Ampleforth has been a hot topic of discussion over these past 3 or 4 weeks of trading. I have written a bunch of articles here and here. The coin managed to surge into the top 50 coins as it reached as high as the 30th position at one point in July.
Since peaking, Ampleforth has slowly started to drop lower as it broke beneath the crucial $0.96 level (the price that triggers negative rebases) on August 3rd and it has been slipping further ever since.
In fact, the coin reached as low as $0.53 over the weekend, which is the lowest point it has been in months. Luckily, the coin has rebounded slightly today as it traded as high as $0.80. However, this extended downturn caused the sentiment for Ampleforth to collapse into an extremely negative sentiment as investors started to get extremely fearful and anxious of the negative rebases.
When some people see fear, others see opportunity.
This scenario reminds me of the famous Warren Buffet quote;
"Be fearful when others are greedy, be greedy when others are fearful" - Warren Buffet
Which rings extremely true today. Just taking a quick look into the Ampleforth Telegram group, the sentiment shifted from extreme optimism (many people expected that Ampleforth would flip Bitcoin at some point) to extreme fear;
As you can see from the selection of comments above, people seem to be extremely worried about why AMPL was dropping so aggressively,
One common misconception with these people is they think AMPL is just like any other cryptocurrency. Buy low, sell high - make money.
What they fail to realize in this situation is the fact that AMPL is an entirely new type of asset class that has two variables that are freely moving - the price AND the supply.
In all other cryptocurrencies, there is a fixed supply and the price is the only freely moving variable. This allows traders to conduct technical analysis and predict price movements within the market.
Well, things are slightly different for AMPL as users have to take into consideration the fact that they supply for AMPL is also freely moving - adding another layer of analysis. In fact, Ampleforth can be considered as the pioneer of the Multi-Variable Asset (MVA) class as it was the first cryptocurrency to have a fluctuating supply on a daily basis. The rest of the cryptocurrencies within the industry are known as Single-variable Assets (SVA).
With that being said, it does look like the buyers are trying to help Amplfeforth rebound;
Bear in mind I did say that Technical Analysis is pretty useless here, but it does seem that Fibonacci Retracements are fairly accurate - which would make sense considering we are just measuring the natural Fibonacci phenomenon which occurs in all markets - regardless of structure.
Looking at the chart above, we can see that it does show that AMPL looks to be ‘bottoming’ out. The coin reached as high as $4.00 by mid-July - at this point, the positive rebases were reaching as high as 27%! This means that, when the price was at $4.00, the rebase value that holders experienced was an increase of 27%.
As you can imagine, this is far too unsustainable and, as a result, we can see that the price started to topple.
It dropped beneath the crucial $0.96 level during early August which kickstarted the negative rebases - people losing value each day. These negative rebases will continue until price can cross back above $0.96 - at which point they will stop.
$AMPL Heads Above $1 Again
Lots of people are calling Ampleforth an unsuccessful stablecoin experiment with some people even suggesting to ditch the rebases and force the coin to be *stupidly* anchored to $1 - like every other normal stablecoin out there.
The problem is that most people did not read the whitepaper. They did not do their own research and just bought their way in through FOMO (fear of missing out) and now are regretting their ill-informed trading decisions.
You see, if they had read the whitepaper, they would have realized that the volatility was most certainly expected toward the early stages of Ampleforth’s lifecycle;
The team has suggested that it could potentially take years - if not, decades - before AMPL reaches its equilibrium. However, over time, it will start to tighten its fluctuation around the $1 level. Looking at the chart above, after a huge swing up in its early stages, a huge swing down is to be expected. Per its mechanism, AMPL should rebound above $1 soon or later.
Of course, the process will leave some investors underwater. Some of them will exit their positions, some of them will hodl. Trading biz as usual.
At the same time, it is important to note that nothing is taken for granted as everything in the cryptocurrency space should be considered as an experiment. Even Bitcoin was considered as an experiment way back in 2009 and you would only have to imagine how many people instantly pointed their fingers to scream scam without fully understanding blockchain technologies.
I guess they finally read the Bitcoin whitepaper.
This is what needs to happen to Ampleforth.
The Thing that Made $AMPL Rebound
So, besides the fact that $AMPL was EXTREMELY oversold these past few days, there was also a very important announcement made by Brandon Iles (co-founder) this week.
This announcement is concerning the fact that Ampleforth has moved toward a fully decentralized protocol as they remove emergency switches from their backend.
You see, when Ampleforth launched, the team allowed for two emergency governance-only functions which where; setRebasePaused and setTokenPaused.
These two switches were designed just to safeguard the launch of Ampleforth and were always intended to be disabled at some point by the team. Well, it seems that the team has made good on its promise as they announce that there are no longer any pause abilities in the protocol contracts what-so-ever.
This is fantastic news as it shows that the Ampleforth team is now confident enough in the history of the protocol to be able to remove these two safety features. This takes away the need to trust the team to only use these in emergency situations.
The response from this post by the community was extremely positive. Following is a quick list of some common reactions from the community regarding this news. These comments have been taken from the announcement page linked above and this Twitter thread from Iles himself.
- Great news!
- Good to see the AMPL team keeping promises and staying visible.
- This has show Ampleforth team’s integrity and trustworthiness
- This should start to help big exchanges list Ampleforth - it means Binance soon.
- Coinbase will list AMPL Soon
Although it is not guaranteed that this will mean that exchanges should now be willing to list $AMPL - it does certainly help the cause!
$AMPL & Balancer
Do you guys remember what happened to $AMPL when the Geyser Incentive Program started at Uniswap?
Let me remind you;
The thing went PARABOLIC.
Now, let me be clear. I hate it when markets go parabolic like this. There is only one outcome for a scenario in which prices head straight to the moon - they crash land!
So, I do not want to try and encourage any sort of behavior that might send the market on a strong wave higher BUT it does seem like $AMPL is starting to get it own pools over at Balancer
This news is so fresh that not too many people are aware of it. However, we can expect the volume from these pools to slowly increase over time. In particular, I expect the WETH/AMPL pool to explode over the coming days;
You see, Balancer and Uniswap are quite similar on the surface but are quite the opposite when you go deeper.
Both of these platforms allow users to deposit liquidity into the pools to allow other users to conduct Decentralized Trading when they wish to swap between the tokens on the pool. Each time a swap is made, the fees are paid to the liquidity providers in the pool.
However, the big difference is how the pools on these platforms operate.
With Uniswap, users are only able to deposit a 50/50 split between the two tokens in the liquidity pair. So, if a user wishes to provide liquidity to WETH/AMPL - by far the biggest pool on Uniswap - they would deposit their AMPL alongside an equal amount of ETH to achieve the 50/50 split.
On the other hand, Balancer offers a similarly weighted pool structure, however, the weightings can be adjusted to suit the need of the liquidity provider. For instance, users could deposit 95% AMPL and 5% WETH into a balancer pool if they wished to do so. In addition to this, Balancer also allows users to create liquidity pools with up to 8 tokens inside, adjusted to the weightings of the liquidity providers choosing.
See where I'm going?
AMPL on Balancer means that liquidity providers can remain up to a 87.5% exposure for $AMPL while providing liquidity, whereas on uniswap it's limited up to 50%.
Balancer might be more attractive to liquidity providers compared with Uniswap as there are more customization options for the Liquidity Provider. As these new AMPL Balancer pools start to catch on - I get the feeling there might be a slight exodus from Uniswap to Balancer - especially if any form of incentive program can be replicated there.
As if this wasn’t enough, metrics from Santiment show that the Social Volume is starting to rise again for Ampleforth;
We are still quite far behind from the late July mentions, however, the increase in social activity is a very promising sign as it shows there is still plenty of interest in this new project.
On top of this, the transaction volume over the past week has seen an increase since Iles posted about $AMPL removing the ‘pause’ switches from the contract;
The last metric I would like to show you concerns the Daily Active Addresses;
We can see that there has been a sharp decline from the late-July peaks. However, it does look like the drop in daily active addresses has flattened out and is starting to slowly increase again. If this metric continues to rise, we can expect AMPL to certainly be above $1 again pretty damn soon!
Let’s get real - every single cryptocurrency project you see out there is an experiment. Bitcoin, Ethereum, Chainlink, Tezos, Ripple, and Ampleforth are all in the same boat that has never sailed this far out to sea before.
Heck, dare I even say that Fiat as we know it is also an experiment in itself? With all of this monetary expansion with the Fiat printers going BrrrrrrrBrrrrrBrrrr there has never been such an inflated economy in history…
In fact, if we were to take the stimulus (not just the US one) away from the Fiat economy - the house of cards is most likely to fall. If you are reading this, you are most certainly aware of how this situation is not ideal YET our global economy still depends on it.
With that being said, as crypto-maxis (or even just cryptocurrency hobbyists) we should not be throwing dirt at projects that are trying to come up with new monetary mechanisms. Who knows, maybe one day someone will take AMPL, modify it and create even more innovative medium of exchange?
Let the best idea win the race.