There are already a lot of lesser-known projects and tokens that are part of the Publish0x Ambassador program. And more than a few of these lack information accessible to newbies like me.

So, I wanted to look at $SPOT now that it will be integrated into the current tipping system because I wasn't personally 100% sure what purpose $SPOT serves in the grand scheme of things or what it could be used for.

Some Terms to Know

What is Ampleforth?

The Ampleforth protocol is a set of instructions on the Ethereum blockchain that produces a decentralized unit of account (a block) called AMPL.

In simple terms, Ampleforth acts like a series of rules or guidelines that define the interface of the network, interactions between computers, incentives, and how data is transferred between AMPL blocks on the Ethereum blockchain.

Any blockchain protocol's strengths and weaknesses will affect the entire project's security, decentralization, database consistency and scalability.

So, SPOT will likely inherit the strengths and weaknesses of this protocol.

What is (AMPL)?

$AMPL tokens have an elastic supply with a set purchasing power target.

Once every 24 hours, a calculation, known as REBASE, occurs to see how high or low the current value of AMPL is compared to its target price. (i.e. $1.022) if the actual cost is lower than the target price, the number of tokens available will decrease from ALL wallets to create a more significant demand, raising the token's value.

When the actual price exceeds the target, tokens are added to all wallets to decrease demand and reach the target price.

For traders, this makes AMPL a viable 'cash' option for inflation-resistant trade. But this also makes AMPL a challenging opportunity for day trading because of the non-dilutive mechanism used to achieve a set target price.

Essentially, it's an interesting answer to everything stablecoins are trying to achieve without actually being a Stablecoin.

What is Buttonwood?

According to this press release, SPOT is built on Buttonwood, an Ethereum-based collection of smart contract building blocks used to create robust DeFi protocols.

Although these core contracts are designed to be easily composable, the main thing that sets them apart is their innovative first principles approach to tranching.

What is Tranching?

Now here's where things get interesting. 

Traditionally, debt instruments like mortgages or bonds are bundled into Collateralized Debt Obligations (CDOs). They are then sliced into segments called 'tranches.' These slices are created with a particular set of characteristics and an ideal risk profile that allows investors with specific risk tolerance to invest in a 'tranch' with their ideal characteristics in mind.

This concept from finance is only now being implemented with the help of Smart Contract protocols like Buttonwood and Tranche Finance.

When applied to the crypto market, tranching would allow users seeking high returns to deposit into riskier levered tranches and those seeking more stable returns to invest in low-risk senior tranches for the same project.

What is a Stablecoin?

It's important to understand that while Stablecoins and AMPL attempt to answer the same problem, they are two different things.

While AMPL maintains a target price through REBASE, Stablecoins achieve the same 'stability' by pegging themselves to a reference asset. Assets can include fiat money like USD, exchange-traded commodities or another cryptocurrency like ETH.

This means stablecoins are only as valuable as the assets they are pegged to. So, for example, if the value of USD or BTC were to rise or fall drastically, so would the stablecoin it's pegged to.

What Is Spot?

Development Company: Fragments (The same team behind the Ampleforth protocol. Co-founded by Evan Kuo and Brandon Iles.)

Ecosystem: Ampleforth (AMPL) Protocol on the Ethereum Blockchain

DeFi Application: Buttonwood

Related DAO: FORTH

According to all the press releases, SPOT is a decentralized peer-to-peer inflation-resistant store of value that can be used as censorship-resistant digital cash. In practice, here's what that looks like.

When you deposit AMPL tokens into the SPOT app, these tokens are split into 2 "tranches" called a-AMPL and z-AMPL, at a 20% - 80% ratio.

• A-AMPL tokens get turned into $SPOT. These tokens DON'T rebase and are redeemable 1-1 for AMPL regardless of the current AMPL price.
• The Z-AMPL tokens do still rebase. However, they are leveraged at 1.25x the normal AMPL rebase and represent the total initial amount of AMPL.

The Pros

• Combining Ampleforth with Buttonwood into a new token is a novel approach that could significantly improve how inflation-resistant tokens in Ethereum work.
• SPOT targets but is not pegged to the price of AMPL, protecting you from exposure to AMPL rebasing and can be redeemed 1 to 1 for $AMPL tokens at any time on the Spot minting app, regardless of the current AMPL price.
• The 80/20 tranching approach helps diversify your AMPL-based portfolio by allowing you to hold a relatively stable tranch alongside a more volatile tranch exposed to rebasing.
• The same team behind AMPL is also working on SPOT. This guarantees that it is being developed by people that already know the protocols inside and out.

The Cons

• Although SPOT is based on and not pegged to AMPL in a traditional sense, their futures are tied. If Ampleforth is ever replaced by a competing protocol that can achieve the same thing, SPOT will go under too.
• Different does not necessarily mean better. The elastic nature of AMPL supply and the moderately managed volatility of rebasing are unique approaches to a cryptocurrency. However, as a result, these blocks move and behave differently than other cryptocurrencies and require a bit of a learning curve to invest in.

Final Thoughts

Despite the lack of a flashy website or a lot of hype, the whitepaper looks promising! SPOT is an innovative approach to inflation-resistant, peer-to-peer currency built on an investment-friendly tranching system.

It's novel, relatively easy to understand and built on a protocol (Ampleforth) that most crypto enthusiasts are excited about. 

Having tips split across multiple tokens can be frustrating because of how long it takes to earn enough to withdraw from Publish0x. But SPOT plays nicely with AMPL and could be a strong investment vehicle once you get the chance to start minting.

Tips are free anyways. So, I'm looking forward to trying it out.

Wish me luck.✌️