Elastic Finance Concept Gets Into The DeFi Discussion: Report

Elastic Finance, a new concept that can start the next generation of financial platforms emerged on the DeFi market as we are learning about it in the latest cryptocurrency news today.

The DeFi craze started making headlines in the first few months as crypto exchanges listed popular tokens like crazy, within the DeFi space. However, another concept called Elastic Finance has emerged and it could lay the grounds for the next generation of financial platforms that can use the supply elastic assets.

$AMPL is just the beginning. @AmpleforthOrg sneak peek on the future of elastic assets. It's time to build the E-Fi stack. @brandoniles @njess @M_MannyRincon @nithinkrishh https://t.co/fhWZGtPkPC

— Evan Kuo 🔑 (@evankuo) August 19, 2020

During an interview, the digital asset protocol firm AmpleForth Foundation and its CEO Evan Kuo said that Elastic Finance started with its own token AMPL which is a rules-based elastic digital currency that translates price volatility into the supply volatility. He said that this new concept represents the category of assets featuring AMPL’s rebasing function and the ecosystem of platforms that will provide support for the elastic tokens, as he pointed out which elastic finance problems will be solved within the current environment:

 “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.
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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.”

Kuo believes that the assets which are based on the concept of elastic finance could reduce the risks of auto liquidation in the systems that utilize baskets of collateral assets which can be used for debt contract denomination. The features which can be highlighted from elastic finance assets include being non-fixed, price targets, non-collateralized, and automatic supply rebasing. The Ampleforth Foundation has released a roadmap that gives an intro into the future of Elastic Finance assets including the price-stability by the varying unit of account and the fair distribution of any asset by unlocking new tooling opportunities over the entire ecosystem for use integration and elastic asset.

According to the plans after releasing the paper with the characteristics and after launching an AMPL-LEND pool on Mooniswap, Kuo 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.”