The ongoing DeFi craze seems to be defying odds as it looks set to continue setting new records and breaking new barriers. New projects and developments are coming up continuously further fanning the flames of the DeFi frenzy. Exchanges are rushing to list some of the most popular tokens as other new ones are arising and grabbing the headlines almost daily. As if that is not enough, a new concept known as ‘Elastic Finance’ has emerged and is poised to become the next generation of decentralised financial platforms.
Elastic Finance, as the name suggests, refers to a financial system that uses elastic digital currency which automatically translate price volatility in the market to supply volatility. These unique supply elastic tokens are then traded in the market through an ecosystem of platforms that is compatible with elastic assets. Evan Kuo, the CEO of virtual assets protocol firm Ampleforth Foundation, offered some fresh insight about this novel asset class through a recent interview with crypto publication, Cointelegraph. Kuo traced the beginnings of Elastic Finance to his firm’s launch of the AMPL token that enabled the direct conversion of price volatility to supply volatility. Based on this, Kuo stated that elastic finance now comprises of all those assets deploying the AMPL rebasing function together with the platforms that support elastic tokens. The executive delved further by highlighting elastic finance and AMPL’s capabilities in solving some of the issues plaguing the DeFi sector saying:
This operationalizes, in a way, the long-standing thesis by Nobel laureate James M. Buchanan that rule-bound “predictability”—–as opposed to human discretion—–might allow for more effective financial institutions. Further analysis had led us to hypothesize that these rule-bound supply changes might lower the correlation of the AMPL market capitalization with those of BTC and ETH.
Ampleforth Foundation recently made public a roadmap outlining the future of Elastic Finance assets and how it could set alight the DeFi sector. The roadmap includes a model for price stability, the equitable distribution of elastic assets and offers insights on how the sector can unlock new tools for integrating various assets. On Sept. 1, the firm launched an AMPL-LEND pool on Mooniswap in line with their short term plans as highlighted in their roadmap. Kuo hopes this will open the door for the launch of other elastic tokens and initiate a wave that will take over the DeFi space. In this regard, he said:
We will be developing special-purpose AMM’s that natively support and take advantage of supply elasticity, special-purpose lending platforms that natively support and take advantage of supply elastic assets. Also, we’ll actively support other platform developers that natively support elastic assets and doing this cross-chain.
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