The discussion primarily revolved around the proposal by TokenLogic to increase the stMATIC Supply Cap on Polygon from 40.0M to 57M units, which is equivalent to 75% of the supply on the Polygon network¹. This proposal was motivated by the steady growth in demand for stMATIC and the need to continue growing TVL through stMATIC deposits and revenue from users who borrow wMATIC. The stMATIC reserve utilization has reached 94.31%, and the proposal aims to increase the SupplyCap by 42.54% to 57M units. The Polygon Foundation is currently providing stMATIC and MaticX rewards to users who borrow wMATIC, supplementing the borrow costs and enhancing the yield.

However, the proposal was met with some resistance. Gauntlet stated that their LST methodology does not support increases in supply cap beyond 50% circulating supply until the killswitch is implemented². They suggested that if the community wants to raise the stMATIC supply cap, it should go through AIP rather than risk steward. Despite this, ChaosLabs expressed their support for the proposed increase to the stMATIC supply cap, based on their LSD supply cap methodology and the community's preference for Supply Cap Limits for LSTs³.

In conclusion, the community is divided on the proposal to increase the stMATIC Supply Cap on Polygon. While there is a clear demand for an increase, there are also concerns about the risks associated with such a move. The final decision will likely depend on further discussions and possibly a community vote.