AMPL is designed to be an elastic supply currency (but NOT exactly a $1 stable coin). If the price is above $1 then the supply increases (called a rebase) - [assuming a rebase supply re-calculation of 5% for simplicity] if you hold 1000 tokens, the next day you have 1050, at the same market rate. This happens every 24 hours. It also is weighted so at $1.01 the rebase is around 1%, at $1.20 it is around 5%. DAILY. . . Yes. "daily compound interest coin"...
The same is true in price decreases. The negative rebase reduces the supply. You have 1000 tokens at $1, if the price drops to $0.90 you will have 950 tokens.
The idea is that it incentivises both buying and selling to bring the price back to equilibrium. It is ELASTIC.
If you held 1000 tokens at $1, 15 days later the price has DOUBLED to $2, simplified to 5% daily averaged for 15 days straight, you now have 2000 tokens, valued at $2 each, so $4000 total: a 400% return, not just a 100% return. Probably at this point traders sell, having an amazing profit, the price adjusts down, and the rebase % lowers and it comes closer to $1 again.
The same is of course true going down from $1 to $0.50, holders *might get rekt here - this is a traders.. a coin for intelligent traders.
You should be only concerned with total market cap of the system than AMPLs individual price going up.
For instance if the total market cap of AMPLs is $10 Million and you own $1 Million of that (10%). If the market cap grows to $100 Million you’ll still own 10% if you didn’t sell or buy any. So you would now own $10 Million AMPLs at $1.
Likewise if the total market cap of AMPL drops to $1 Million and you didn’t buy or sell your position you would now own $100,000 AMPLs (still 10%). The rules are actually pretty simple. Everyone’s account is increased and or decreased at the same rate (given the current price of AMPLs)
The interesting stuff - LIQUIDITY INCENTIVES.
If daily 1% compound interest wasnt enough then the Ampleforth "geyser" liquidity program just launched 3 days ago.
$1+ million has been locked into it, LPs earn incentives for providing liquidity to the AMPL-ETH market on uniswap. In 3 days it is now the 8th largest pool on uniswap.
This geyser is a "trial", but for 3 months, giving out 75k extra AMPL tokens to LPs. * however, there have been 3x positive supply rebases since it started, so the 75k has turned into 77.6k (i.e. alternatively if you had $75k of ample 3 days ago, with 3x supply increases - which are auto changed in ALL wallets - then now you have $77.6k ($2.6k profit!)
Next
- AMPL seems to swing up and down, but not daily, over weeks/months - with this liquidity incentive program and the uptick in defi interest, expect this to be a longer positive cycle (? speculation)? And next is:
- probably integrating liquidity incentive programs to other exchanges - i.e. Bancor/Balancer.
- seeing AMPL as a collateral asset in lending platforms - this is actually the goal of ampl - to be an uncorrelated asset. Uncorrelated to bitcoin and ethereum and the rest of the market - living off its own supply increase/decrease economics. (and *probably liquidity incentives there to provide collateral)
Links:
https://www.ampleforth.org/dashboard/ - see history of supply changes and price.
https://www.ampleforth.org/geyser/ - liquidity incentive "gesyer" app , click to the stats tab to see how much locked up and apr for incentives.
https://www.ampltalk.org/app/forum/ampl-geyser-19/topic/about-the-geyser-21/ - official article explaining the geyser liquidity incentives indepth and guide to getting involved.
Be careful, this one is risky, but it's early stages, its a large idea, but small cap eth-defi fit product.
Last breadcrumbs; Brandon the CTO and Brian from coinbase were roommates at Rice, and Brian is a PERSONAL investor. Also strong links to LINK - using Chainlink for the price oracle which is needed, and Brandon and Sergey have done 2 podcasts together. Also , Brandon was just on the Charlie Schrem podcast :)
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