AMPL problem on Aave v2 Ethereum

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1

Summary

We have noticed an inconsistent state on the aToken/vToken total supply of the AMPL asset listed on Aave v2 Ethereum as non-collateral, which will require actions by the community via governance proposals.

The problem doesn’t affect any other asset of the pool anyhow, and with the current configuration, it is in a controlled state, but requires actions.


Context

Back in July 2021, the AMPL asset was added to Aave v2 Ethereum. This listing is pretty specific for the following reasons:

  • AMPL is a so-called supply/balance rebasing token, which targets a price and expands or contracts its supply (and the balance of its holders) in order to create pressure to reach that target.
  • Both the aToken and variable debt token of AMPL are custom implementations, done by the Ampleforth team. The reason is that the rebasing dynamics needed to be taken into account in order for Aave to support the asset, requiring a deep adaptation of the codebase.
  • Even if never collateral in order to protect the protocol, the dynamics of AMPL were always really aggressive for example interest-rate wise, in order to balance the fast and aggresive rebasing of the underlying.

Following a plan of off-boarding multiple assets on Aave v2 Ethereum, AMPL was frozen (together with multiple assets) on November 2022, on proposal 121.


The problem

Lately, during our work on un-related development tasks on Aave v2, we noticed what it seemed like inconsistency on the AMPL asset: the aToken supply of the asset appeared to be way more than it should, bigger than the sum of the variable debt plus available liquidity.

Even if we are not deeply familiar with the Ampleforth system, and their custom aToken/vToken implementations, this is a problem, as technical aAMPL holders balancers grows, but virtually: it should not if the variable debt token doesn’t proportionally.

After consulting the Ampleforth team, we confirmed that this is probably consequence of imprecision created by the complex rebasing dynamics on aAMPL and vAMPL, in combination with the really aggressive historic interest rate, and probably accrual to the Aave Collector.

As a result, the aAMPL supply is currently not representative of the claims over AMPL underlying, and action should be taken.



The following aspects should be considered for actions to execute:

  • Currently, being on off-boarding stage, the RF parameter of AMPL and other assets is maximised (99.9%). This is positive for the AMPL problem, because all the aAMPL growth reflects in the Aave Collector aAMPL balance. Important to highlight that this growth is virtual, non-existent, but being on the Aave Collector is easier to reconcile, as potentially can simply be written down.
  • As mentioned, the aToken supply is not consistent with how the claims should be. Given that knowledge of the AMPL/aAMPL/vAMPL custom dynamics are not our expertise, we will reach the Ampleforth team in order to analyse which should be the real value of aAMPL at the moment, if the supply would be precise.
  • There is no risk for Aave, as AMPL is pretty isolated. Regarding aAMPL suppliers, from the aforementioned analysis, further steps should be defined/proposed from Ampleforth and/or Aave on how to cover expected withdrawals.

It is important to clarify again that not having developed the custom implementation of a/v AMPL, feedback from the Ampleforth team is mandatory, and our role given our service provider scope is to support on all Aave related steps on how to solve the situation, for example via governance proposals.

We will also involve the 2 risk providers of the community.


Next steps

  • We will ask the Ampleforth team for the aforementioned analysis on what would be a precise aAMPL supply, following the implementation intention, and share with the community.
  • As commented, the asset is frozen at the moment, so only withdrawals, repayments and liquidations can technically happen. As the utilisation is 100%, no withdrawals can be executed, only repayments and liquidations.
    Again, the aToken supply and balancers are virtual at the moment, so factually the reserve is paused currently.
  • Once more precise data is available, next steps should be defined, like doing updates via governance proposals on the AMPL data, or injecting liquidity for withdrawals, amongst others.
8 Likes
2

Minor note: The proposal link does not work post the Governance V3 upgrade. It should be Aave - Risk Parameter Updates for Aave V2 ETH Market (2022-11-22)

3

i have a similar or s strange issue in tusd v2. Crazy old loan APY on V2 that *4 the debt. Need help with situation

4

Hello @bluandyellow, that spike on TUSD rates is due to the off-boarding of that asset approved by the community, and not related with this problem on AMPL.
We suggest to keep any question on that in a different thread, in order to keep topics separated.

5

Hello. Any updates on this topic from AMPL or AAVE teams?

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6

Definitely interested in liquidity for making a withdrawal on my AMPL balance…Please keep me.updated.

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7

Cause of That, borrowing % is very low for AMPL now, so chances that people will repay is not good for us. They said in proposal, that are making % higher for borrowers, but they lowered % for AMPL from 186k to 2k…

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8

Will there be a solution before this topic is closed? What is the current status?

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9

What is surprising me, that AMPL devs completely ignoring that. Before opening ticket on AAVE discord about that problem with aAmpl, I wrote to AMPL devs, same as in their support - zero reaction. Very disappointed in communication level, as its pretty ignorant.
Only after reaching Aave support, some investigation is going on now, but again - where is transparency.
But yeah, lets see how it will go.

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13

Yes please,

Is there any chance that I’ll be able to withdraw my AMPL balance from AAVE anytime soon?

MLP

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15

I am using version 2 Ethereum in AAVE right now. I writing extra to get to the 20 character limit for your email system…

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17

Yes i still need help with this problem.
Just like bgdlabs was saying in the next steps to solve the problem.
Can the problem be solved? when is there enough liquidity to withdraw ampl if one wants?
@jeffProg

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18

BGDLabs stated that they have to get in touch with the AMPL team and will inform the forum as soon as they have new information. So please stay calm and wait for either BGDLabs or the AMPL team directly to answer on this. If this post cannot stay clean i will have to moderate.

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19

As an update for the community, we have connected the Ampleforth team with the risk services providers of Aave, and we will be providing the tech support needed to solve the current problem.
At the moment, there is no defined time-line, but we can confirm that the issue is being worked on.

3 Likes
20

Just seeking clarification.

Does this thread pertain to the issue I’m seeing where I have a warning stating, “This asset is frozen due to an Aave Protocol Governance decision,” and I’m unable to withdraw my AMPL tokens?

Screenshot 2024-01-03 at 11.56.53 AM

Screenshot 2024-01-03 at 11.57.25 AM

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21

Why there is no communication anymore? Is 10 January 2024 already and me and other people want to know when they can take their money out!

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22

As BGDLabs stated on their previous response, both teams are in touch and working on, when there is real progress or relevant updates it will be shared here.

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23

I appreciate your input, but I’m increasingly concerned about the lack of official updates from BGDLabs or Aave. The situation with the AMPL token is understandably complex, yet regular and transparent communication from the official teams is crucial for investor confidence. As stakeholders, we are in a state of uncertainty and would greatly benefit from more frequent updates on the progress, even if they are to confirm that the resolution is still in the works. It’s now January 10, 2024, and clarity on when we might be able to access our funds or a roadmap for resolving the issue would be very helpful.

24

Hello @AMPL, we can confirm that the analysis of the situation and next steps is progressing, but to clarify, given their role on the custom implementation of AMPL on Aave, this is being conducted by the Ampleforth team, with the support of the risk providers engaged with Aave (Chaos Labs and Gauntlet).

Even if we have initiated the discussion on the topic, as we commented on the initial post on this thread, we have not implemented AMPL on Aave, so our role is mainly of support on all Aave high-level aspects that could have any influence.

Nevertheless, we agree that this should be treated with maximum seriousness and promptness, and we have notified today the parties conducting the analysis on the highest importance of keeping the Aave community (AMPL suppliers included) well and frequently informed.

7 Likes
25

Hello BGDLabs and the Aave community,

It has been 14 days since the last update and over a month since the issue with the AMPL token on Aave first arose. The lack of recent communication and detailed updates is becoming a significant concern for myself and other AMPL stakeholders. We understand that resolving complex technical issues can be challenging and time-consuming, but regular updates on the progress, even if small, are essential for maintaining confidence and transparency.

Could we please have a more detailed update on the following points?

  1. Specific Challenges: What are the specific technical or logistical challenges currently being faced in resolving the AMPL issue?
  2. Progress Made: Has there been any progress, however minor, since the last update?
  3. Estimated Timelines: While recognizing the difficulty in providing exact timelines, can any estimated time frames be shared for when we might expect further developments or resolutions?
  4. Action Plan: What are the next steps planned by the Ampleforth team and risk providers in addressing this issue?

As investors, we are in a precarious position and require more substantial information to understand the situation better. Regular, detailed communication would be greatly appreciated.

Thank you for your attention to this matter.

3 Likes