To a newbie and even some experienced traders, it could be difficult grasping the concept of Ampleforth (AMPL) in a single read since it is a novel project in the crypto space- it’s quite different from what we are all familiar with.
What we are acquainted with is that when the price of Bitcoin goes up or down, the price of Altcoins (other cryptocurrencies) follows suit - This is quite evident when you look at your cryptocurrency watchlist on your favorite App, and it’s referred to as correlation. The dominance of BTC is undoubtedly responsible for this.
However, this is not only found in cryptocurrencies but also in other financial assets. It is quite not cool since it makes the value of these assets (in price) dependent on one another. Well, I used to think I was the only person not comfortable with this kind of market movement but all thanks to the Ampleforth team for realizing it and ultimately bringing forth their precious innovation!
Bearing the complexity of the subject in mind, I will try as much as possible to be explicit and succinct in this presentation. By the time you’re done reading this, you should now grasp AMPL’s concept and how to profit from it.
The Ampleforth Protocol
AMPL is an ERC-20 token built on top of the Ethereum blockchain. Its protocol is quite dissimilar to other cryptocurrencies most of which are positively correlated and highly volatile, hence, not a good store of value. Ampleforth is not a stable coin, instead, it operates based on a mechanism that allows its price to be relatively stable (at $1 per unit) by either increasing or decreasing the quantity of AMPL tokens available in users’ wallets (a process known as a rebase).
The Rebase System Explained
A rebase can either be positive or negative and it occurs daily at exactly 13:00 EST. The elastic supply mechanism incorporated into the token’s smart contract automates the rebase process. By elastic supply, we mean supply is sensitive to price change and will be in a state of unrest until equilibrium is reached. It is quite appealing to refer to the state of unrest as “dynamic” during which supply changes until it becomes static during which it equilibrates with the price (state of equilibrium).
When the demand for a fixed supply of goods increases or decreases, there will be a respective increase or decrease in price. Undoubtedly, this is what most of us are familiar with but the Ampleforth protocol seems to deviate from this conventional belief as changes in demand for the AMPL token is reflected in changes in supply or quantity of tokens held in users’ wallets rather than price.
To better understand this, see the illustration below…
Assuming you purchase 100 AMPL at $1 per unit. A sudden increase in demand could drive the price to $2 per unit meaning you now have $200 worth of AMPL in your wallet. The quantity didn’t change, right? That’s exactly how Bitcoin and other cryptocurrencies work, but Ampleforth works differently…
Since the Ampleforth protocol is trying to keep the price of AMPL per unit relatively constant via its rebase system, the quantity of AMPL in your wallet will be doubled (that is 100 x2) and the price remains constant near $1 - A perfect scenario for positive rebase.
Similarly, if there is a sudden decrease in demand and the price per unit decreases to $0.5 you should have $50 worth of AMPL token with a static supply (100 AMPL). Instead of a price drop, your quantity of supply is halved (50 AMPL at $1 per unit) - A perfect scenario for negative rebase.
It’s worth noting that the supply, whether minimum or maximum, of the AMPL token, is not fixed, however, there will continue to be an increase in the quantity of AMPL should the price go above the target price of $1 to restore it, and vice versa. However, the percentage of tokens held by each user within the AMPL ecosystem remains fixed before and after the rebase. Therefore, if you own 5% of the total circulating supply before rebase, you will still own 5% of the total circulating supply after rebase, irrespective of whether it’s positive or negative.
Trading AMPL Token For Maximum Profits
Theoretically, an increase in the price of AMPL token per unit subsequently leads to an increase in the circulating supply to cushion the increase in demand, therefore, stabilizing the price at $1.
How, as a trader can you profit from this?
Well, this actually depends on whether you are a fast or slow actor.
As a slow actor, you may not be concerned with the daily changes that occur in price and supply since equilibrium will be achieved over time. However, if you are a fast actor, these changes become an issue. You can either profit from expansion or contraction although the opportunity around this is quite limited.
See the scenarios below…
Information is very important when trading AMPL and it's publicly available without any fees.
What exactly is the information needed? Of course, you need to keep yourself updated on what the next rebase will look like and this is dependent on changes in price & supply. Market Oracle provides you with the necessary price info obtained from whitelisted independent data providers who broadcast 24-hour volume-weighted average price to a single on-chain aggregator.
Expansion Scenario
As a fast actor, you should notice that at t1 Bob has 1.2 coins worth $1.2/coin which is a bit higher than his initial coin holding. If Bob could sell at this new price before the rebase, he would be profitable.
Contraction Scenario
This is just the opposite of what happens to Bob during expansion and it's an opportunity to buy more, although the opportunity is limited…
In the second example in the image above, you should notice the number of coins held in Charlie's wallet reduced while the price remained the same. If Charlie could purchase more coins at this stage fully knowing that subsequently, the price will be restored to the target price ($1). Of course, he would have more coins now worth $1 per unit at t2.
All the same, you have to know there is limited opportunity around this before the price is restored by other fast actors. Obviously, you want to see either expansion or contraction, then, equilibrium!
Fundamental Analysis Of Ampleforth
At the time of release, the market capitalization of AMPL was about $7.8 million. However as at the time of writing, the market cap. sits around $222.6 million according to Coinmarketcap with a circulating and maximum supply of $220,578,073 & $395,345,190 respectively.
What does this info tell you?
BuyExchangeGamingEarn Crypt
From the data above, the circulating supply accounts for about 56% of the maximum supply. What happens when the maximum supply gets exhausted as a result of a possible increase in demand in years to come?
If we are to go by the Ampleforth protocol (assuming a positive rebase occurs) and as said earlier in this, an increase in demand leads to a corresponsive increase in price. However, to keep the price fairly stable at $1 per AMPL, the circulating supply increases. If it gets to a point where the maximum supply gets exhausted, will more tokens be added to the system to prevent a possible rise in price? Well, I think this is left for the Ampleforth team to answer, otherwise, I might have skipped it somewhere in the whitepaper.
Assuming the circulating supply will be fixed during a prolonged positive rebase (more like the bull market), I think an increase in demand will cause the price to increase. Of course, this will mostly HODLers who have held their coins since they bought them to the moment such a thing happens. It will surely be an insane return then!
On the other hand, should the price keep dropping during a prolonged negative rebase and supply continues to restore it to its target by dropping (more like a bear market), is it possible to have a negative supply of coins in circulation? Well, I am not sure about this and the team behind the development won’t make such to happen.
Technical Analysis Of Ampleforth
Support Levels
- S1 >>> 0.78679
- S2>>> 0.55562
Resistance Levels
- R1>>> 1.23409
- R2>>> 1.70877
- R3>>> 2.24735
Technically, the AMPL token is currently trading near a major support level, S1, at 0.78679 on the daily time frame and within a broadening rising wedge, shown by the two black trendlines on the chart. Should the price break S1, S2 will be acting as the next support level near 0.55562. However, if S1 stands, there is a possibility of the price heading to the nearest resistance zone, R1, at 1.23409. If this obstruction is cleared, the price should be ready to face another resistance zone, R2, near 1.70877, then, R3 at 2.24735.
Should the price reach the third resistance level, R3, at 2.24735, it is likely to face a strong rejection and the price might come down from there to the current trading zone at 1.00000 provided that price will be able to break through R1, R2 & R3 which will be acting as support S3, S2 & S1 respectively.
Note that: Before the AMPL’s bullish trend could be confirmed, the price has to break through the diagonal red line that forms part of the right-angle triangle.
Where & How To Buy/Sell Ampleforth (AMPL)
The AMPL token can be purchased on a few numbers of exchanges including Coinbase. However, you may need to register on them before going ahead to purchase your coin. If you already have an account on your preferred exchange, you do not need to register anymore; all you need to do is to log in to your account to begin the process and become a proud AMPL investor!
Some other websites are…
- KuCoin
- Bitfinex
- Balancer
- Uniswap
- Kyber Network
The Ampleforth’s Team
As an investor, of course, I wouldn't want to invest in a faceless project. Therefore, talking about an actual project without referencing the brains behind it is quite not appealing.
The Ampleforth's team is a team of 8 brainiacs whose reputation in the tech industry cannot be sidelined. Ampleforth was founded and launched by Brandon Iles & Evan Kuo alongside other team members. Kuo is the CEO of the company and he handles product engineering while Brandon handles architectural engineering of the project. Of course, all of these guys are crypto enthusiasts and have worked with reputable tech companies like Yale, Google, UCLA, Facebook...
Ampleforth’s Notable Investors
The project is backed by strong investors like the CEO of Coinbase, Brian Armstrong among other reputable ones…
- True Ventures
- Pantera Capital
- Founder Collective
- Slow Ventures
- FBG Capital
- Huobi Capital
- Spartan Group
- Nima Capital
- Skunk Capital
Note that: It is not recommended to store your cryptocurrency on exchanges, instead, withdraw them into your wallet once purchased for safety. You may use Ledger, Trezor, or wallets that support AMPL like Coinomi, Trust wallet, Atomic wallet, etc.
Final Thought
At this point, we could conclude that Ampleforth is an outstanding project as it is definitely going to disrupt the crypto universe. The most fascinating thing about this project is the rebase system which makes it totally distinctive from other projects we’ve been seeing in the crypto space.
