AMPL is a New Asset Class for Aave — A World’s First

  • It’s going to push Aave and the DeFi frontier forward.
  • It’s going to transform the DeFi ecosystem.

Eli5 on $AMPL:

If you’re already familiar with $AMPL skip to the next part.

The Economics of Borrowing Crypto Assets

Three things that can happen to an asset when you borrow it. The price of that asset can:

  1. Stay the same
  2. Increase

Let’s look at Stablecoins

If you borrow 10,000 USDC to go long $ETH, you will owe 10,000 USDC — which has the value of $10,000.

  • TVL - +$5.5 billion
  • Available liquidity - $1.5 billion
  • Stable borrowing APY - 10.63%
  • Variable borrowing APY - 3.26%
  • TVL - +$4 billion
  • Available liquidity - $1.7 million
  • Stable borrowing APY - 3.66%
  • Variable borrowing APY - 0.53%

Let’s look at Non-Stable Crypto Assets

Take $ETH or $BTC, for example.

  1. The price of Bitcoin stays the same — Nothing happens. The borrower owes the same amount of Bitcoin + fees. Their position is unchanged.
  2. The price of Bitcoin increases — The borrower is now in trouble. The borrower owes more $$ in Bitcoin than they borrowed. This means that the borrower will suffer a loss.

Let’s look at $AMPL — The Elastic Asset Class

  1. $AMPL price remains the same — The borrower of $AMPL has the desired effect — unchanged debt repayment obligation (like a stablecoin).
  2. $AMPL price increases — The borrower profits from the positive rebases and is in a profitable position against their debt. They can pay their debt off and keep the positive rebases as profit. If the borrower is long and holds the $AMPL, they can win significantly as their borrowed asset positively rebases — they get an increase in supply and can keep that as profit and pay back the original amount.

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