Introducing the Elastic Vault and EEFI: A Yield Generating Protocol and Asset Powered by Ampleforth’s Rebase Mechanic
The elastic vault will generate EEFI token rewards for AMPL stakers, incentivize
active participation in the Ampleforth protocol, and can be integrated into DeFi applications in the future.
In 2019, the Ampleforth protocol was launched and led to profound changes in the DeFi landscape. Significantly, the innovation AMPL’s creators developed, the rebase, has become a core component of a range of DeFi protocols.
However, while AMPL is positioned as a core building block of DeFi, the token has seen limited utilization outside of lending, borrowing and trading applications. Today, we are pleased to announce a new DeFi innovation that will expand AMPL’s utility, reach, and yield-generating capabilities for holders.
Introducing the elastic vault, which is powered by Ample’s rebase mechanic. The elastic vault will have a number of benefits for AMPL holders including:
- Generating yield from AMPL: Individuals will be able to deposit AMPL in the vault to receive rewards in a new yield token, Elastic Finance Token, or EEFI. The elastic vault monitors AMPL’s rebase status and delivers EEFI rewards to stakers when AMPL is in negative rebase or equilibrium (neutral rebase).
- Benefiting from positive rebases in a new way: When AMPL staked in the elastic vault experiences a positive rebase, a percentage of new AMPL supply is traded for EEFI. 90% of EEFI purchased by the vault is burned (the rest is deposited into the DAO’s treasury), making EEFI a deflationary asset depending on how long AMPL is in positive rebase status.
- Incentivizing active participation in the AMPL protocol’s economics: Currently, the Ampleforth protocol utilizes negative rebases to incentivize market actors to purchase AMPL to bring it back into its target range. The elastic vault introduces a new economic incentive for AMPL market participants. The elastic vault emits more EEFI rewards when AMPL Is in neutral rebase and burns EEFI when AMPL is in positive rebase. Because of this, elastic vault stakers and EEFI holders are incentivized to engage with the Ampleforth protocol to maximize the benefits of EEFI minting and burning.
See above for an infographic with additional information about the elastic vault’s mechanics.
EEFI Tokenomics, Initial Supply, Liquidity Rewards Program and Airdrop
EEFI, the yield token generated by the elastic vault:
- Does not have a maximum supply: The number of EEFI in circulation will depend on the following factors:
- How much AMPL is staked in the elastic vault: The amount of EEFI minted by the vault and delivered to stakers depends on the amount of AMPL deposited into the vault. The more AMPL is staked, the more EEFI is minted.
- AMPL’s rebase status: Less EEFI is minted by the vault when AMPL Is in negative rebase. More EEFI is minted when AMPL is in positive rebase.
- The amount of EEFI burned daily: Each day that AMPL is in positive rebase, a percentage of new AMPL supply (generated from AMPL staked) will be used to buy EEFI. The majority of purchased EEFI will be burned, reducing the amount of the token in circulation.
- How long it has been since AMPL reached positive rebase status: The elastic vault is configured to stop minting EEFI if AMPL has not entered positive rebase status for 90 consecutive days.
EEFI will have an initial supply of 100,000 tokens. 40% of the initial EEFI supply will be airdropped to kMPL holders who stake in the previously announced Pioneer Fund II vault. Pioneer Fund II will be funded with EEFI tokens prior to the launch of the elastic vault.
EEFI holders will be able to provide liquidity via an EEFI/ETH pool that will be launched on Balancer. Liquidity providers can stake their LP tokens in a vault to receive a portion of EEFI rewards minted by the elastic vault.
The elastic vault will also emit rewards for:
- Pioneer II Vault Stakers: kMPL stakers will receive a percentage of EEFI rewards from the elastic vault
- Pioneer Fund III Vault Stakers: Some EEFI rewards from the elastic vault will be delivered to kMPL/ETH liquidity provider stakers
ETH Rewards: The elastic vault will also emit ETH rewards (generated from sales of new AMPL supply) which will be provided to:
- AMPL stakers
- EEFI/ETH LP stakers
- kMPL stakers
- kMPL/ETH LP stakers.
Elastic Vault Audit and Launch Timeline
The elastic vault is currently being audited by Omniscia, a well-regarded security firm that has worked with a range of top projects, including Olympus DAO (Omniscia has experience auditing contracts featuring rebase tokens), and the popular lending application Rari.
The audit report is scheduled to be delivered by early December 2021. After the audit is published we will open the Pioneer Fund II vault for kMPL stakers, airdrop EEFI, launch the EEFI/ETH liquidity pool and open the elastic vault to AMPL holders.
Future Applications Leveraging the Elastic Vault
The elastic vault will provide the DeFi community with a unique way to achieve exposure to the Ampleforth protocol, while greatly reducing the impact of negative rebases.
In addition, we are currently exploring introducing additional use cases for the elastic vault and EEFI to the community that will expand its utility and strengthen the protocol including:
- Self-repaying AMPL loans
- Lending and borrowing with EEFI
- Protocol-owned EEFI/ETH liquidity
The elastic vault innovation can also be expanded to other elastic finance protocols. All of the concepts and ideas mentioned above will be subject to community review and voting prior to implementation.
In the weeks to come, we will be releasing additional information about the elastic vault and the evolution of the Amplesense DAO, including:
- Rewards calculator: A calculator that can be used to estimate token rewards generated by the elastic vault
- Lending and borrowing: Information on a strategy AMPL borrowers can use to leverage the elastic vault — even during periods of negative AMPL rebases
- Ecosystem development: Potential to create a funding stream to support the development and implementation of elastic finance applications
- Improved community stewardship of the DAO: Launching advisory and implementation committees run by leaders from the community to shape the DAO’s priorities and activities over the short-and medium term
You can stay up to date about the elastic vault launch, the airdrop for kMPL stakers and more by joining us on Telegram or the Amplesense DAO’s Community Hub.