The discussion primarily revolved around the proposal put forth by Llamaxyz to increase the wstETH Supply Cap on Polygon v3 from 1,800 units to 2,400 units. This suggestion was made in response to the Supply Cap reaching over 70% utilization within the first 24 hours of listing wstETH on Polygon v3. The proposal was largely driven by the fact that most large users are adopting the yield maximising looping strategy, and the dollar value of exposure to Aave Protocol on Polygon is projected to be $5M, assuming the proposed Supply Cap is fully utilized¹.

The proposal was met with support from ChaosLabs, who noted that the proposed 2,400 wstETH would constitute approximately 57% of the total circulating supply. Despite the general guideline of capping the supply at 50% of the total circulating supply, ChaosLabs argued that the current distribution of positions, the availability of sufficient liquidity for liquidations, and the relatively modest proposed increase justified the expansion².

In conclusion, the discussion was largely in favor of increasing the wstETH Supply Cap on Polygon v3. The proposal was backed by strong arguments and data, and it was generally agreed that the increase would be beneficial for the community. The community is now expected to review and discuss the risk parameters specified in the proposal.