[ARFC] Increase stMATIC Supply Cap

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The discussion focused on a proposal to double the stMATIC Supply Cap on Polygon to 15M units, aiming to enhance the stMATIC/wMATIC loop strategy and incentivize Lido DAO to distribute LDO rewards on Polygon v3. Concerns were raised about the reactive nature of such proposals, prompting a call for more proactive cap management and risk assessment, with the proposal now submitted and awaiting further action.

The discussion revolved around the proposal by Llamaxyz to increase the stMATIC Supply Cap on Polygon from 7.5M units to 15M units, aiming to expand the stMATIC/wMATIC loop strategy and encourage Lido DAO to distribute LDO rewards on the Polygon v3 deployment1. The proposal was supported by Gauntlet and Chaos Labs, but Sakulstra raised concerns about the frequency of "reactive" proposals and suggested a more proactive approach2.

ChaosLabs clarified their process of monitoring cap utilization and proposing updates, stating that they propose updated caps when a supply or borrow cap reaches 85% utilization. They also plan to improve this process by proposing to update caps at 75% utilization and increasing the upper bound of the supply cap increase to 2X the current supply cap3. Pauljlei echoed Sakulstra's concerns about proactivity and expressed concern about the 100% supply cap on CRV/bal/maticx and stMatic on Polygon4. ChaosLabs responded by explaining their risk management approach, stating that they do not support continuous cap increases without first determining the maximum acceptable market size5.

Sakulstra clarified that his criticism was not about not updating caps, but about the lack of discussion on the topic. He pointed out that some assets have been utilized around 100% on Polygon v3 since December last year, while others had no caps at all or had arbitrary 2B caps6. Llamaxyz announced that the proposal is scheduled for the next week's engineering workload intake, with an AIP submission targeted for mid to late next week. No Snapshot is required due to the nature of the upgrade and support from a risk service provider7. Later, Llamaxyz confirmed that the AIP to increase the stMATIC Supply Cap was submitted8.

In conclusion, the discussion highlighted the need for a more proactive approach in managing supply caps and the importance of risk management in the process. The proposal to increase the stMATIC Supply Cap on Polygon was submitted and is awaiting further action.

Posted 9 months ago

Last reply 9 months ago

Summary updated 2 months ago

Last updated 04/12 15:05