KVORUM
aaveSource: Aave governor v2 · #24

Lower Reserve Factor for AMPL

executedAug 7, 2021, 07:03 PM UTCby320x32a9…fb2c

01Summary

AISummary by Kvorumclaude-haiku-4-5

Lower AMPL reserve factor from 20% to 10% to incentivize deposits by sharing more interest revenue with suppliers, paired with AIP-26 which raises the maximum borrowing rate.

Type
parameter change

Key changes

  • Reduce AMPL reserve factor from 20% to 10%(high)
  • Increases share of interest revenue paid to AMPL suppliers instead of protocol(medium)

Notable concerns

  • Reduces protocol revenue from AMPL interest payments
  • Dependent on coordinated implementation with AIP-26 for intended effect
Contracts0xd46ba6d942050d489dbd938a2c909a5d5039a161
Generated by Kvorum
model: claude-haiku-4-5
provider: anthropic
profile: anthropic-fast-v1
prompt: v1.0
generated: 2mo ago
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02Description

158 words

Simple Summary

This is a sibling proposal to AIP-26 and proposes lowering the AMPL reserve factor from 20% to 10%.

Motivation

Following API-12, AMPL borrowing & depositing went live on the AAVE v2 market [date=2021-07-24 time=20:22:00 timezone="UTC"]. Since then, there has been a near 100% utilization rate of deposited assets.

The reserveFactor allows the FeeCollector smart contract to receive part of the interest paid by takers of liquidity. Each asset on Aave has its own reserveFactor.

AIP-26 raises the maximum borrowing rate for AMPL and would result in more fees coming into the system. This AIP proposes (in tandem) lowering the AMPL reserve factor from 20% to 10%. This shares more of the revenue with AMPL suppliers to further incentivize deposits.

Relevant Links

Implementation

call setReserveFactor(0xd46ba6d942050d489dbd938a2c909a5d5039a161, 1000)

On the lending pool configurator contract

https://etherscan.io/address/0x311bb771e4f8952e6da169b425e7e92d6ac45756

Copyright

Copyright and related rights waived via CC0.

03Mismatch analysis

AIMismatch analysis by Kvorum

A calldata-vs-description analysis is not generated yet. Review the decoded actions →

04Actions

1 total
#0fallback()chain 0x1
Target
0xe8ec…ab90
Value
0 wei
Function
fallback()
Arguments
{}
Calldata

05Tally

Summed from votes

Voters0
VP participating0
Outcome (current)—
Current support—

06Voters

0 total

No votes recorded yet.

07Forum

AIForum synthesis by Kvorumclaude-sonnet-5
sentiment · favorablethread · mixed

Arguments for

  • AMPL's rebasing, non-dilutive, algorithmically stable-target design provides a novel uncorrelated collateral and debt-denomination asset that differs meaningfully from stablecoins reliant on centralized/fiat backing.— AMPL_Kirby, BNM, kbambridge, marzipanstar, brandon
  • AMPL 'borrows like a stablecoin but holds like a non-collateralized asset', enabling unique trading strategies such as leveraged positions, rebase arbitrage, and interest-bearing AMPL.— brandon, yawobeng, MRSpock, cloudedlogic, kbambridge
  • Listing AMPL would deepen liquidity, drive new traffic and users to Aave, and strengthen a partnership with a large, active, and technically engaged Ampleforth community.— Jag, asimoes, ScottS, damien, chainone
  • The Ampleforth team has done substantial technical due diligence, including a custom aToken implementation, Chainlink price feeds, audits (Peckshield), and a bug bounty, showing readiness for safe integration.— brandon, Emilio, cloudedlogic
  • Third-party teams (Protofire, Atomica) offered to build liquidation-protection/backstop infrastructure specifically to mitigate AMPL collateral risk, potentially justifying a higher LTV.— margaret_protofire, Elena.Atomica, Elena.Atomica.org
  • AMPL's low correlation to other crypto assets (supported by Gauntlet analysis) makes it a useful diversifying collateral option that could reduce systemic liquidation risk.— kbambridge, brandon, GOATY
  • Reducing DeFi's reliance on centralized, fiat-backed stablecoins with a censorship-resistant, algorithmic alternative is a valuable step forward for the ecosystem.— BNM, kbambridge, marzipanstar, cloudedlogic

Arguments against

  • AMPL is highly centralized, with team/seed holders controlling a very large share of supply, creating risk of insider manipulation, especially combined with leverage on exchanges like FTX.— Coinninlingus
  • The aToken design where only unborrowed AMPL rebases (not borrowed balances) creates an arbitrage dynamic that systematically transfers value from lenders to borrowers, especially harmful during positive rebases.— pakim249
  • Supporting AMPL on Aave V1 is technically difficult since aTokens aren't upgradeable, requiring significant custom engineering and pushing the integration to V2.— Emilio
  • Borrowers face uncertain long-term repayment risk if AMPL's market cap and rebase-driven supply grow dramatically over time, complicating debt planning.— refri
  • Some thread contributions were low-substance hype rather than rigorous analysis, raising concern about the quality of governance discussion.— tonezone

Unresolved concerns

  • Once live, the AMPL pool suffered from severe liquidity problems, trapping unsophisticated lenders who couldn't withdraw despite high APY, raising ethical and reputational concerns for Aave.— Stoto, ethereumin
  • The rebase-driven arbitrage dynamic (only unborrowed AMPL rebases) could leave lenders as unwitting 'bagholders' absorbing negative rebases while missing positive ones.— pakim249
  • How exactly liquidation risk would be managed under volatile rebase conditions, and whether proposed backstop/insurance mechanisms (Protofire/Atomica) would actually be implemented, was left open.— margaret_protofire, Elena.Atomica
  • Concerns about AMPL's concentrated token ownership and potential for manipulation were disputed but never conclusively resolved.— Coinninlingus, damien
  • Confusion among community members about how borrowing, lending, and rebase mechanics interact in practice was only partially clarified through back-and-forth examples.— refri, kbambridge

Notable participants

  • brandonAmpleforth co-founder who authored the proposal and provided ongoing technical and governance updates through to on-chain submission.
  • EmilioAave-side contributor who flagged technical constraints (V1 vs V2) and tracked progress of the AIP.
  • kbambridgeFrequent, detailed advocate who explained AMPL's rebase mechanics and addressed community questions about loan behavior.
  • pakim249Raised a significant technical objection about arbitrage risk to lenders from the aToken rebase design.
  • margaret_protofireProposed a liquidation-protection service to mitigate AMPL collateral risk on behalf of Protofire.
  • CoinninlingusRaised centralization and manipulation concerns about AMPL token distribution, sparking pushback.
  • refriAsked clarifying questions about rebase/loan mechanics, helping surface community confusion.
  • cloudedlogicProduced explanatory content and repeatedly advocated for the proposal, also pushed back against criticism of thread quality.
  • tonezoneCriticized the thread for being hype-driven rather than substantive.
  • StotoReported real-world post-launch liquidity problems affecting lenders, raising reputational concerns.
Generated by Kvorum
model: claude-sonnet-5
provider: anthropic
profile: anthropic-strong-v1
prompt: v1.0
generated: 2mo ago
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