Proposal: AmpleSense Grant to Expand Elastic Vault Functionality

It can be frustrating to read @kbambridge’s posts, but they are not completely invalid. Misinformed and incomplete, yes.

At first glance, the mechanism does appear to facilitate value extraction from AMPL → EEFI/ETH. But this is not value extraction, it is value transfer. The value is not leaving the ecosystem. Importantly, automated conversion of AMPL into EEFI/ETH during sustained expansions introduces a healthy degree of “sell pressure” that would otherwise exist from short-sellers anyways. Better for that to unfold within the ecosystem, rather than outside of it which would indeed result in value extraction.

The ecosystem benefits from this diversity of market dynamics. The new proposed features add more heterogeneity. Like energy, risk cannot be created or destroyed; it can be only transferred. So lets implement healthy risk (value) transfer mechanisms within the ecosystem and automate as much of it as possible.

Time to pass this proposal.

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Still no one has answered my question where the yield comes from. If you don’t know where the yield comes from in DeFi, you are the yield.

Ctrl + F “yield” = 8 x all by one poster. “Yield” not mentioned or contained elsewhere, including within the proposal.

In web3, yield takes many forms. If you are the only one talking about yield, you are extracting yield.

What more is necessary to move this to a Snapshot vote? Concerns should be voiced, or the matter advanced in their absence.

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Although this proposal is a step in the right direction (from the previous proposal’s automated AMPL selling), this proposal does not guarantee the same volume of automated AMPL buying.

I believe the AMPL buying pressure is less than the AMPL selling pressure if:

  1. The EEFI-AMPL vault is smaller than the AMPL-EEFI vault
  2. The AMPL/EEFI pool is smaller than the AMPL/ETH pool

Feel free to correct me.

Will Amplesense use the deposited FORTH to vote on Forth DAO proposals? Is it possible for Amplesense to have a significant percentage of Forth’s governance power?

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Thanks for updating the proposal.

However, as none of my comments were answered in the last discussion, I’ll add them here again.

I do not see how the EEFI token is sustainable.

How could EEFI’s value not be diluted if Ample is most of the time in equilibrium?

Ampleforth’s docs state that derivates are “a specific type of financial asset whose value depends solely on an underlying financial asset.”, see here.

Considering this definition, the EEFI token is not a derivative of Ample. While there is an underlier for a certain amount of time (at least 90 days due to locking), the EEFI token will exist well after the Ample could be withdrawn again.

Introducing EEFI minting through FORTH deposits dilutes the Ample-EEFI correlation even more.

FORTH’s utility is governing the ForthDAO that is dedicated to the growth and adoption of AMPL.
Personally, I do not think there needs to be more utility.

This seems to have cyclical reasonings. “Help us make EEFI great, to have a great EEFI”.

To be honest, I really think that the criticism mentioned by @kbambridge, even if written in a rough tone, is valid.
How is the vault not a value transfer from AMPL → ETH/EEFI with an optional buyback of AMPL?

And to be clear, the ForthDAO is solely dedicated to the growth and adoption of AMPL, see here.

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We’ve received a few questions here and in other channels about the FORTH vault and voting.

Similar to currently deployed vaults, assets (in this case FORTH) deposited into the sub-vault remain under the control of the depositor.

Given this, only sub-vault users will have the ability to withdraw deposited FORTH from the vault to use for voting or other purposes. AS will not have any access/control over the FORTH users deposit into the vault, or have the ability to vote (on-chain/off-chain) using deposited FORTH.

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ITT: People missing forest for the trees.

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We do not want your shady Grant. We want to burn the Tokens!

Thanks everyone for the great conversation around this proposal.

At this point, I believe the “targeted discussion” part of the proposal phase has been completed.

We’ll be moving this proposal to the next stage: off-chain signaling via Snapshot.

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lol, good luck with that!!!

How could EEFI’s value not be diluted if AMPL is most of the time in equilibrium?

The goal is to provide an avenue for yield (the generation of some expected return on investment) during negative rebases and equilibrium, which currently does not exist. Depositing AMPL on Aave does not save anyone during negative rebases. Selling remains the best option and contributes to sustained negative contractions.

We are not worried about EEFI’s value nor its dilution. How it accrues value is for the community, and broadly the market to decide. E.g., governance proposal to pair EEFI with fungible versions of A-tranches can be passed.

EEFI is not a derivative of AMPL.

Semantically, this is correct.

The AmpleSense DAO deposits AMPL into the Elastic Vault in order to mint EEFI tokens, so EEFI is understood as a “derivative” of AMPL - at least empirically by a group of people, in this case.

FORTH’s utility is governing the ForthDAO that is dedicated to the growth and adoption of AMPL. Personally, I do not think there needs to be more utility.

This is why you, personally, have a say in the matter through your vote.

This seems to have cyclical reasonings. “Help us make EEFI great, to have a great EEFI.”

Taken out of context.

How is the vault not a value transfer from AMPL → ETH/EEFI with an optional buyback of AMPL?

The innovation of AMPL is not one of value transfer from price into supply, but rather one of volatility transfer. Therefore, timing matters. As you’re aware, this volatility is registered as a change in price for non-rebasing assets and a change in supply for rebasing assets like AMPL.

During the previous AMPL cycle, the absence of any scaffolds or ecosystem structures resulted in 70+% loss of value for AMPLers. Tremendous volatility was released in a short period of time. People lost fortunes and it could’ve drawn intense scrutiny were the bubble anywhere near as big as LUNA-UST. In addition to the giga-brain energy behind SPOT and its perpetual note, it does not hurt to have another channel for containing/transferring volatility via EEFI - especially, because this volatility will be transferred during the most violent times historically: negative rebases.

It’s either that or flight to USD, ETH, or other perceived SoV (FORTH, SPOT, tranches), which again enhances sell pressure on AMPL and non-linearly promotes contraction because these systems are reflexive with feedback loops. Depositing AMPL into the Elastic Vault removes it from circulation for 90 days. Through EEFI, volatility (or value) remains within the ecosystem under our governance. It can be redirected towards SPOT, public goods, or exclusively AMPL as the sub-vault already will automate some selling of EEFI for AMPL.

This is synergistic and symbiotic.

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All I wanted to say to this was “LOL” but there’s a 20 character minimum.

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What even is this? Who uses this and for what?

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Definitely all concerns addressed. I’m glad we clarified that value is only being transferred to EEFI by the base vault and not extracted.

We don’t seem to be making progress talking about the shortcomings of the vault so let me try and evaluate whether we think it makes sense to give Amplesense a grant.

Since Amplesense has a web3 building track record of

  1. Created a governance token (kmpl) borrowing the AMPL brand with no actual voting rights (the “DAO” decision makers don’t have to hold it to maintain control which seems odd) and attracting capital with the completely copied term “kGeysers” making airdrops that now need to be “transferred value” from this vault. See the details of governance here: https://forum.amplesense.io/governance-docs/dao-governance-and-initial-roadmap/
  2. Create another token and a vault to “transfer value” to it and the NFTs they airdropped to those kMPL holders

Now this team wants to be granted Forth to try and fix their vault by bolting on auto selling functionality because many ForthDAO members expressed serious concern with the base protocol, especially the risks, sustainability, and utility of EEFI.

This is a community that generally respects building a durable financial system and I think underscores why we care about AMPL and Forth. Frankly I think Amplesense’s activities have undermined this goal by

  1. Creating a very centralized org that claims to be a DAO
  2. Utilizing the AMPL brand which has caused general confusion about how this “DAO” is related to ampleforth.org itself
  3. Creating a token literally called “kiloAMPL” which is some crazy brand borrowing. The only other tokens that popped up and borrowed the AMPL name were scams (RMPL, XAMPL, etc)
  4. Creating a vault that auto sells AMPL without buying it back and trying to take funding from the ForthDAO itself to deposit into this auto selling machine with no good reason why this vault is sustainable

If they are truly trying to force this vote, let’s keep this track record in mind.

Bambridge one thing I appreciate about your perspective on our pursuit of pioneering the Elastic Vault (and seeking funding for additional utilities that would satisfy the AMPL and FORTH community) is that it is a clear exercise in ‘framing’.

How one can choose to frame (give a perception of) people’s pursuit of a vision or product and how it is painted when they are at a fledgling state (MVP). In which 99% of all successful products and projects (including Bitcoin and AMPL) experience at some point in time. Why you are expecting us to be any different, especially in crypto at our earliest stage, is confusing. We are raising resources like any other to fulfill a long term vision… But fair enough we should be successful in everything we do from day one. That is fair…

As Degen_Autist implicitly pointed out in our original thread… At this earliest stage? You are really investing in people and I think you are undervaluing the type of tangible and intangible ROI that can come from a project like AmpleForth showing it supports its earliest community’s efforts at bringing utility to the protocol. Also Aave was EthLend for a long while before it changed (look on the side at “Who created Aave”).

But either way, one thing I can reassure you is no one is “forcing” a vote. The other thing I would encourage you to do is look around at the rest of the community who does support us. We’re not bad people. We also want to invest in the brightest amongst us. We have not asked for anything crazy. Just a little support for a few early folks who believed in AmpleForth just like you. It will go a long way! Thanks for the conversation.

I’m sure this benefits both AmpleSense and Ampleforth. But I’m unsure whether AmpleSense benefits more than Ampleforth here.

Can you explain to what extent this benefits Ampleforth? Does AmpleSense intend to incentivize the same amount of AMPL buybacks as there are EEFI buybacks?

What if there are less AMPL buybacks than EEFI buybacks? Is AmpleSense thinking about this scenario? Wouldn’t this be the opposite of beneficial to Ampleforth?

I’d appreciate a response to this and to my concerns from a previous post:

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Thanks for your questions.

Regarding how the vault benefits ampl, we have gone through the rationale for the vault in the proposal, and @manbearpig and @Degen_Autist have also made relevant points that I think are good discussions on this topic.

Second, re: your question about equal buy versus sell pressure for ampl versus eefi, that is difficult to predict.

Historically, ampl has spent more time in negative/neutral rebase, so there is a possibility that the volume of ampl buys versus sales will tilt in the direction of ampl, but that’s only an assumption.

The sub-vault is also incentivized with eefi from the amplesense treasury so it is possible that this eefi may be deposited into the sub-vault as well.

Overall, the sales from the vault will be automated, just as ampl sales are automated from the main vault.

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Thank you for adding value to the Ampleforth ecosystem with your riveting insights.

This is what I don’t understand… so on positive rebase the vault has presold the AMPL into EEFI, and then during negative rebases and neutral rebases mint EEFI. So not only is there sell pressure on AMPL during negative rebases, there will also be sell pressure on EEFI. So now users have to worry about two tokens dumping during negative rebases. Instead of concentrating liquidity on AMPL there is this other opportunity to game the market with EEFI, so it’s harder to maintain a depositor’s value over the long run. This is on top of

  1. Slippage from trading in and out of a token that is not super liquid since there are just created for this “vault”
  2. Paying off previous investors in kMPL with the staked NFTs
  3. Losses from fees by trading between tokens unnecessarily

And I want to go back to the first question I had which is Where is the yield coming from which no one has answered, since minting tokens that have no purpose besides being burnt later is not really yield, there is no growth economic activity that is growing the value stored in the vault, only forces that take it away (slippage, AMM fees, NFT fees). I believe this is why so many people are worried about it’s sustainability. There is no mechanism for value accrual besides new investors depositing into the vault so there is an increase in burnt EEFI. It’s just going to be another trading game around when to sell EEFI. The sub vaults in theory will help with this but there is a similar issue with other actors dumping EEFI before the automated vault sale.

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