Welcome to these week’s edition of Wealth Mastery. Today we’ll be discussing a project that’s been in the blockchain space for a couple years now. Taking the same legacy fiat systems money mechanics and introducing it to the blockchain, is Ampleforth.
Introduction
Ampleforth protocol is working to bring a diversified and automated stablecoin to the blockchain ecosystem through a countercyclical supply policy that automatically and proportionally adjusts supply in response to demand. With Bitcoin’s lack of connection to traditional assets, it brings diversity to an interdependent global economy by giving users the option to exit into an asset outside the traditional cycle of consumption and production. But 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. To address this shortcoming, Ampleforth has created the ability to fairly and automatically adjust its supply in response to demand, without any need for any intermediaries. Ampleforth was designed to be the simplest direct solution to the supply inelasticity problem that limits assets like gold and Bitcoin. With daily rebasing operations that adjust the supply universally and proportionally across every wallet’s balance. Ampleforth’s non-dilutive supply changes introduce a different set of incentives for traders. Because changes in demand are expressed by the number of AMPL held, in addition to its price. As a result, profit maximizing users become compelled to devise new trading strategies to counteract Ampleforth protocol consistently reducing it’s volatility over time. This applies a countercyclical pressure that was not present in current generation digital assets until developed by Ampleforth.
How it works is that Ampleforth propagates price information into supply by reacting to nominal exchange rate information. The protocol achieves this by seeking a price supply equilibrium and entering a state of unrest until it finds one. Meaning, Whether a user holds 1 AMPL worth $2 USD or 2 AMPL each worth $1 USD, makes no difference in terms of net balance. The difference is the Ampleforth protocol propagates price information to each token owner through the count in their token balances as seen in the Ampleforth Dashboard. By expanding to and contracting from coin holders , a given user’s percent ownership remains fixed unless the user chooses to sell or buy more. When price is high, wallet balances increase. When price is low, wallet balances decrease. Meaning that early on, while AMPL’s market cap is small, wallet balances will be very volatile. As dynamic periods will occur with the system snapping from one supply equilibrium to the next, and reflecting the rapid changes in demand for AMPL. In this period of its life cycle, AMPL benefits from use as a diversifying asset to be held, and from use as a decentralized collateral asset. Later on, as AMPL’s market cap grows, equilibrium periods can last for longer stretches of time. But, In these static periods AMPL still remains relatively stable in both price and wallet balance. As the mechanics are only mildly interrupted by macroeconomic changes in demand. Because, such elasticity prevents demand shocks from cascading into liquidity crunches and deflationary…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
