AAVE Will Lose Its Edge If It Doesn’t Vote on AMPL Proposal

It’s in every $AAVE holder’s best interest to see an aAMPL proposal coming to on-chain voting.

Why?

Because if it doesn’t, Aave might lose its edge in DeFi lending space. Period.

If Aave doesn’t add support for $AMPL it will be passing on:

• The first non-collateralized asset “suitable” to borrow on major DeFi lending platforms.
• An asset that unlocks a differentiated set of incentives to borrow and lend.
• A low-correlated collateral asset resistant to black swan price shocks.
• A decentralized and censorship-resistant collateral asset that provides a safe denomination for debt. How awesome is that?
• The pioneer of the elastic supply assets that can suck liquidity from virtually any direction, like Bitcoin.

If $AAVE holders fail to get $AMPL supported on Aave, they’re failing to innovate and will be left behind. The crypto space moves fast and just because they’re a leader in DeFi lending now, doesn’t mean they’ll be a leader tomorrow.

So do your part and vote with your $AAVE to see that the aAMPL proposal gets passed. Here’s a guide to walk you through it:

If I still haven’t convinced you to go vote now, keep on reading to see exactly how Aave will lose its edge in DeFi lending and how this could all be prevented by supporting $AMPL.

Aave Will Lose Market Share

I already stated that the crypto space moves fast and if you fail to innovate, you fall behind. This is an obvious statement and yet it happens to projects time and time again.

Take Kyber Network, for instance, it was once the father of AMMs (alongside with Bancor) with VC backing and ranked a top 15 cryptocurrency on CoinMarketCap. It was the most promising DEX-based project, had Vitalik Buterin as an advisor, and was growing fast; that is until Uniswap came along and stole the show.

What happened? Where did Kyber go wrong?

Ultimately, Kyber failed to innovate.

Kyber’s AMM model only allowed big players with reserves to pool their tokens and earn on the swap fees. In that sense, it mirrored a model commonly seen in traditional finance where only large players (ie. accredited investors, banks, hedge funds, institutions) could participate in a system.

Therefore, Kyber was exclusive like the traditional financial system… not much innovation there.

Uniswap, on the other hand, allowed for ANY amount of ANY ERC-20 token to be pooled in their AMM model by ANYONE. It was an inclusive model, allowing everyone to join and profit from. A true innovation in the AMM space.

Today, Uniswap and other inclusive AMM models rule the DEX space while Kyber has fallen behind.

How does this relate to Aave and the DeFi lending space?

For one, Aave is following Kyber's lead in regards to exclusivity because it does not support lending and borrowing for ANY ERC-20 token. Oh no, they are exclusive in the tokens they support.

We already know this is a problem because an open and inclusive system that breaks down the barriers to entry for ANY individual and ANY token will win, every time.

Secondly, if Aave doesn’t add support for $AMPL, it’s failing to innovate in the same way that Kyber failed to innovate their AMM model. You see, by not supporting $AMPL on Aave, it means Aave is failing to support the most innovative asset class (elastic ones) in DeFi.

$AMPL on Aave would unlock a differentiated set of incentives to borrow and lend and would provide Aave users with a different kind of collateral asset that separates cyclical price-volatility from non-cyclical supply-volatility. No other type of asset would borrow or lend like $AMPL, making it a true innovation.

That said, the idea of lending and borrowing $AMPL on Aave is an innovation that should not be ignored. If it is, more innovative DeFi lending platforms that support $AMPL will rise to the top as they’ll introduce a new utilization incentive for lending and borrowing on their platforms with $AMPL.

$AMPL is the Innovation Aave Needs

“We think the unique nature of this asset [$AMPL] and its interactions with rebases will create an active and vibrant market, and bring new and interesting possibilities to Aave users.” — Brandon Iles

While Aave is already failing to be a 100% inclusive platform that supports lending and borrowing for any ER-20 token, all hope is not lost. It doesn’t have to suffer the same fate as Kyber and other projects that have risen to the top, only to be replaced.

Aave can still be saved by supporting innovative new asset types like $AMPL.

Let’s explore IN DEPTH the benefits of $AMPL on Aave:

1. $AMPL Provides Safe Debt-Denomination

$AMPL serves as a safe denomination of debt because the value of 1 $AMPL always tends towards the price target of the 2019 US Dollar ($1.027). $AMPL’s price is not affected by inflation like $USDC nor is it affected by price appreciation like $BTC.

This is because $AMPL’s elastic supply protocol automatically adjusts supply in response to demand which trades price volatility for supply volatility. When you borrow $AMPL, the debt denominated in $AMPL remains fixed because the loan itself is not affected by the rebase (change in supply).

Therefore, $AMPL’s price target is inflation-adjusted and the protocol is designed to always seek the equilibrium price target over time, making $AMPL a safe denomination of debt.

2. $AMPL can be a Diversifying Agent in a Basket of Collateral

Ampleforth’s elastic supply effectively decorrelates the $AMPL token’s movement pattern from the performance of Bitcoin and traditional markets because the protocol adjusts supply in response to demand which trades price volatility for supply volatility.

Also, unlike decentralized stablecoins like $DAI, $AMPL is 100% non-collateralized and therefore resistant to black swan price shocks. And unlike fiat-based assets like $USDC, $AMPL’s price and stabilization are 100% sustained by free-market incentives.

3. Lending $AMPL Unlocks a Differentiated Set of Incentives to Borrow and Lend

Lending or borrowing $AMPL fits several different investment strategies and investor profiles.

For instance, if you lend $AMPL and a negative rebase occurs, you effectively reduce your exposure to it while earning interest from borrowers. In this way, lending $AMPL can be a hedge to negative rebases.

In another scenario, If you borrow $AMPL the amount of $AMPL you owe stays fixed. So, if $AMPL’s supply expands, your borrowed $AMPL supply increases as well, so you can actually make money by simply borrowing and then easily pay off your loaned amount.

The innovations that come from borrowing and lending $AMPL are truly exciting and have the potential to revolutionize the DeFi space.

4. $AMPL on Aave allows for more and more Complex Products to be Created

Being able to lend and borrow $AMPL on Aave will unlock $AMPL derivatives that enable the creation of more and more complex products like rebase rate swaps, swapping LP tokens, leveraged $AMPL trades, interest-bearing $AMPL that can be staked in other protocols, and so much more.

Therefore, Aave can play an integral role in helping $AMPL become a composable DeFi building block that benefits the entire DeFi ecosystem.

5. $AMPL is a Non-Collateralized Asset that Borrows like a Stablecoin

The vast majority of borrowed assets in DeFi are stablecoins like $DAI, $USDC, and $USDT because they provide safe debt denomination. As already described above, $AMPL provides a safe denomination of debt and does in fact borrow like a stablecoin.

But it one-ups stablecoins by being 100% non-collateralized, just like Bitcoin. Therefore, $AMPL doesn’t suffer from the risks and pitfalls of discretionary systems that stablecoins rely on.

$AMPL is far more innovative because it’s not just recreating traditional finance on the blockchain, it’s advancing it toward a new future that is only possible with cryptocurrency technology.

6. $AMPL is Decentralized & Censorship Resistant

The $AMPL token can no longer be changed or upgraded because its upgradeability function has been removed, making $AMPL truly decentralized and censorship-resistant, just like Bitcoin.

$AMPL is even more decentralized and censorship-resistant than the “decentralized” $DAI stablecoin because it does not rely on any collateral. For instance, $DAI had its black Friday issues, and now at the center of $DAI is $USDC as collateral.

Vote on the aAMPL on Aave Proposal NOW!

There are only 3 days left for the proposal to be passed and so far it is short 10K $AAVE tokens to make it.

So, if you’re an $AAVE holder and you care about the future of DeFi lending on Aave, head on over to the Aave delegation tool found here: app.aave.com/governance/delegation and delegate Proposition & Voting power to this address:

0x32a9d6A550C3D89284D5700F7d7758dBc6f0fB2C

Also, to keep an eye on where we’re at, check out the live stats here:

Cheers guys, and godspeed.