Rebasing, new money, old money, the stable value, and value fluctuations.

Hello all.

I have seen several people comparing ampleforth to bitconnect, so here is the simplified formula:
(Oracle Price – Target Price) / 10 supply change every 24 hours.

Now so long as the price fluctuations are under this amount, we never run the risk of dropping into negative territory. Now, look at the chart. What are our fluctuations?

The biggest fluctuation was the 13 july 2020, from 3.46 to 1.86. Now, is this due only to the rebase? No. If you look up on the days before that, we had a massive run up. This looks like a normal market pattern cycle that got burst.

But did hodlers lose? No. The marketcap just keeps going up. So, what could cause the price to dip below $1? Well, if we reached $1, and the marketcap stagnated, then a whale *COULD* crash the market. However, there are several things to consider here. First, when we reach a stagnated market value, ampleforth will have taken a strong competitive edge against tether and usdc. That means its volume will be absolutely massive. Second, it requires more money to crash an asset than it requires to jack an asset's prices up.

Psychology lesson. Most people are bad traders because they treat risk and reward differently. They hold losing positions hoping the losing position will come back, and they hesitate to take winning positions if there is a chance of loss.

This risk adverse mentality has an application here. Also, the lower number of say .90 is a numerically lower number than say 1.15.

And trading lesson... the spot price of an asset is determined by active traders. Not by actual hodlers. Traders are necessarily reactionary. We cannot see the future. And when the price fluctuates, non market participants tend to become active market participants. This is why small price moves can spark fear/greed runs.

At ampleforth's target price of $1, it is going to be difficult for any one trader to crash the market, and we will NOT see price drops to .5 as a normal occurrence. If we do, there is an arbitrage that traders like me WILL do if it happens. Basically since we know that below $1 the rebase is a negative event, we will do the opposite of current actions with trading. The current trading strategy that eliminates risk while at the same time maximizes returns is to jump in with tether 5 minutes before rebase, and jump out and crash the market with the new 10% supply. Under $1, the strategy would be to buy and jump in. Right before rebase, traders sell, and then buy back in after rebase.

People who are saying ampleforth is a bad investment are probably wrong. There are reasons it won't crash sub $1 when it has lots of users, and there are ways the market can remedy the situation.

Now.. the ampleforth rich list IS disturbing. Just like satoshi nakamoto holding 10% of bitcoin is disturbing. However, they are a respectable crypto company, and they have plans for at least coinbase and binance, and I do not see them flash dumping on the market. That isn't to say they might sell. I am saying that if they do sell, they will do it in a nice respectful manner that does not crash the market, and doesn't cause lots of slippage for them.