[ARC]: Unfreeze Ampleforth for AAVE V2 ETH Market


This ARC requests the AAVE community to unfreeze the Ampleforth lending/borrowing pool on the AAVE platform.

Ampleforth is a protocol that powers a new type of cryptocurrency: AMPL. AMPL utilizes a unique rebasing mechanism to adjust its supply. The supply of AMPL is increased or decreased periodically (daily) based on the price of AMPL relative to a target price. If the price of AMPL is below the target price, the supply of AMPL is decreased, which is referred to as a “negative rebase.” If the price of AMPL is above the target price, the supply of AMPL is increased, which is referred to as a “positive rebase.” The rebasing mechanism aims to maintain a target price of AMPL (CPI-adjusted 2019 US dollar) over time by adjusting its supply in response to changes in demand without a hard peg.


  • Due to rebasing mechanics, Ampleforth is not used as collateral on the AAVE platform and cannot expose the platform to the recent attack risk (or other unknown ones). In other words, the AAVE team does not need to implement any additional safeguards or monitor the Ampleforth borrowing pool for liquidity risk, which would be required if Ampleforth is as collateral.

  • The AAVE platform has previously generated significant fees through Ampleforth lending and borrowing, with Ampleforth accounting for approximately 30% of AAVE’s revenue for a couple of weeks during positive rebase cycles with only a fraction of the liquidity of the other top revenue generators. These positive rebase cycles are triggered when the demand for Ampleforth increases, leading to price appreciation and a corresponding increase in the supply of Ampleforth. During these periods, the Ampleforth pool has typically been close to 100% utilized, and lending rates have been close to 87,000% APY. The generated fees can, in the future, be used to make the platform whole and safeguard against other attacks or hacks.

  • The recently launched SPOT, a decentralized inflation-resistant token, may drive further demand for Ampleforth, as minting SPOT requires buying AMPL (overview: SPOT Protocol Overview on Vimeo). This increased demand for Ampleforth could lead to additional positive rebase cycles, further driving utilization of the Ampleforth pool on AAVE.

  • In addition to generating fees, the Ampleforth lending/borrowing pool on AAVE will likely increase user activity on the platform due to the unique nature of the Ampleforth protocol and the potential for high returns during positive rebase cycles.

  • AAVE V3 protocol enables parameters to limit risk. AMPL already has risk parameters baked into the protocol with the sigmoid function, so even if AMPL token price is manipulated to $10000, the max rebase will only be ~10%. This makes the token price manipulation resistant by design. It also should be noted that currently, Ampleforth rebase mechanics, internally, rely on three distinct oracles: one from the Ampleforth team, one from Chainlink and one from Tellor (https://www.ampleforth.org/dashboard/oracles).

  • Ampleforth can only function on V2 pools, so AAVE’s potential disincentive to keep certain assets frozen on the platform to encourage migration to V3 pools does not apply in this case.


Ampleforth community would like to request a vote to unfreeze the Ampleforth lending/borrowing pool on the AAVE platform. The unfreezing of the Ampleforth pool can generate significant fees for AAVE, increase user activity on the platform, and provide a unique opportunity for users to lend and borrow a novel type of asset (one that undergoes periodic supply adjustments through the rebasing mechanism) without additional risks to the AAVE platform itself.


Hi @RomanPope,

I highly recommend opening this discussion on the following thread for the up and coming launch of V3: [ARC] Aave V3 Ethereum Deployment: Assets and Configurations - #22 by Pauljlei.

Ampleforth is currently not listed as an asset for the V3 launch. I would recommend challenging the risk providers to add it as an asset for V3.

Right now, assets shouldn’t be touched on V2 with V3 being the focus going forward.

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Thank you for the reply @0xGraham,

Does V3 support assets with rebase?

I believe that V3 will support rebase assets in a similar way to V2.

Will maybe request @bgdlabs or @miguelmtz input here to confirm.

I support this proposal. Since AMPL cannot be used as collatoral yet, having AMPL lending on Aave poses no risk to the protocol.

I don’t quite understand the logic for why the AMPL market as removed in the first place.

There is a risk even with non collateral assets.

When someone borrows ampl, manages du dump the price and withdraws collateral the protocol is left with bad debt if the price recovers faster then liquidations are performed. In the current CRV bad debt situation caused by Avi, CRV was not used as collateral either.

I’m personally not in favor of re-enabling v2 or listing on a v3 with current mechanics. I think there’s no other asset that caused a similar amount of frustration in the community. Perhaps one could consider wrapped ampl though.

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Thanks for the informative reply, I’ve looked into this further, and you’re right that low-liquidity assets such as AMPL may be vulnerable to this type of price manipulation attack.

For now, it’s probably best to keep Ampl frozen, but in the future as Ampl liquidity increases, it would be great to see the Ampl market unfrozen, as it is one of the more unique markets on Aave, and it’s differing behavior and utilization rates are quite interesting.

Hello, the ACI is not supportive of this proposal.

V2 is legacy tech, and Ampleforth can be a candidate to join V3 after its deployment.