Algorithmic stablecoin | With over 70% approval votes, AMPL will become Aave's first algorithmic stablecoin lending asset

The decentralized lending platform Aave has passed a governance proposal to introduce the algorithmic stablecoin token Ampleforth (AMPL) for borrowing and lending. AMPL will become the first cryptocurrency asset on Aave with a flexible supply mechanism known as Rebase.

Ampleforth AMPL

Ampleforth is a stablecoin project based on a supply-adjustment strategy, aiming to achieve a "low-volatility cryptocurrency" with a flexible supply policy.

When the price of AMPL fluctuates, the protocol implements "expanding" (quantitative easing) or "contracting" (quantitative tightening) for all AMPL holders to reach a new price equilibrium.

AMPL was launched as early as 2019 but remained relatively unknown until the rise of DeFi liquidity mining last year, drawing public attention once again with prices even nearing $4 at one point.

Subsequently, the market spawned many algorithmic stablecoin projects, but due to imperfect Rebase mechanisms, their prices spiraled into a death spiral, with AMPL being one of the few surviving algorithmic stablecoins.

Proposal Passed with High Votes

The proposal was put forward by Ampleforth co-founder Brandon Iles, who believes that as AMPL has already deployed liquidity pools on mainstream AMMs such as Uniswap, SushiSwap, Mooniswap, and Balancer, it's time to expand into the lending field.

According to the proposal, allowing AMPL to be borrowed could provide the following benefits to AMPL holders:

• Utilize an emerging, low-correlation collateral asset to reduce risk
• Reduce exposure from rebase through interest income
• Enable uncollateralized assets to be lent out like stablecoins
• Create leveraged AMPL trading and begin derivative products
• Create interest-bearing AMPL that can be staked in other protocols
• Enhance investment in AMPL and yield farming opportunities

The proposal concluded on 7/23 and passed with over 76% of the vote.