The AMPL pool on borrowing and lending protocol Aave suffered a liquidity crunch in December due to a contract bug, and DAO participants continue to debate how to properly compensate investors.
Depositors of Ampleforth’s AMPL stablecoin are complaining of frozen funds on popular decentralized finance (DeFi) borrowing and lending protocol Aave due to a lending pool shortfall. The issue, which has left AMPL depositors unable to withdraw their assets from Aave, has persisted since December 2023. Other DeFi pools on Aave are not affected by the problem.
AMPL is a stablecoin designed to track the 2019 value of the U.S. dollar adjusted for inflation. The protocol increases or decreases the number of tokens available based on whether its price matches its dollar target.
In November 2022, Aave became the victim of an alleged market manipulation attack against its Curve (CRV) pool. The attack failed to net any profits for the attacker, but it led to $1.6 million of bad debt for the protocol. In response, AaveDAO voted on Nov. 2, 2022 to freeze deposits and borrows for 17 different tokens, including AMPL.