Ampleforth Protocol

Ampleforth Protocol Stable Contracts with AMPL Cryptocurrency has Varying Token Supply Daily

January 11, 2021 Off By Steven Anderson

The Ampleforth Protocol is a lot like Bitcoin, but different in that it is a financial building block and is used in stable contracts.  It is algorithmic and uncollateralized.  AMPL can be used to denominate stable coins.

The protocol works by translating price volatility to supply volatility.  Thus, the numbers of the AMPL tokens in the user wallets will increase or decrease according to the price.  This kind of supply adjustment is known as “Rebases.”

The AMPL protocol will automatically adjust the supply in response to demand.  Since the AMPL is non-dilutive, there will be supply adjustments, which will be applied universally and proportionally across every wallet’s balance. Therefore, the percent ownership of the network will remain fixed.

Rebases happen once in a day.  When the network grows, users will have more tokens and when the network shrinks users will have fewer tokens. However, the price for every AMPL will trend around $1.  This rebasing mechanism is the foundational concept that makes it possible to use AMPL in contracts.

Ampleforth Protocol (AMPL) Smart Contracts

Stable coins is a familiar concept, but stable contracts sounds different.  When a contract is entered to using Bitcoin, due to the high price volatility, it is considered to be an unstable contract obligation with a high risk of default.  Thus, denominating contracts in Bitcoin makes BTC unstable for contractual obligation.

Stable coins depend either on traditional banks or they depend upon the lenders as a last resort.  However, AMPL does not depend upon a centralized collateral or lenders. 

For clarity, DAI are debt market place derived stable coins, which are sustained by free market incentives and require periodic bailouts.  AMPL look at them as lenders of last resort.  Traditional banks are relied upon by stable coins that are fiat collateralized like the USDT and USDC. 

In AMPL, the question is “If the number of tokens in my wallet can change, then isn’t AMPL still speculative and volatile? Why not use a stablecoin like Tether or DAI for contract denomination?”  They clarify stating, “Because the goal of the decentralized finance movement, is to create an alternative financial ecosystem, beyond the reach of politics.”

When AMPL is used in a stable contract obligation, there is a lower risk of default.  The unique incentives, movement pattern, and monetary qualities of AMPL make it ideal for several use cases.

AMPL is a cryptocurrency and how it differs from the entire lot of others Alts is that the token supply changes daily!

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