The discussion primarily revolved around the proposal by MarcZeller to increase the supply cap for cbETH on the Aave V3 Ethereum market to 20k cbETH, as the current cap is nearly reached. This proposal was made independently of Coinbase, and MarcZeller clarified that he does not hold any cbETH at the time of writing. The Aave-Chan Initiative (ACI) supports this proposal and does not recommend any modifications to the asset borrow cap based on current demand levels^1,2.

The proposal received support from ChaosLabs and Pauljlei, who agreed with the 20k supply cap and no change to the borrow cap from a market risk perspective^3,6. However, Lbsblockchain raised concerns about the risk of a depeg and the potential impact of the Shanghai upgrade and regulatory issues with Coinbase's products⁵. Pauljlei suggested a smaller initial increase to 15k if the community has a conservative risk tolerance⁶.

Lbsblockchain further discussed the potential impact of the SEC's actions and the Shanghai upgrade on Coinbase's cbETH redemption. He suggested that there is no reason not to expect the Shanghai upgrade to happen around April 2023, and that there is no particular reason to predict a long withdrawal queue when Shanghai is implemented. He also mentioned that LSDs are liquid and can be unstaked on secondary markets⁷.

In conclusion, Lbsblockchain suggested that LSDs are strategic assets and that the current cap being hit indicates strong market demand. He also mentioned that Aave is not the only actor to allow cbETH collateral, and that the current cap may be favoring other protocols more than Aave. He also discussed the potential impact of regulatory perspectives and suggested that the worst-case scenario is not particularly concerning for the peg or Aave in general. He concluded by stating that the ACI would like to open discussions about adding cbETH to emode after the current proposal maturity⁷.