$AMPL on AAVE = Perpetual Growth for $AMPL Utility & AAVE Revenue

$AMPL and Aave are two DeFi primitives that complement each other so incredibly well, there’s no better duo in crypto — seriously.

Aave dramatically increases utility and demand for $AMPL, while $AMPL generates insurmountable fee revenue for Aave with the liquidity that’s provided.

Why $AMPL is Sooo Good for AAVE

  • There is $3.61B worth of $USDC on Aave (v2) which generated $385,000 in revenue. 21.3% of total rev.
  • There is $1.93B worth of $DAI on Aave (v2) which generated $222,000 in revenue. 12.3% of total rev.
  • There is $1.09B worth of $USDT on Aave (v2) which generated $245,000 in revenue. 13.5% of total rev.
  • There is $19.6M worth of $AMPL on Aave (v2) which generated $518,000 in revenue. 28.7% of total rev.
Aave Fee Revenue (Nov 1, 2021) Source: Token Terminal

As you can see, $AMPL is the top revenue-generating asset on Aave v2, almost generating 30% of all the revenue on November 8. And this isn’t just a 1-day occurrence. Take a look at the cumulative revenue on Aave for the past 7 days:

$AMPL has flipped $USDC in 7D daily cumulative revenue, bringing in a total of $3M in revenue for Aave in just 7 days. And it brought this in with under $20M in liquidity — that’s approximately 0.1% of the Aave TVL.

Unbelievable I know, but it’s true.

The amount of revenue that $AMPL is able to generate with the little amount of liquidity it has is absolutely staggering. Now, just imagine what it can bring in when its liquidity doubles or triples… it’ll be huge.

That’s why $AMPL is sooo good for Aave. Now let’s look at why Aave is sooo good for $AMPL.

Why AAVE is Sooo Good for $AMPL

Aave increases $AMPL’s utility = which increases demand for $AMPL = which increases price = which increases supply = which increases market cap = which increases adoption = which increases utility

In other words, Aave initiates a perpetual growth cycle for $AMPL.

Sounds great, doesn’t it?

But there’s more to it than that. Let me explain:

When Aave and its users earn fees each day from $AMPL, a 10% share of those fees goes to the platform (this is the reserve factor). These fees are held as aAMPL and are available as liquidity for borrowers.

As of November 9, 2021, Aave holds (because of fees) 367,836 $AMPL and growing. That’s +0.1% of the $AMPL network in which Aave has acquired from simply having $AMPL on their platform. And it didn’t take much time to earn this (majority was acquired in < a month).

Why is this a big deal?

This $AMPL in which Aave has acquired via fees has been taken off the market and is now liquidity for borrowers as aAMPL — its protocol owned liquidity. So Aave literally took like $550,000 worth of $AMPL out of the market and locked it into liquidity.

And if the current trend continues ($AMPL generating high revenue for Aave), Aave’s protocol-owned liquidity will continue to grow as more and more $AMPL is taken out of the market and locked into liquidity.

$AMPL Aave fee revenue = Increase in Aave’s protocol-owned liquidity / less $AMPL available on the market = Increase in $AMPL Aave fee revenue

You see, it’s another perpetual cycle. Only this one leads to more and more revenue for Aave and less and less $AMPL available for sale on the market as it gets locked into aAMPL liquidity.

Again, this is good for both $AMPL and Aave.

Conclusion

Now let me ask you this:

How long do you think it’ll take before other DeFi projects like Aave realize what $AMPL can do for them? I’m willing to bet that in the coming weeks and months everyone will realize it.

After that, we’ll start to see DAOs everywhere owning $AMPL liquidity. And the positive effect this will have on $AMPL and the protocols behind these DAOs will be massive.

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