The discussion revolved around a proposal by MarcZeller to increase the supply cap for cbETH on the Aave V3 Ethereum market from 20,000 to 30,000, due to high demand¹. This proposal was supported by ChaosLabs², but Pauljlei from Gauntlet suggested a more conservative increase to 25,000, citing changes in risk profile and debt distribution when emode is activated³. Aesthetic raised a question about quantifying the benefits and risks of a higher supply cap⁴, while Lbsblockchain voted against the proposal, agreeing with Gauntlet's analysis⁵.

The discussion further delved into the differing opinions of Gauntlet and Chaos Labs on the supply cap for cbETH, especially in light of the upcoming eMode. MarcZeller argued for the increase, stating it would allow more people to leverage long cbETH exposure, thereby increasing their staking reward and helping to stabilize the cbETH peg⁶. However, the proposal to increase the cbETH supply cap (AIP-173) failed, keeping the cap at 20k cbETH⁷. Ponzinomic expressed disappointment at this outcome⁸, while Michigan_Blockchain explained their vote against the proposal, arguing that the potential gains to Aave from increasing the supply cap are likely small and indirect, while the potential losses could be more significant⁹.

In conclusion, the community decided against increasing the supply cap for cbETH on the Aave V3 Ethereum market. The discussion highlighted the complexities of managing supply caps, the potential risks and benefits, and the differing opinions within the community. Despite the proposal's failure, the discussion provided valuable insights into the community's risk tolerance and strategic approach to managing assets.