Proposal: AmpleSense Grant to Expand Elastic Vault Functionality

[manbearpig]

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

[kbambridge]

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.

[SolomonSollarsNSense]

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…

@Degen_Autist

So if there is a community of trusted benevolent actors that is adding value to the Ampleforth ecosystem to materialize those hopes and expectations, I’d prefer rewarding that kind of behavior. On the other hand, we run the risk of allowing entities like Alameda and 3AC to take off like bandits opportunistically when the expansion begins. I’m still not sure why this proposal is perceived as adversarial.

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.

[coldpress]

@Degen_Autist

Through EEFI, volatility … can be redirected towards … AMPL as the sub-vault already will automate some selling of EEFI for AMPL.

This is synergistic and symbiotic.

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:

@coldpress

@davoice321

• Develop a new sub-vault that would automate AMPL purchases using EEFI deposited by Elastic Vault users. (See new functionality outlined in the image above and tables below.)
• AmpleSense would also pair EEFI with AMPL (provided by the FORTH DAO) into a new liquidity pool to facilitate AMPL purchases using EEFI (this pool would be incentivized using EEFI).

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.

[davoice321]

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.

[Degen_Autist]

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

[kbambridge]

@Degen_Autist

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.

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.

[Degen_Autist]