Hello Publish0x community and welcome back in this new article of my “Easy & Short Cryptocurrencies Made Accessible” area.
This Sunday we talk about more features of Ampleforth!
Last Sunday I introduced you Ampleforth (AMPL) and I said that it is a digital-asset-protocol for smart commodity-money. Ampleforth aims to provide the next generation of synthetic commodities, which may eventually generate independent new asset classes to diversify each portfolio. Although the supply is flexible and the price constantly finds a balance, AMPL carries currency value.
If you missed the article you can recover it here before to continue this one.
Today I want to go deeper into the Ampleforth Technology and Economics side.
At a high level, the policy contract reflects price changes in the market as supply changes in wallet balances. This in-turn incentivizes market actors to adjust price. Price informs supply algorithmically and supply informs price behaviorally, in a cycle.
Bitcoin's lack of connection to traditional assets brings diversity to a highly interdependent global economy by giving users the option to exit into an asset outside the traditional cycle of consumption and production. However, since Bitcoin, thousands of new cryptocurrencies have failed to add any diversity to the ecosystem because they are either connected to traditional assets or their price movements follow Bitcoin too closely. Economically, it is as if only one new asset has been introduced because adding more identically designed cryptocurrencies offers no marginal optionality.
Why AMPL is a new DeFi (Decentralized Finance) building block?
The high correlation that prevails in cryptocurrencies, creates systemic risks in the Decentralized Finance (DeFi) ecosystem, because in such environments, a basket of assets cannot be used to reduce total volatility. However, AMPL has created diversity in a basket of decentralized assets. This means it can be used to build more powerful tools in the DeFi ecosystem. This is a new original building block.
Today's decentralized assets, BTC and ETH, are the original components of the new DeFi economy. These assets can be arranged to construct instruments such as loans, debts, and synthetic stocks. But their limitation lies in their volatility and high correlation with each other.
Over-collateralization of DeFi applications is a common practice to address the inherent volatility of useless mortgage assets, but the risk of liquidation is still high. Unless a basket of decentralized assets can be built, many DeFi applications are either unreliable or will be forced to use licensed centralized assets as collateral.
AMPL can be a better Bitcoin in future?
The AMPL protocol automatically converts price fluctuations into supply fluctuations. However, it is these traders seeking incentives that have adopted incentives to propagate these supply changes back into prices. In other words, the price informs the supply in a periodic manner, and the supply informs the price in a behavioral manner.
This cycle takes the form of a step-function-like movement pattern that alternates between static periods, where price and supply are in equilibrium, and dynamic periods where the market searches for its next equilibrium.
Even when supply is volatile, AMPL can be used as a unit of account. Use in this regard would be major step forward for cryptocurrencies, because it means the currency would have a real-exchange-rate in addition to a nominal-exchange-rate. Since the real exchange rate is more resistant to change than the nominal exchange rate, the use of currency as a denomination currency helps economists call it nominal rigidity.
This stickiness further enables currencies such as the U.S. dollar to withstand macroeconomic shocks and has played an important role in the longevity of currencies throughout history. If AMPL is at the current maturity level of Bitcoin, we hope that it has already been meaningfully used in denominations. In the long-run AMPL becomes a simple bankless asset, like Bitcoin, except it can be used for denomination and adapts to economic shocks.
So, is Ampleforth + Publish0x a great combination?
Let me know your opinion in a comment below!
Ampleforth’s goal is to compete against national currencies, and perhaps against Bitcoin as well, to become the world currency.
Next Sunday I’ll introduce you a new cryptocurrency!
So, be sure to follow my profile for receive the notification of my next articles on Publish0x!
@Gandisimo994 : we have found no evidence of AMPL being supported on the Atomic Wallet.
If I were in you, I would evaluate to move AMPL on an exchange to trade them in another coin