Reading time saved: 4 minutes
7 replies, 1798 views, 19 likes
The discussion focused on MarcZeller's proposal to increase the cbETH supply cap on the Aave V3 Ethereum market to 20k, which received support from several members but also concerns about potential risks. Lbsblockchain highlighted the strong market demand for cbETH, the potential impact of regulatory issues and the Shanghai upgrade, and suggested that LSDs are strategic assets and that Aave should consider adding cbETH to emode after the current proposal matures.
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 levels1,2.
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 perspective3,6. 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.
Posted 10 months ago
Last reply 9 months ago
Summary updated 2 months ago
Last updated 06/12 00:43