Proposal: add support for AMPL

More then any other currency out there AMPL’s price swings oscillates around its equilibrium, which is 1 USD$. Over a couple of weeks it will always return to its 1$ price tag. In the short term though, there is a lot of opportunity for swing trading or loan offering. Let me give an example how AMPL’ unique swings can be used by Aave borrowers to use this mechanism and thereby returning AMPL to its price target (1$):

Step 1: Borrow pricy AMPL when price is above 1$
Step 2: Sell AMPL
Step 3: Buy cheap AMPL when price is below 1 $
Step 4: Pay back loan
Step 5: Pocket the difference
Step 6: Profit!
Step 7: Repeat

This of course also means additional volume for lenders offering loans up for this unique mechanism.

1 Like

man these comments are really hype-filled and substance-less. not what i have come to expect from aave governance discussions.

What are the most borrowed and lent assets on Aave? Stablecoins. Some of the issues of stablecoins is that they rely on 3rd parties/censorable/and it’s an asset not native of
DeFi. In comes AMPL, a censorship resistant asset that is volatile however due to its mechanics LENDS OUT like a stablecoin. So you have the unbreakable nature like Bitcoin, with the ease of lending like a dollar. I have a really deep dive video here https://youtu.be/kuYImuvHiyE start at 12:29 to get to lending in practice

I greatly disagree with your sentiments. A ton of work was put in here by the team and community. And it’s not fair you to call us “all hype” and “substance-less”

Protofire team supports this proposal. Our support is backed by

  1. Intimate knowledge of Aave v2,

  2. Deep understanding of intricacies of insolvency risk at a collateral/system level, maturity of liquidation markets at Aave, and specifics of AMPL as collateral

  3. Research and development of upcoming multichain relayer/bridges cooking at Ampleforth.

Further, Protofire can help mitigate solvency/liquidation risks which may help justify a higher LTV ratio for AMPL.

How? By implementing/providing soft guarantees of solvency and liquidation backstop by liquidation pool.

In which way? By developing and operating an Aave adapter and deploying rewards for LPs in a non-custodial liquidation pool at Atomica’s Liquidation Markets v2, where this pool will liquidate AMPL with higher priority vs other liquidating other (non-AMPL) collaterals at Aave/Cream/Compound/Maker - IF and WHEN AMPL price action triggers massive liquidations of AMPL used as collateral - especially in periods of high volatility and network congestion where liquidators may not have enough liquidity/incentives/network capacity to liquidate AMPL - which obviously puts
a) AAVE stakers in Safety Module, and
b) Aave lenders at risk of experiencing bank runs and insolvency events.

If such service makes sense, please indicate your support for Protofire to submit a proposal for activating such collateral protection service for Aave, starting with AMPL as protected collateral.

5 Likes

AMPL has proven itself over time to be more uncorrelated to the general cryptocurrency market. See Ampleforth for real data.

There was an in depth analysis performed by Gauntlet: Gauntlet

This makes AMPL an ideal asset to add as collateral to user’s pool to mitigate risk of liquidations. Especially since it partially avoids negative rebases.

Another thing to take note of is that because of its rebasing mechanism, the fact that borrowing and lending give you unique positions in AMPL, (taking out debt in AMPL actually puts one in a long position with respect to the rebase) it naturally incentives loan liquidity as it hovers around it’s target. This is good for expanding the liquidity within AAVE.

Getting AMPL on AAVE is one of the first steps to reducing (not eliminating) DeFi’s reliance on stablecoins tied to central banks, which a lot of AMPL holders believe will make the entire system more resilient to supply and demand shocks.

Thanks again for you consideration, looking forward to taking out some AMPL loans on AAVE :slightly_smiling_face:

3 Likes

Apologies for double posting, but I wanted to take another stab at getting across to AAVE holders why this is such a big deal for AAVE and DeFi as a whole. I’m seeing a lot of confusion on the telegram what AMPL is and what it isn’t.

Stablecoins are critical to DeFi at the moment, since they bridge the gap between a typical user’s understanding of value in fiat and crypto value. There’s already been attempts at reducing risk on centralized services to maintain coins like USDC and USDT: e.g. DAI, ESD, DSD, FEI, FRAX.

The risk of these systems and fragility is becoming ever more apparent as time passes. DAI’s reserves were drained during the flash crash of March 2020. ESD and DSD represent a bond approach and were essentially failed experiments and investors lost a great deal of money in them. FEI attracted even more investment and was backed by high profile investments, and is failing catastrophically. FRAX’s hybrid experiment is interesting, but it has not been around long enough to prove itself quite yet. These all have other mechanisms like bonds or reserves. See @brandon 's tweet on this https://twitter.com/brandoniles/status/1379102333481623555.

Why am I talking about stablecoins? AMPL is not a stablecoin! The point is when our debt is denominated in these stablecoins it adds a lot of risk to the system, and we are adding a dependency on a government actor to maintain the stability of the system.

AMPL on the other hand provides counter cyclical pressures to ease the boom and busts automatically without manipulation or potential censorship from other entities (See Ampleforth). It also provides a stable target of value as adjusted by CPI (I’m not saying the price of AMPL is always stable!). This means in theory a coffee could in fact always be worth 3 AMPL as opposed to inflating like fiat (assuming availability of coffee and coffeeshops remain relatively constant).

I understand the reason why AMPL is not apparent to everyone, but we are seeing hints that an asset like AMPL could be a big benefit to DeFi and the wider economy as time passes. AAVE has the opportunity to be a pioneer to list the first of this new class of asset. As some investors say, if some people don’t think its crazy, then it clearly isn’t that big of an idea.

If any AAVE holders are on the fence I recommend checking out some resources. Not meant to be hype, just for info and understanding the motivation of AMPL

5 Likes

I am not sure if I would choose ampl to take a loan if I expect ampl to grow, cause the rebase will also affect my lown. Imagine marketcap of ampl goes up 100 fold in this ten years I would have to repay 100 fold ampl or will the loan not be rebased? Ofc same holds true for gold and btc, only usd is different cause this is an inflationary asset. IMO lending of ampl or btc is only for short term and especially if you expect the market to go down. Anyway, having the oppertunity to play with ampl in aave is fine for me, I’ll support the proposal.

If you borrow AMPL the amount of AMPL you owe stays fixed, so if AMPL’s supply expands you made money on borrowing. This is because only AMPL in wallets, whether stored in a contract or user wallet, expands and contracts. A loan only has terms and doesn’t actually store the AMPL so it is not affected by the rebase. For this reason AMPL is especially useful for long term contracts, because when the contract is payed off the value of 1 AMPL at the beginning of the contract can be expected to be roughly the same at the end of the long term contract. The small fluctuations in price that AMPL goes through are inconsequential when you have many days to pay off the loan, because you can pick a good time to buy off the market. (Note how this incentive actually helps stabilize the currency as well!)

Thank you for engaging on this proposal :slightly_smiling_face:

4 Likes

Thanks, that sounds interesting, but will the lended ampl rebase cause they stay in a sc? And another question: will the proposition also be at ‘governance dot aave dot com’ or is there another place I can vote for this. Can see only proposals at that site.

1 Like

Yes the lended AMPL (if the AMPL is in the borrowers wallet and not traded elsewhere) will rebase! You can think of AMPL like this: lends like a stablecoin (price is not pegged though but hovers around a fixed point), but holds like btc (non-dilutive).

To delegate to the proposal there is a guide here: Guide – AMPL on AAVE: How You Can Take Part in the Governance Process – AmpleSense DAO Community Hub

Thanks again!

2 Likes

thanks, although I feel still a bit confused how lown and deposit will match in the end I delegated my aave, curious how it will work out.

When you are talking about lended AMPL are you referring to AMPL in the pool (aAMPL?) or AMPL that has been sent to a borrower?

aAMPL will only be exposed to the rebase proportionally to how much AMPL has been borrowed

1 Like

We at Atomica support this message. We will collaborate with Protofire to enable this adapter if there is desire to protect AMPL: to give soft guarantee, ensure liquidation in the period of volatility, network conjunction.

1 Like

We at Atomica support this message. We will collaborate with Protofire to enable this adapter if there is desire to protect AMPL: to give soft guarantee, ensure liquidation in the period of volatility, network conjunction.

1 Like

Thanks, now I hopefully get it right, I’ll try to write how I understand it: Bob puts 1000 AMPL in Aave, Bill borrows 100 of those. Rebase is +5%. Bills borrowed AMPL are in his wallet, so he will have 105. The AMPL Bob had put in Aave will be rebased only for the part that’s borrowed, so his share now is 1005 (905+100), that gives a match and is fine. Now Bill realized his Ampl has gone up and he decides to repay the 100 AMPL, this will give him a profit of 5 AMPL (not adding the interest to keep the calculation simple). Bob now owns the 1005 AMPL instead of 1050 AMPL which he would have if he kept the amount in his wallet. And while this isn’t a favorable outcome for Bob it will be the opposite during negative rebase cause he protects part of his holding from this. Right?

Close! Since there is 900 AMPL not lent Bob’s share will be 900 * 1.05 = 945 AMPL after the rebase! So he missed out on 5 AMPL. So Bob’s final total will 1045 AMPL instead of 1050 AMPL (Bill profited 5 AMPL from the rebase)

3 Likes

:pray:ok, thanks, now I got it.

1 Like

Quorum reached! 80k+ Aave have been delegated in favor of the proposal. Where can i vote now to get aAMPL on Aave proper? Excitement intensifies

3 Likes

80,000! Lets go! Congrats on passing through proposal!

2 Likes