Why AMPL on Aave will be a Billion $ + Pool Like USDC
Those unfamiliar with $AMPL think this is a bold statement. But I’m here to tell them it’s really not. And show them exactly how and why $AMPL will get to this size.
In the tweet above, Manny and Kuo ponder the idea that $AMPL could become a top pool on Aave and their thinking behind it is clear and simple:
If you’re lending $AMPL and it’s nearing a 100% utilization rate, it’s like lending a stable asset (there’s no volatility exposure).
Because most of your deposited $AMPL is lent out and you have little exposure to the rebase. So there is little to no risk of potential downside from negative rebases.
And if the lending APY for $USDC is less than 5% at 90% utilization, while the lending APY for $AMPL is 5,000% at 90% utilization and climbing exponentially with more utilization, what would you choose to lend?
Obviously $AMPL right?
The APY is so much higher and there’s little to no risk as $AMPL nears 100% utilization. So, as a lender on Aave who’s looking to earn high yields on their deposited capital, it’s a no-brainer to lend $AMPL over $USDC.
$AMPL Lending — Highest APYs on Aave
There are 31 assets available to lend on Aave and none of them come even close to $AMPL’s maximum APY percentage.
Take a look at Aave’s most popular pools and their lending APYs:
Isn’t that pathetic?
All of these top pools (which are stablecoins) have lending APYs around 3–5%.
And then we have $AMPL — an asset that borrows like a stablecoin because its price always reverts to its target price (thus providing a safe denomination of debt) — with APYs that can reach as high as 186,210.38%!
As seen in the chart below, $AMPL on Aave follows an exponentially growing interest rate curve which starts increasing exponentially at 80% utilization:
As of this writing, the new APY fee structure enabling exponential APYs for $AMPL lending has been live for only a few weeks now. Things are just getting started and we’ve only just recently got a taste for what’s to come:
$AMPL Pool will eat Aave’s $USDC Pool
Once the profit-focused Aave yield farmers realize these three things:
- That they can make up to 186,000% APY for lending $AMPL.
- That $AMPL borrows better than a stablecoin.
- That lending $AMPL has no downside risk at 100% utilization.
They’ll start selling their $USDC for $AMPL for the sole purpose of lending it.
And get this:
$USDC is a $5 Billion pool right now. Once even just a small piece of that $5B pool switches over to the $AMPL pool, the $AMPL price and thus supply will increase (an increase in $AMPL TVL on Aave = increase in $AMPL utility = increase in $AMPL price + supply).
Then watch how the borrowing demand starts to increase to the point of 100% utilization (people will want to borrow $AMPL to benefit from the increasing supply during positive rebases).
Then watch even more profit-focused Aave yield farmers come to join the party… It’ll be a perpetual growth cycle for the $AMPL pool and $AMPL network as a whole.
This, my friends, is what I’m watching for. This is what I anticipate.
Now one last thing:
I know that the observant amongst you will notice that this isn’t happening just yet (the $AMPL pool TVL is only $2.3 million). But I’m telling you; once even just a small piece of the $5B USDC pool switches over to the $AMPL pool, watch how this trend takes over ;)