Ok a really interesting deep dive today, a project with some very interesting, complex and possibly rewarding economics. If you are reading into [defi], or projects like Maker, Syntheitx, Rune, or are interested in projects with unique elements relating to trading, arbitrage, compound interest, with a view to try and identify opportunities early on that others aren't aware of.... then grab a cup of coffee, this one is pretty intriguing
So, without further ado, I present to you Ampleforth (AMPL) – synthetic commodity money with near-perfect supply elasticity. Ampleforth’s cryptocurrency Ample (AMPL) is sound like Bitcoin and elastic like fiat, making it the first sound money with elastic supply.
Have I caught your attention yet?
Ampleforth (AMPL) - Team & History
Kuo is Ampleforth’s CEO and product engineer and Iles is Ampleforth’s architecture engineer.
Kuo holds a BS from UC Berkeley, he was previously the CEO of Pythagoras Pizza, and he has extensive experience developing predictive auction products and working with venture capital.
Iles holds a BS and MS in Computer Science from Rice University, has spent over 5 years at Google's Search Ranking and Machine Intelligence groups, and worked in Uber's Ranking and Relevance team.
Needless to say, these two entrepreneurs have impressive backgrounds and are extremely driven.
Accompanying Kuo and Iles is a team of 6 with an extensive background in major tech companies including Google, Visa, and others and distinguished academic institutions including Yale, UCLA, and more.
Moreover, Ampleforth has an impressive Advisory Board as well, with members from Harvard University, Stanford University, University of Oxford, Massachusetts Institute of Technology, Thiel Fellowship, and Hoover Institution.
Ampleforth has an impressive list of investors including:
- Brian Armstrong (Coinbase CEO/founder)
- True Ventures
- Pantera Capital
- Founder Collective
- Slow Ventures
- FBG Capital
- Huobi Capital
- Spartan Group
- Nima Capital
- Skunk Capital
Overall, Ampleforth (AMPL) looks like it has a strong and promising team, an intelligent advisory board, and powerful investors.
Ampleforth (AMPL) - What is it? What does it do? How does it work?
Ampleforth – Amples (AMPL) – describes itself as the first sound money with elastic supply. It is a synthetic commodity money, like Bitcoin, but with near-perfect supply elasticity, like fiat.
For instance, while Bitcoin’s total supply is capped at 21,000,000 BTC, Ampleforth has no cap on total supply - it has a daily "rebase"; A re-calculation of the supply. If the price is over $1.01 then the supply increases, if the price is below then the supply contracts - yes, YOUR balance in your wallet changes too - if you have 100 amples, and there is a 1% supply rebase then you will have 101 amples - more on this below.
Why was Ampleforth designed like this?
Scarce commodity-monies like Bitcoin or gold are naturally fair, independent and immune to runaway inflation.
However, they are a poor substitute for central-bank-money because they cannot efficiently respond to changes in demand, which makes them vulnerable to economic shocks and runaway deflation. This is why the world’s economies require highly elastic fiat money today.
To address the shortcomings of Bitcoin and gold, Ampleforth was designed to propagate price-information into supply, which gives it attributes of high supply elasticity without being controlled by a central authority.
That said, Ampleforth’s ambitious long-term goal is to become an alternative to central-bank money.
How does Ampleforth work?
The Ampleforth protocol always seeks a price-supply equilibrium, and will automatically enter a state of unrest until it finds one.
This is achieved by a daily "rebase": Every day, the Ampleforth protocol proportionally increases or decreases the quantity of tokens each user holds according to its average price.
If the price is above $1 then the supply increases. If Alice holds 1000 tokens, the next day she will have ie. 1050, at the same market rate. This happens every 24 hours.
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 incentivizes both buying and selling to bring the price back to equilibrium. If you held 1000 tokens at $1, i.e. $1000, then 15 days later the price has DOUBLED to $2, simplified to 5% daily, you have 2000 tokens, valued at $2 each, for a total portfolio value of now $4000. i.e. a 400% return, not just a 100% return. This incentivizes Alice to sell, with an amazing profit, the price adjusts down, and the rebase % lowers and it comes closer to $1 again.
What are Ampleforth’s use cases?
Ampleforth is a truly unique cryptocurrency due to the elastic monetary qualities of the Ample (AMPL) token, making it ideally suited for the following near, medium, and long term use cases:
For diversification in cryptocurrency portfolios (Ampleforth is a non-dilutive asset that’s neither correlated with traditional assets nor with Bitcoin)
As reserve collateral in decentralized banks (AMPL could be plugged into DeFi – loans using AMPL as collateral, lending AMPL via Compound, etc. (the team has close links to both Compound and Aave, and actually was selected into an a vote to be added to Compound very early on after it's launch - unfortunately being just too new and unknown, and up against Tether, it lost the vote... for now?)
An alternative to central-bank money (like Bitcoin but macroeconomically friendly)
Ampleforth (AMPL) - Launch & Distribution
Now that we have a basic understanding of what Ampleforth is, what it does, how it works, and who’s behind it, let’s dig into other details like how it was launched and distributed.
Ampleforth (AMPL) became the first cryptocurrency to be launched and distributed on Bitfinex’s initial exchange offering (IEO) platform, Tokinex. The Ample (AMPL) token sale commenced on June 13, 2019, and had a $5 million USD hard cap which was fully sold in 11 SECONDS.
Ampleforth (AMPL) Token Distribution:
Ampleforth’s Ample token was launched with an initial total supply of 50,000,000 AMPL with the following distribution:
- 25% - Ampleforth Team & Advisors
- 23.2% - Ecosystem (Growth, Community, Partnerships, Etc.)
- 20% - Token Treasury
- 18.5% - Seed Sale
- 10% - Initial Exchange Offering (IEO)
- 3% - Series A/Private Sale
Now, before we move on let me explain something again.
Ampleforth (AMPL) is different from any other cryptocurrency in that it has an elastic supply, meaning the Ampleforth protocol proportionally increases or decreases the quantity of tokens each user holds according to its average price, every single day.
“This automatic supply policy is countercyclical and nondilutive, making the Ample immune to both runaway inflation and runaway deflation.” – ampleforth.org
Due to this supply change, total supply as of May 27, 2020, is 19.94M AMPL with a price of $0.942 per Ample (AMPL).
Ampleforth (AMPL) Price & Total Supply History - (Source)
Ampleforth (AMPL) Token Release Schedule:
While Ampleforth has a current total supply of 19.94M AMPL, its current circulating supply is just ~5,098,157 AMPL. This is because a large percentage of the Ample token supply is locked up and yet to be released.
That said, the Ample (AMPL) token release schedule is as follows:
AMPL token release schedule for up until January 2022 - (source).
Ampleforth (AMPL) - The Competition
We’ve already established that Ampleforth (AMPL) is a digital currency whose behavior is far different from its peers. There really is nothing quite like it in the digital asset space, but that’s not to say it doesn’t have any competition.
Looking at Ampleforth’s medium and long-term use cases:
- AMPL to be used as reserve collateral in decentralized banks
- AMPL to be an alternative to central-bank money
It becomes clear that Ampleforth’s competition is stablecoins, for example DAI (produced by MakerDAO).
However, although Amples have an equilibrium price-target, they cannot be thought of as a stablecoin initially because user balances can gain or lose value daily and the time to reach equilibrium is market dependent.
In the short term Amples are likely to be more volatile due to a lack of liquidity as any trading, either selling or buying can produce larger price swings (this is good for traders! However, as Ampleforth evolves and importantly grows in liquidity, it will become a macroeconomically friendly commodity-money where it can then compete with and be a viable alternative to other decentralized stablecoins, or be considered a more serious candidate to provide collateral for defi platforms like MakerDAO and Compound.
Conclusion - RISK but Opportunity
Now is the time to identify promising cryptocurrency projects worth investing in and I believe that Ampleforth (AMPL) may be one of these projects.
It is a genuinely unique digital asset that has very interesting and complex economics and tokenomics to figure out. The Ample token is intelligently designed and is unlike anything that has been tried before.
Investing in Ample tokens at the right time could prove to be quite profitable, even with only small price swings, but staying above $1 for a few weeks at a time (i.e. 5% daily compound interest gained from 15 days above a $1.20 price would DOUBLE the amount of tokens you own) and the project looks to have an incredibly bright future. Not only does Ampleforth have a killer team, but it’s also backed by a strong Advisory Board and notable Investors.
That said, it is potentially very volatile. A low cap coin, it can be manipulated, or even just genuine interest positively can increase the price possibly beyond accurate market value, or just larger investors needing to cash out for personal reasons could significantly reduce the price.
To sum up, this is not just a straight forward "buy low, hodl, and sell high" trade. The rebase adds extra complexity. If you time it right, say buying at $0.70 you could be getting the opportunity of a lifetime if it QUICKLY rises past $1. Or if daily negative rebases continue for 10-20-30 days you could see your amount of coins reduce by 10-50%!
With this understanding you might feel it is safer to wait until the price is at $1 again and there are daily POSITIVE supply rebases. This is true unless the price then dips under $1 and you lose token price AND start to experience supply rebase reductions.
This is a coin for TRADERS. If you can figure out the tokeneconomics and especially factor in the rebase then this could be an amazing opportunity.
What Ampleforth needs is LIQUIDITY. To give confidence to buyers getting in and let people buy in without spiking the price artificially, and to let people cash out without otherwise destroying the price. The Ampleforth team know this too - and have announced liquidity provider incentives of up to 23% of the token supply (but yet to confirm exact amounts and over what period they will be distributed) for holders to provide liquidity into Uniswap and other DEXes. This is rumored to start with the launch of Uniswap V2, estimated to be May/June 2020.
With this increase in liquidity over the coming months, the Ample market could mature, and with fewer swings in the rebase and could mean AMPL is more likely to be used as an asset that’s plugged into other DeFi protocols - further increasing liquidity, utility and confidence.
All in all, Ampleforth (AMPL) is an interesting project to keep on your radar and potentially invest-in.
What do you think about Ampleforth (AMPL)? Do you think it’s a good investment? Let me know what you think in the comment section below.