[NIP-27] Increase supply caps on Notional V3 Arbitrum


We propose to increase supply caps on Arbitrum in preparation for the upcoming launch of Notional V3.

Currency Current Supply Caps Proposed Supply Caps
ETH 300 ETH (~$480,000) 3,000 ETH (~$5,000,000)
USDC 500,000 USDC (~$500,000) 5,000,000 USDC (~$5,000,000)
DAI 250,000 DAI (~$250,000) 5,000,000 DAI (~$5,000,000)
wstETH 150 (~$270,000) 1,400 wstETH (~$2,500,000)
FRAX 250,000 FRAX (~$250,000) 2,500,000 FRAX (~$2,500,000)
WBTC 9 WBTC (~$260,000) 80 WBTC (~$2,500,000)
USDT 250,000 USDT (~$250,000) 1,000,000 USDT (~$1,000,000)
cbETH N/A 650 cbETH (~$1,000,000)
rETH 150 rETH (~$250,000) 300 rETH (~$500,000)
GMX N/A 14,000 GMX (~$500,000)

Context and objective

Notional V3 will officially launch on Arbitrum on November 1st. As part of the launch, we propose to increase supply caps in order to allow LPs and lenders to deposit larger amounts of capital on Notional. This proposal is important given the proposal to increase incentives on Arbitrum.

Supply caps can always be adjusted in the future as demand changes and as market conditions (liquidity, volatility) evolve.



We propose setting the supply caps for ETH, USDC, and DAI to ~$5M initially. These assets benefit from deep liquidity on Arbitrum and have historically been in high demand on Notional’s mainnet deployment. If demand for these assets ever approaches the $5M supply caps, they could be raised again by governance.


We propose listing wstETH, FRAX, and WBTC with initial supply caps of ~$2.5M due to slightly lower liquidity on Arbitrum. As demand and liquidity for these assets increase supply caps could be increased by governance.


We propose setting an initial supply cap of $1M for USDT. USDT is listed as a collateral asset on Notional’s Arbitrum deployment. In order to mitigate the protocol’s exposure to a potential depeg we propose setting the supply cap at $1M initially and re-evaluating the cap over time as the DAO gets a better sense of user demand for USDT on Notional.


We propose setting an initial supply cap of $500,000 for rETH. Although liquidity for rETH on Arbitrum is sufficient to list rETH with a higher supply cap, rETH’s chainlink oracle on Arbitrum is a custom oracle that only records the rETH/ETH exchange rate without considering rETH’s market price. This oracle would therefore not capture potential rETH market price decreases and would assume that the market price of 1 rETH is always equal to the rETH exchange rate with no consideration for rETH’s on-chain trading price. The supply cap for rETH could be updated if Chainlink eventually offers a price feed that looks at rETH market price.


See cbETH and GMX onboarding risk assessments for the rational behind the proposed supply caps.