$AMPL will Become the #1 Asset Across Lending Platforms
Every DeFi lending platform will list $AMPL, and when they do, it will turn out to be their most important listing ever.
Why?
Two Reasons:
- $AMPL can generate immense revenue for these lending platforms, even with very little liquidity. There’s no other asset in crypto that can bring in as many fees from lending and borrowing as $AMPL. That’s a fact.
- Lending platforms will naturally become large $AMPL holders as their DAOs will own $AMPL liquidity (protocol-owned liquidity). They will acquire $AMPL liquidity with their treasury reserve fee capture.
For example, Aave captures 10% of all fees generated by lending & borrowing $AMPL and holds them as aAMPL which is then used as liquidity for borrowers.
The importance of these two points cannot be understated. And it’s of vital importance you understand the gravity of what I’m saying here because what $AMPL can do for lending platforms is absolutely groundbreaking.
Let’s dive deeper.
$AMPL Fee Revenue Generation — Aave Case Study
If you’ve been following me on Twitter and Medium, you’ve probably read my latest three pieces: here, here, and here, which showcase $AMPL on Aave’s fee revenue. The reason I’ve covered this topic so frequently is because of the incredible rate it’s been growing.
That said, I provide another update here with some exciting new milestones:
Stats from Aave for 9th of November:
The aAMPL pool on Aave has set a new ATH in daily revenue with $527,700 generated in just 1 day! That’s 28.7% of the total revenue generated on Aave and $AMPL did this with roughly $20M in liquidity — which is approx. 0.1% of the Aave TVL.
- Every time I write this I have to pinch myself. That’s how unbelievably amazing these stats are!
Also, since $AMPL’s generated revenue has been steadily rising (as my readers know), $AMPL has now flipped $USDC in the 7D daily cumulative revenue with $3.5M in generated revenue over the past week — that’s 25.7% of the total revenue.
To put this achievement in perspective, just 1 month ago, $AMPL was generating $119 in revenue. Let that sink in…
Moreover, another milestone worth mentioning is that $AMPL has now generated more revenue in a single day than $DAI. The biggest revenue day for $DAI was on October 7, 2021, with $512,500, even though it has been on the Aave platform since the very beginning.
As for $USDT, it still has a few days where it has generated more revenue than $AMPL. And getting to the top spot might take a while since the highest amount of revenue $USDC has been able to generate is $1.9M. However, at the rate it’s been going, I’m willing to bet $AMPL will get there by the end-of-year.
Lending Platform DAO’s to Become Largest $AMPL Holders
Okay, we’ve already established that $AMPL is a revenue-generating powerhouse for lending platforms.
Now get this:
$AMPL’s revenue generation may not even be the biggest factor as to why $AMPL will be the #1 Asset across lending platforms.
Seriously, now hear me out:
Perhaps an even bigger factor is the ability for lending platform DAOs to become large $AMPL whales via the percentage they capture from the interest paid by borrowers.
For example:
The Aave protocol DAO captures 10% of all the interest borrowers pay and allocates it as a reserve for the Aave ecosystem. As of November 10, 2021, Aave has acquired 408,126 $AMPL which equates to 0.12% of the total supply.
What do they do with this reserve?
Aave holds it as aAMPL and turns it into permanent liquidity for the protocol, allowing borrowers to borrow this aAMPL, which allows Aave to earn even more fees for the protocol, which grows their aAMPL reserves even more.
Why do they do this?
For a couple of reasons:
- Aave doesn’t want to be an active money manager (they’re a lending platform) — so they won’t try and time the market to sell their $AMPL. Also, being an active money manager would add risk for them and regulatory complexity and concerns.
- By turning their earned $AMPL into permanent liquidity, Aave’s TVL (Total Value Locked) gets permanently increased and Aave is able to ensure there is always something to borrow. And seeing as borrowing is the lifeblood of Aave, this can only benefit the platform.
How big a deal is this?
This is huge. Like fucking massive! Really, it’s such a good thing.
For example: with a revenue of 500K per day, Aave is generating $50K worth of permanent aAMPL liquidity to Aave v2 per day. This means that Aave is becoming a substantial owner of the total $AMPL supply.
This is extremely bullish.
Not only is this bullish for Aave (as they become a substantial owner of the total $AMPL supply), but it’s also bullish for $AMPL because a percentage of its total supply is continuously locked into the protocol as liquidity for borrowers in the aAMPL pool. And this means that less $AMPL is available for sale on the market as it gets locked into aAMPL liquidity.
Final Thoughts
I truly believe that it’s only a matter of time before $AMPL becomes recognized as the #1 asset for lending platforms to integrate.
It just makes so much sense as it can generate revenue like no other asset can, and can also turn these platform DAOs into $AMPL whales.
Aave is now realizing the benefits that integrating $AMPL has. Benqi on AVAX is just starting to realize these benefits.
Now, who’s next?
Expect to see many more integrations soon ;)
