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.