20% reserved the Team – this includes current and future team members. This reserve should be kept separate from the multi-sig Treasury wallet and awarded as grants using best practices in vesting (e.g., 4 years vesting with 1 year cliff). On each distribution, the grant will go to a locker contract (reversible on multi-sig’s call).
25% for Contributor Mining – this fund is for giving grants for top contributors arising organically from the community. The grants programme is controlled by Governance and the funds are kept separate from the multi-sig Treasury wallet and awarded for 1 year at a time. On each distribution, the grant will go to a streaming contract (reversible on multi-sig’s call).
20% for bootstrapping the Treasury – any fundraising done during pre-launch or launch will also come from this fund, and the $AMPT will be exchanged for stables or reserve assets like bitcoin and ether. All funds will be controlled directly by the multi-sig Treasury wallet and used for operational liquidity.
5% for an Ecosystem Fund – this reserve is for giving grants to teams and protocols that will build on Amplify or integrate it in a complementary manner to their offering. These funds are separate from and indirectly controlled by the multi-sig Treasury wallet.
30% for Liquidity Mining (LM) – which are algorithmically distributed by the protocol. Governance can configure the speed of distribution and the weight of each pools/markets or staking contracts the LM rewards can be distributed to.
Up to 10% of the Treasury's reserve of $AMPT may be sold at launch in a batch auction, using the Gnosis Auction protocol, which enables fair price discovery by matching limit orders of buyers and sellers at the same clearing price for all.
A reserve price will be used to protect early investors and allow the market to find a price point before the start of the Liquidity Mining programme.
Liquidity Mining subsidizes interest rates for borrowing (can even make them negative) through token incentives and encourages more lending by boosting yields for liquidity suppliers.
To kick off the LM, a 2-week Bootstrapping will distribute 3% of the initial 100M $AMPT supply to 2 categories of users:
1.5% is to be distributed to Amplify 1.0 participants, including testnet participants.
0.5% is to be distributed to Amplify 2.0 testnet participants. This will include participation rewards as well as a set of structured bounties.
0.5% is to be set aside for an airdrop that will precede the LBP. This would have the effect of attracting experienced and dedicated users to the platform, for example by querying Ethereum, governance participants in $COMP, $AAVE, or $MKR (large-caps and lending protocol tokens) as well as large depositors in those lending contracts as well as holders of CeDeFi tokens like $CEL and $NEXO can be sought after
The genesis Liquidity Mining programme will last 4 years, with a terminal rewards rate (i.e., perpetual inflation) initialized at 7% but subject to modification by Governance.
The governance functions of the protocol shall be executed by a multi-sig, with 3 members from the founding team. Transactions will happen when 2 out of 3 members sign, however the multi-sig will be expandable to configurations of 3/5 and 5/7. The governance shall also support off-chain voting.
The governance address shall be writable, while the voting power token shall be $AMPT in the voting escrow (veAMPT). This voting power token has been introduced to prevent voting from occurring via flash loans: an issue where a user might borrow AMPT for the purpose of voting, with the intent of returning the loan right after voting has finished. veAMPT solves this problem via its issuance mechanism.
The issuance mechanism works as below:
veAMPT is voting token (1 vote = 1 veAMPT)
veAMPT is issued 1:1 for each AMPT locked for 4 years
veAMPT is issued proportionally for AMPT locked for less than 4 years
veAMPT prevents governance attacks (flash loan is an example, but not the only example)
veAMPT decays linearly, but the lock can be extended anytime
We introduce veAMPT for 3 reasons:
rewarding long-term holders with the power to participate in governance
rewarding long-term holders with revenue sharing (from Amplify protocol fees, paid in market-bought $AMPT)
rewarding long-term holders with boosted rewards (more $AMPT from borrowing/lending in Amplify markets)
Additionally, the governance shall have a proposal mechanism, so proposals can be sponsored, and proposals by different sponsors can be labelled.
Proposals from the multi-sig members or their proxy designates shall be labelled as core, while proposals by the community members with at least 1% of the supply shall be labelled community. Proposals who do not meet the core or community criteria shall be blocked.
In v2 of Amplify, there are further mechanics that would be introduced to strengthen the protocol.
Locked staking would allow $AMPT holders to lock digital assets on the blockchain, with higher amounts of tokens locked providing greater voting power and greater rewards. A mechanism analogous to Curve’s CRV -> veCRV vote-locking with boosts.
The Security Module (or SM) is a pseudo-insurance mechanism, inspired by Aave’s implementation of the same mechanism. This is described as below.
The SM takes $AMPT as deposits and receives part of the $AMPT LM emissions as security incentives (SI) and distributes it pro-rata to depositors. The SI is determined by governance.
The SM also receives revenue-sharing and distributes it pro-rata to depositors, the percentage of revenue is determined by governance.
The $AMPT deposited in the SM is represented by a tokenized share, $ smAMPT, which is tradeable. $AMPT deposits are subject to a cooldown for withdrawal, together with the SI. This cooldown should be initialized to 7 days and subject to change by governance.
The revenue-sharing rewards are claimable anytime, and not subject to the cooldown.
In case of a shortfall event (SE) in the protocol, up to 30% (adjustable by governance) of the locked $AMPT (and SI) in the SM can be seized by the protocol to cover the shortfall.
The seized assets are auctioned. A “backstop module” also exists where users deposit $ETH or stablecoins, in order to automatically buy $AMPT at a pre-agreed price (set by governance) in case of an SE. The backstop module also receives SI (determined by governance) as incentives for their opportunity cost.
The backstop module is part of the auction module. The auction module uses a Dutch auction system to sell the seized assets, prioritizing the backstop module in filling orders, which are also available on the open market. The proceeds from the auction are then sent to the insolvent market.
Should the SM fail to cover the full extend of the SE, a secondary mechanism issues $AMPT and auctions it until the SE is covered. This mechanism is called recovery issuance (RI).
The SM would also accept as deposits liquidity shares (programmable Balancer LP tokens (BPT) initialized to 80% $AMPT and 20% ETH), which the protocol controls in a private pool that can change pool weights as well as trading fees, in order to maximize liquidity depth.
An on-chain vault will be created that is controlled by governance, which is deposited in the security module. It receives a percentage of protocol fees.
The values are planned to be initialized as below, though this may be subject to changes nearer the time of release.
loan origination fees:
to Treasury: 0.5%
to Loss Provision Fund: - low credit risk: 1% - medium credit risk: 1.5% - high credit risk: 2%
lending interest fees:
to Treasury: 0.25%
to Loss Provision Fund: 1%