[ARFC] Supply Cap increase - LSTs on Polygon V3

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The AAVE Polygon V3 community has mixed reactions to Alice's proposal to increase the supply cap for wstETH and stMatic tokens, with some members citing potential risks. While there's consensus on the need for a cap increase, most agree that a safety mechanism like a killswitch should be implemented first.

The discussion primarily revolved around a proposal by Alice to increase the supply cap for wstETH and stMatic tokens on the AAVE Polygon V3 markets, citing high utilization rates as the main reason1. This proposal was met with mixed reactions from the community. While ChaosLabs and TokenLogic were in favor of the proposal 2,3, Gauntlet and 0xkeyrock.eth expressed concerns about the potential risks associated with such an increase 4,6.

Gauntlet specifically pointed out that their methodology does not support the supply cap increase for WSTETH and recommended against increasing STMATIC supply cap due to the excess risk it adds to the protocol. They also highlighted that the STMATIC liquidity has decreased due to Balancer pool vulnerabilities and the STMATIC-WMATIC recursive borrowing strategy is not profitable4. 0xkeyrock.eth echoed these concerns and suggested waiting for the implementation of a killswitch6.

Kene_StableLab also expressed support for allowing more users to supply LSTs to Aave, but emphasized the importance of safety. They agreed with Gauntlet and 0xkeyrock.eth in not supporting the increase of the supply caps until the Killswitch is implemented7.

In conclusion, while there is a general consensus on the need to increase the supply cap, there is also a shared concern about the potential risks. The community seems to agree on the need for a safety mechanism, such as a killswitch, before proceeding with the proposed increases.

Posted 3 months ago

Last reply 3 months ago

Summary updated 2 months ago

Last updated 08/12 04:39