AMPL in the Pie: Governance Proposal Discussion

  • AMPL in the Pie: Governance Proposal Discussion

  • Jag

    Organizer
    October 15, 2020 at 16:31

    @brandon has introduced a proposal for AMPL to be added as an asset in the Aave markets. This is a great start.

    Let’s discuss here how AMPL can be introduced to the PieDAO (https://forum.piedao.org/) for inclusion within the DeFi++ Index (https://docs.piedao.org/current-pies/defi++).

    I have drafted a proposal here, and I would love to hear comments and input from the community so that we can refine and submit (or not, if this is not a good idea):

    Based on recent rumors and developments, AMPL is likely to be listed for trading on several Centralized exchanges. Though this is mostly good news for AMPL as the listings will unlock access and demand for the asset, it is important to focus on progressive decentralization lest we allow history to repeat itself.

    In the spirit of Decentralized Finance, we would like to propose the addition of AMPL to the DeFi++ Index.

    Why?

    As a rebasing protocol that expands and contracts daily to target the ”2019 US Dollar” (by tracking a consumer price index – the PCE), AMPL functions analogously to Central Banking monetary policy. In order to sustain a healthy economy, the Federal Reserve will either increase or decrease the supply of US dollars; well – mostly it has only increased recklessly and this has arguably contributed to the economic chaos we find ourselves in today. Therefore, the value of a decentralized protocol where ”code is law” and the aim is to maintain stability of purchasing power, cannot be understated.

    Particularly with respect to the DeFi++ Index, AMPL is an excellent candidate for the small caps allocation (at this time, because the market cap is <200M). Given the price and MC volatility of AMPL, it could very well count as a large cap at times. But the advantage here is that the percentage of the supply allocated to the DeFi++ Index would remain largely constant (because demand for AMPL is reflected in its supply, not the price).

    As the AMPL ecosystem matures with lending/borrowing already in the works (https://governance.aave.com/t/proposal-add-support-for-ampl/854/8), the market cap will balloon to promote deep liquidity that will accommodate larger swings in value so as to buffer the price fluctuations.

    Future Collaborations

    In addition to farming Dough V2, yield farming AMPL (and other elastic assets such as kMPL, wAMPL, etc.) could be offered to PieDAO and ASDAO supporters.

  • davoice321

    Organizer
    October 15, 2020 at 19:04

    What do you think about revising and expanding this proposal to fit the proposal format outlined here (PIP 1- BTC++, BTC on Ethereum diversified)?

    This proposal has several sections, which I’ll provide here with some questions I have.

    Description: Adding AMPL to the DeFI++ Index

    Motivation

    I like what you have outlined here already: “But the advantage here is that the percentage of the supply
    allocated to the DeFi++ Index would remain largely constant (because
    demand for AMPL is reflected in its supply, not the price).”

    Proposal: This is pretty simple.

    Benefits for users/traders: I think this should be outlined more clearly. There are macro benefits to having AMPL, but what would be the benefit for traders? The supply issue you mentioned above is certainly a benefit, but I’m having trouble understanding how that benefits the basket’s performance.

    There’s also the issues related to Ample’s rebase mechanic and what that means for the pool itself. Here are my questions about this:

    Impact of rebase on basket performance and weighting

    1. Would the addition of the asset to the DeFi++ Index have an impact on its performance? What would be the impact of the rebase on how this part of the basket of assets performs over time?

    2. As the spreadsheet shown below illustrates the DeFi++ index is weighted based on the number of tokens in the basket. With AMPL this percentage would change on a daily basis, which could have a big impact on the weights in the pool. How would this be managed. Is there a benefit of the supply changes?

    For example, the current DeFi++ small cap allocation has this rule: “Assets represented within DEFI+S have been weighted in as a function of their current Market Capitalization, capped by a max weight of 30%.”

    I could see AMPL exceeding that weight pretty quickly during a market boom. How could that be handled?

    3. Small cap versus large cap inclusion (where does Ampl fit?)

    Currently AMPL is a small cap, but during a period of positive rebases, it could move to the large cap pretty easily (and then fall back over time). This may cause technical challenges for PieDAO. How could these challenges be overcome?

    Should we advocate for EeFi++ rather than including Ampl in the DeFi++ index, which might not be the best fit for the reasons mentioned above? EeFi++. which would take into account the unique rebasing mechanics of these coins.

    Other elastic finance assets would have to be selected for that pool, but a case could be made that the pool to provides users with exposure to these assets in a basket of currencies (although this could also be something proposed to the DAO).

    The question would be how to price the combined index, weighting of each asset (AMPL might be 70 percent of the pool for example).

    • Jag

      Organizer
      October 15, 2020 at 19:56

      Thanks for the thoughtful response.

      I like the suggestion of the diversified index, but after reading through your post I think it might be best to advocate for an EeFi++ Index.

      We can table this discussion for now and allow the other elastic assets (kMPL, wAMPL, and more) to come to market in the interim. This would help us answer the question of how to handle negative rebases more adequately.

      Simultaneously, integration of AMPL into Aave V2 will deepen liquidity.

      Altogether, this would mature the ecosystem and promote viability of an EeFi++ Index.

Log in to reply.

Original Post
0 of 0 posts June 2018
Now