On July 22, Ampleforth (AMPL) co-founder Brandon Iles was interviewed by Bankless co-host David Hoffman on the Meet the Nation podcast. I could not resist listening to it and make some notes, which I hope you'll find valuable.
This is my second post of this type where I summarize an interview, following the well-received interview with Loopring's CEO.
Iles talks about a range of subjects, including what inspired Ampleforth, the design and development of the protocol and what it might potentially grow into the future.
I’ve covered all of the major highlights of the interview here, with approximate timestamps so you can view the responses yourself.
1. The Motivation Behind Ampleforth (1:23)
Hoffman’s first question was to ask what the motivation behind creating a unique asset like Ampleforth, which was launched in 2019 under the name of ‘Fragments’. Iles notes over the course of the conversation that there are a lot of protocols, technologies and fields of research blossoming in the decentralized technology space. However, the fixed supply of Bitcoin didn’t seem like the ‘best quality’ and that it may even ‘seem regressive to go back to the gold standard’.
But it was when Ethereum arrived that the two founders (the other being Evan Kuo) began to conceptualize Ampleforth. During the heyday of ICOs that is 2017, they realized that most problems that people were trying to solve with a blockchain didn’t need a blockchain.
We found that the most fundamental problem is really just the fixed supply of assets. [We were] trying to create a better Bitcoin...the problem of fixed supply assets is that it’s not able to respond to the needs of the marketplace. That was sort of the central idea that we were trying to pursue when we created the project.
2. The Purpose of Ampleforth (4:00-18:30)
The bulk of the interview sees Iles explaining what Ampleforth actually is and how it differentiates itself from other cryptocurrency assets, and especially Bitcoin.
Ampleforth reaches a supply-price equilibrium with its rebasing mechanism (which Iles explains in detail.) As a result, the volatility is in the token supply, not the price. A holder’s ownership of the network always remains the same, as wallet balances are globally altered in proportion to changes in demand. Iles explains it best,
I’d say that AMPL is a base money digital currency with an elastic supply that responds to the needs of the marketplace. How it works is that when the price is above the target price, then it needs to increase the AMPL in circulation [and vice versa]...it incorporates price into supply, which we’ve never really seen before.
The specific mechanism by which supply is modified, which Iles alludes to in the high level explanation, is called rebasing. Iles explains how rebasing works shortly after describing the general purpose of Ampleforth.
Saying that it “creates a different set of underlying incentives that they think will lead to different market behaviours and movement patterns”, Iles states AMPL has a unique value because of its focus on supply as opposed to price. Regarding the general purpose of AMPL, he says,
It might turn into, in the very long term, some sort of alternative central bank money but at least in the medium term, we expect it will move differently, which you know does add value as a unique building block not just in defi but the surrounding financial infrastructure.
He ends this question by talking about one of the protocol’s most important functions, rebasing.
If the 24 hour volume weighted average price of AMPL is within 5% of the reference price then it is considered to be in equilibrium and no changes happen. If it’s more or less than 5%, it goes into an expansionary or contractionary state...most assets go through a process of price discovery, AMPL goes through a process of supply discovery.
To clarify things, by saying 'reference price' Iles refers to peg of $1 USD 2019 value.
More than 5% of the reference price is $1.06 - as long as the oracle price is above that number, AMPL total supply will expand
Less than 5% of the reference price is $0.96 - as long as the oricle price is below that number, AMPL total supply will contract
If oracle price stays within 5%, which the range between $0.96 and $1.06 - AMPL total supply won't change.
3. Use Cases (18:30)
Iles highlights a few different use cases as being ripe for application of AMPL, primarily in the DeFi space:
- Diversification into baskets of collateral for DeFi
- Denominate debt and contracts in a safe way
- In the long term, an alternative central bank money
- Solving impermanent loss
On a high level, one significant point that Iles mentions is that AMPL acts like a decentralized asset, but “borrows like a stablecoin.” In other words, when AMPL is borrowed against, people know exactly how much they must pay to repay the loan. Unlike other assets, where the price of that 1 asset may change over time, thus affecting repayment value.
4. Funding (31:40)
Hoffman asks Iles to briefly go over the major holders of the Ampleforth assets. The Ampleforth treasury holds 20% of the supply, the team and advisor pool holds 18% and the ecosystem fund holds 8.5%. Iles explains that this budget was selected as the team believed it would adequately support ongoing development, outreach and long term development.
The biggest wallet, the Ampleforth treasury is also inaccessible at will and locked behind unlock schedules. He does state in the future, if Ampleforth does become stable independent of the locked funds, that the team may add those funds to the Ampleforth Geyser program and distribute them.
5. Ampleforth’s Vision for the Future (37:00)
Hoffman ends by asking what the medium and long term future has for Ampleforth, and what promotional endeavors AMPL has in mind. For the most part, it has to do with building the ecosystem and getting more projects to work with Ampleforth.
From a technology perspective, the team also wants to be blockchain agnostic, launching on top of ecosystems like Polkadot (DOT) and Cosmos (ATOM). Additionally, they will look into decentralizing the oracle.
Long term goals include total decentralized governance by handing over network control to the community, though this does not have a date set aside as it is part of the long-term vision.