The DeFi trend had been extremely popular among the headlines of last several as crypto exchanges had been in hurry to list popular tokens within the decentralized finance sphere. Such situation has caused the appearance of another concept called “Elastic Finance”. Such concept can become the next generation of financial platforms that can use unique supply elastic assets.
Digital asset protocol company Ampleforth Foundation director Evan Kuo mentioned that Elastic Finance has started with its own token, AMPL, a rules-based elastic digital currency that automatically converts price volatility into supply volatility.
He added that elastic finance represents the category of assets with the option of AMPL’s rebasing function, and the ecosystem of platforms with elastic tokens support. Kuo emphasized the issues elastic finance and AMPL can decide within the current DeFi 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. 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 convinced that for this moment the assets made on the concept of elastic finance might “reduce risk of auto liquidation in systems that utilize baskets of collateral assets,” and can be used for debt contract denomination.
Elastic finance assets have the following advantages such as being non-collateralized, having a non-fixed supply, a price target, and an automatic supply rebasing.
Recently, Ampleforth Foundation released a roadmap with detailed description of future of Elastic Finance assets, such as offering price-stability by varying unit of account, a more-honest distribution of any asset, and unblocking new tooling opportunities within the entire ecosystem for use and integration with any elastic asset.