Going beyond the basics of Ampleforth's daily rebase mechanism many use cases could be drawn up. From traders and hodlers to lending and yield farming platforms. The rebase mechanism creates a gaming mechanism to incentive price movement. Majority of ample's price volatility currently is due to fairly small liquidity and trade volume. A simple solution to overcome the price volatility and create a more stabilized price would be to have a larger liquidity pool and trade volume where price fluctuations aren't so drastic.
Traders and Hodlers
Traders and hodlers are the backbone to the ebb and flow to Ampleforth's protocol. By utilizing the dashboard one could deduce which of the three states the protocol may be in (equilibrium, expansion, contraction). Equilibrium is the middle ground where everyone gets to play. Since the supply will neither contract or expand traders and hodlers may take advantage of price action to their ultimate goal, increase ampl bag or USD bag. Contraction state, would be disadvantageous to traders yet the opposite for hodlers. $100 of ample bought at $0.50 would still equivocate to 200 ample pre-rebase. If a negative rebase (contraction) is in effect, then the next day their ample value would reflect a lost of coins and perceived value. Similar to liquidity providers the lost is not realized till sold below $1. But, their actual stake or percentage of total supply of ample never changes. The elasticity of supply becomes the game changer. Skipping equilibrium, that hodler has now become a trader. They want to make some moola and take advantage of a positive (expansion) rebase. Pretending in the before scenario we skip the rebase as well. Poof, the next day the price of ample is at $1.10 and oracle rate is showing $1.08. We know that the oracle rate is trying to reach the price target of 2019 USD. Positive rebase equals expansion so our 200 ampl now becomes 204 ampl. 204 ampl at $1.10= $224.40. Best scenario, that's $224.40-$100=$124.40. Sell off gains or all helping create sale pressure to return the ebb and flow. Hodlers to traders, and traders to hodlers.
I am not a financial advisor and do not pretend to be one. Please always Do Your Own Research.
Situations are hypothetical.
Lending and Yield Farming Platforms
Lending and yield farming platforms somewhat resemble the muscles to the backbone of our system. Lending and yield farming both could take advantage of positive rebases. During expansion each platform could sell the top after each rebase moving profits to other cryptocurrencies such as btc or eth to diversify or hedge. A theoretical win-win situation for the platforms and users, as gains would be re-invested to support devs and improve the platform, another portion would be paid out to users. Negative rebases would be easier to weather for lending and yield farming platforms. With congregated funds each platform could purchase larger stakes of the ample supply knowing that eventually an expansion process will happen. Ebb and flow, contraction to equilibrium to expansion. Now, these platforms could do a positive rebase strategy with a significant stake of ample supply from the earlier phase.
Interested community members should check out the Amplesense DAO. It's where community members can pitch ideas and thoughts for the future of Ampleforth.
