AMPL supported on Aave 👻

6 min readJul 29, 2021

Earn Interest On Your AMPL!

The Ampleforth community can now not only hold the best rebase token in the market, but also earn interest while doing it!

Per Brandon Niles’s Aave proposal (Proposal: add support for AMPL):

Being able to borrow and lend AMPL would enable holders to:
1. Utilize a new, low-correlated collateral asset which could reduce risk
2. Decrease exposure to rebases in exchange for income from interest
3. Use a non-collateralized asset that “borrows like a stablecoin 27”
4. Create leveraged AMPL trades and unlock derivatives
5. Create interest bearing AMPL that can be staked in other protocols
6. Increase exposure to AMPL & farming

Here’s a very basic breakdown on the benefits in both lending & borrowing AMPL on Aave.

First let’s start with Lending:

When lending AMPL, you will receive the interest-bearing aAMPL token in return.
Once you’ve provided you AMPL to the Aave AMPL pool, your AMPLs will no longer experience rebases.
As a lender, you will only be exposed to AMPL’s price volatility — unless there remains some unutilized AMPL within the pool. In this case, contingent on the amount of AMPLs available at the time of the rebase, both lenders & borrowers will experience a positive (negative) rebase event.

Now on to Borrowing:

As a borrower you could potential partake in rebase arbitrage. How so? You may ask. Well let’s explain this by example.

Let’s say you decide to borrow 10,000 AMPL from the AMPL pool. You are now liable for these 10,000 AMPL + interest. As you hold these newly acquired AMPL in your wallet, you notice that AMPL has a chance to experience a positive rebase.

For those who are new to Ampleforth Protocol, a positive rebase is when the price of $AMPL is above $1. When this occurs, the supply will increase in proportion to the percentage above $1 $AMPL is valued.

Thus, during a positive rebase you (the borrower) will see an increase in your $AMPL holdings! Now you’re in a unique situation in which: (A) you can continue to hold your loan + rebased AMPL in anticipation for another Positive Rebase event or (B) Repay your loan + interest and pocket the extra AMPL you accrued during the rebase.

Whichever option you decide, you’re essentially committing Rebase Arbitrage.

Pretty Cool, right?

When is the right time to lend/borrow?

TL;DR:

100% Utilization Rate = Market is anticipating Positive Rebase (Rebase Arbitrage opportunity)
<100% Utilization Rate = Market is anticipating Negative Rebase and are actively adding liquidity to minimize value-loss.

The best way to spot a Lending or Borrowing opportunity is to monitor AMPL’s utilization rate coinciding with an impending rebase.

If the utilization rate is near 100% along with AMPL’s price being $1.042+, you can safely infer that AMPL is in the midst of a positive rebase.

If the utilization rate is below 100%, you will note that there may be an increase in the Reserve Size — indicating that more AMPLs are being lent. So what does this mean? Well, if AMPL holders are anticipating a negative rebase the best thing to do to minimize loss-impact is to supply liquidity in return for a decent APY.

How to participate in Aave’s AMPL market?

At the time of writing this article/walkthrough, AMPL’s market price was $0.853 (signaling a potential contraction; i.e. negative rebase).

Therefore the best thing to do to take advantage of this opportunity is to provide liquidity in order to earn some interest ($aAMPL). This will serve as a potential hedge on the approaching negative rebase.

Below I have provided a step-by-step guide on how deposit your AMPLs to start earning some interest (interest rate at the time of writing: 0.67%).

Depositing AMPL into Aave

Step 1: Head over to Aave and click/tap on ‘Enter App’

Upon entering, make sure that the selected market is Aave Market v2

Step 2: Scroll down until you see Ampleforth and click/tap on it.

Step 3: You will be navigated to the ‘AMPL Reserve Overview’ page where you can:

Monitor Variable APY, Deposit APY, and Utilization (Utilisation) Rate
View AMPL’s Reserve Status & Configuration (basically how much AMPL is being lent in correlation to how much is borrowed)
Deposit/Withdraw/Borrow AMPL

Since the goal with this walkthrough is to Deposit AMPL, proceed to click on the ‘Deposit’ button located in the ‘Deposits’ module.

Step 4: Assuming you’re holding some AMPL, go ahead and enter the amount you would like to deposit within the ‘Available’ field box.

If you would like to max out on your deposit, click on ‘Max’.

Quick tip: After entering the deposit amount, notice the ‘Approximate tx cost’ section below the field box. There you’ll see an estimate of how much the transaction will come out to.

Proceed to tap/click ‘Continue’