There’s Big Money In AMPL ft. AAVE

By Chenhuang_defi | CanUHodl | 15 Mar 2021

$AMPL getting featured on Aave is inevitable, we already know that. But do you know how much money this will bring to $AMPL?

Let me fill you in on a little secret. It’s BIG, really BIG.

Here’s how I know:

You know the Coinbase effect, right? When a token gets listed on Coinbase and its price skyrockets? Well, a similar effect has developed on Aave, where when they support a token for lending and borrowing, its price skyrockets.

For example:

It was December 2020 when the SushiSwap team proposed for $xSUSHI to get added to Aave. In the weeks and months leading up to its listing on February 14, 2021, the $SUSHI price grew dramatically:

From the inception of the proposal to the date $xSUSHI was added to Aave, the price went from $1.79 to $15.25 and continues to climb higher sitting at $18.47 today (March 11, 2021). That’s a 715% increase in market cap from $282M to $2.3B in just over 3 months.

It’s outstanding, really.

Lending and borrowing $SUSHI en masse gave it a utilization boost across the expansive DeFi ecosystem. For example, it enabled holders to collateralize their $SUSHI, so they could borrow $ETH or stablecoins to buy even more $SUSHI. It also enabled holders to lend $SUSHI, earn interest, and buy more $SUSHI with the profits.

To be honest, Aave listings are turning out to be a greater launchpad for a token’s price than a Coinbase listing and a bigger boost to a token’s economy than a Chainlink integration. It’s a double whammy and it’s a big deal.

AAVE Will Boost AMPL's 3rd Expansion Cycle

(Source)

As many of you $AMPL fans know, $AMPL has already experienced 2 expansion cycles where the supply of $AMPL increases dramatically due to a rising $AMPL price coupled with positive daily rebases.

We are now getting very close to the third expansion cycle and the $AMPL listing on Aave could very well be the catalyst that kicks it off.

After all, the proposal for $AMPL on Aave has already been submitted by Brandon Iles, the co-founder of Ampleforth, on October 14, 2020. Plus, more recently on December 9, 2020, the characteristics of $AMPL on Aave (aAMPL) were fully laid out on GitHub with a total of 40 commits.

And the latest $AMPL on Aave development was on February 15, 2021, where Brandon and Stani Kulechov, the Founder and CEO of Aave talked about “DeFi in 2021 and beyond” at the EthereumDenver Conference:

All that said, the $AMPL listing on Aave is truly inevitable and when it finally happens (should be soon), it will mark the achievement of $AMPL’s second-biggest milestone on their roadmap: Lending.

As we know from TradFi, lending is an essential part of every economy and it will have multiple positive effects for $AMPL as well.

Benefits of AMPL Lending

The benefits for lending and borrowing $AMPL stretch far and wide as it opens up new and unique trading strategies not possible before in traditional finance.

The benefits to being able to borrow and lend $AMPL include:

Market participants are given the chance to utilize a new, low-correlated collateral asset that’s resistant to macroeconomic shocks and liquidity crunches. Therefore, lending and borrowing $AMPL reduces risk.
$AMPL holders can decrease exposure to negative rebases in exchange for income from earning interest from lending.
Users can finally use a non-collateralized and non-dilutive asset that “borrows like a stablecoin” because it's a safe denomination for debt (a loan amount that is stable).
It creates unique ways of using $AMPL across various DeFi protocols because it unlocks $AMPL derivatives that enable the creation of:
- Leveraged $AMPL trades and other derivatives
- Interest bearing $AMPL that can be staked in other protocols
- leveraged $AMPL Geyser farming via lending tools

All in all, the unique nature of $AMPL regarding its interactions with rebases will create an active and vibrant market, and bring new and interesting possibilities to Aave users.

The Big Money

With $AMPL’s listing on Aave right around the corner, a tsunami of money and liquidity is coming. We’ve yet to experience the 3rd expansion cycle for $AMPL and its listing on Aave is sure to capitalize and boost this cycle to new heights, never before thought possible.

We saw what happened to $SUSHI when around the time it was listed on Aave, now we can only imagine what will happen to $AMPL when it gets added.

I mean, $AMPL is an algorithmic, uncollateralized financial primitive that was literally created to denominate stable contracts for protocols like Aave. $SUSHI, on the other hand $SUSHI is not a groundbreaking token yet its price skyrocketed in anticipation of Aave’s listing.

Therefore, since $AMPL is an innovative financial primitive literally built to be used in protocols like Aave, I expect its Aave listing to have an extraordinary effect on its price and market cap. People will get excited about this and will hop on board to capitalize on not only the $AMPL price appreciation but also the more powerful mechanism known as positive rebases.

We’ve actually already seen a slight effect on $AMPL’s supply since the proposal date, but once $AMPL actually gets added to Aave, I think the price and thus the supply will increase massively: