter yield maximising strategies, creating borrowing demand for network tokens that generates revenue for Aave DAO.
Each of the parameter changes presented have been reviewed and are endorsed by at least one risk service provider.
Motivation
stMATIC Supply Cap Polygon
Recently, the Supply Cap of stMATIC was increased from 21M units to 25M units. Within a few days, the Supply Cap was reached.
The above chart shows the pent up demand awaiting Supply Cap increases. The right most part of the chart shows a rapid increase in utilisation as soon as the Supply Cap was lifted.
The recent increase in stMATIC deposits is from users entering the yield maximising strategy. This type of interaction with Aave Protocol is deemed lower risk than borrowing less price correlated assets.
The chart above shows that the supply of stMATIC on Polygon has only increased notably over the last few days. 50% of supply is 25,825,944 which can be rounded to 25.8M units. This AIP presents a stMATIC Supply Cap of 30M units, or 58.08% of supply.
wstETH Supply Cap Polygon
Current utilisation of the wstETH Supply Cap is 100%. Supply of wstETH on Polygon is 4,034 units.
As the majority of larger holdings are entering into the yield maximising strategy and the oracle draws upon liquidity from DEXs across various networks and CEX, Aave Protocol can be more flexible with setting the Supply Cap.
As a result, this AIP will implement a Supply Cap that is approximately 59.49% of supply. This is equivalent to a 33% increase in the Supply Cap.
wstETH Supply Cap Arbitrum
The wstETH Supply Cap on Arbitrum v3 is at 100% utilisation.
There is ample liquidity for wstETH to wETH to USDC swaps to occur when liquidating the largest wstETH holdings. At the time of writing, wstETH supply on Arbitrum is 34,699.59 units, 50% of the supply is 17.35k units. The wstETH Supply Cap is to be increased by 100% to 9,300 units.
Specification
The following risk parameters changes are presented:
Polygon
Ticker: stMATIC
Contract: polyon: 0x3a58a54c066fdc0f2d55fc9c89f0415c92ebf3c4
| Parameter | Current Value | Proposed Value |
|---|---|---|
| SupplyCap | 25M units | 30M units |
Ticker: wstETH
Contract: polygon: 0x03b54A6e9a984069379fae1a4fC4dBAE93B3bCCD
| Parameter | Current Value | Proposed Value |
|---|---|---|
| SupplyCap | 1,800 units | 2,400 units |
Arbitrum
Ticker: wstETH
Contract: arbitrum: 0x5979D7b546E38E414F7E9822514be443A4800529
| Parameter | Current Value | Proposed Value |
|---|---|---|
| SupplyCap | 4,650 units | 9,300 units |
Implementation
A list of relevant links like for this proposal:
Polygon stMATIC
Polygon wstETH
Arbitrum wstETH
Risk Service providers have endorsed the contents of this proposal.
The proposal Payload was reviewed by Bored Ghost Developing.
Copyright
Copyright and related rights waived via CC0.
03Mismatch analysis
The proposal follows Aave's standard cross-chain governance pattern: the on-chain actions decoded here are two outer 'execute(address)' calls made from Ethereum mainnet to bridge/executor contracts, each forwarding a payload address to be executed on a target L2 (Polygon and Arbitrum respectively). This matches the description's claim of two separate Aave v3 deployments (Polygon and Arbitrum) receiving supply cap increases — one payload for Polygon (which per the forum links contains both the stMATIC and wstETH cap updates) and one for Arbitrum (the wstETH cap update). However, the calldata provided only shows the outer execute() calls and does not expose the inner setSupplyCap parameters, so the specific numeric values (25M→30M, 1,800→2,400, 4,650→9,300) cannot be directly verified against the decoded calldata. Given the strong structural match to Aave's known cross-chain governance flow and no evidence of a mismatched target or extra/missing action at the level of visibility provided, I find no discrepancy, but confidence is only medium since the actual parameter-setting calls inside each payload are not decoded and thus not independently verifiable here.
Generated by Kvorum
04Actions
- Target
- 0x158a…d45b
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0xA4C2C730A4c01c64d54ce0165c27120989A3C743" }- Calldata
- Target
- 0xd1b3…cfa3
- Value
- 0 wei
- Function
- execute(address)
- Arguments
{ "0": "0x52d5F9f884CA21C27E2100735d793C6771eAB793" }- Calldata
05Tally
Summed from votes
06Voters
No votes recorded yet.
07Forum
- [ARFC] Increase wstETH Supply Cap on Polygon v3 ↗discourse · high confidence
- [ARFC] wstETH Supply Cap Increase Arbitrum v3 ↗discourse · high confidence
- [ARFC] stMATIC Supply Cap Increase Polygon v3 ↗discourse · high confidence
Arguments for
- Strong immediate demand for wstETH on Polygon with 70% supply cap utilization within 24 hours indicates healthy user interest and supports gradual capacity expansion.— Llamaxyz
- Yield-maximizing looping strategies are driving deposits, demonstrating sophisticated user engagement that the protocol can safely accommodate with higher caps.— Llamaxyz
- Polygon liquidity and on-chain supply are growing with manageable protocol exposure (approximately $5M), supporting the modest proposed increase.— Llamaxyz
- The proposed cap of 2,400 units (57% of circulating supply) is reasonable given sufficient liquidity for liquidations and current position distribution, and aligns with gradual expansion under the new caps framework.— ChaosLabs
Arguments against
None surfaced.
Unresolved concerns
- ChaosLabs noted that 2,400 units exceeds their general 50% circulating supply recommendation; it was unclear whether this deviation posed material risk.— ChaosLabs
Notable participants
- LlamaxyzCo-author and primary proposer of the wstETH supply cap increase with detailed technical and risk motivation.
- ChaosLabsRisk assessment contributor who supported the proposal while noting it exceeds standard guidelines but is acceptable under current conditions.
- thetravelerCommunity member who checked in nearly a year later noting the supply cap had reached full utilization and suggested a new proposal.
- TokenLogicCo-author of the proposal mentioned in the title metadata.
Generated by Kvorum
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