Hello PUBLISH0X community and welcome back in this new article of my “Easy & Short Cryptocurrencies Made Accessible” area. This Sunday we are going to introduce Ampleforth (AMPL)!
Have you ever heard of this cryptocurrency?
Well, probably yes, because you will have noticed that it is one of the currencies that Publish0x uses to reward readers and authors.
If you want to know more about this coin, that we also find on Publish0x, read the article to the end!
Protocols like Compound, Aave, and MakerDAO have introduced a new dimension of financial possibilities with supply-demand based interest rates, flash loans, and crypto-collateralized stablecoins, respectively. Among these game changers is a project called Ampleforth which has recently taken the spotlight, and for good reason.
Ampleforth aims to provide the next generation of synthetic commodities, which may eventually generate independent new asset classes to diversify each portfolio. Although the supply is flexible and the price constantly finds a balance, AMPL carries currency value.
Ampleforth is a digital-asset-protocol for smart commodity-money.
The Ampleforth protocol receives exchange-rate information from trusted oracles, and propagates that to holders of its units (Amples) by proportionally increasing or decreasing the number of tokens held by each person. For traders, these changes in exchange rates and quantities will translate into changes in the market value of Ample. Therefore, short-term traders, especially those who use automated or algorithmic methods, will have to design new strategies to trade Ampleforth.
The idea of Ampleforth itself came from examining two things (among others) that cryptocurrency are seeking to redesign: money and banking. Ampleforth cryptocurrency is modeled on a theoretical currency called Ducat proposed by the famous economist and philosopher Fredrich Hayek. This currency will increase and shrink its total supply to maintain its purchasing power for commodities such as food, oil, housing and precious metals.
Various economic conditions such as economic recession, prosperity, and technological progress will affect the amount of money people want to hold. For fixed supply currencies such as gold, silver and bitcoin, these changes in demand are completely represented by changes in currency value. This means that fluctuations in demand will translate into the price of anything in that currency. Therefore, a sudden shock in demand will undermine the stability of the ecosystem supported by fixed supply assets. The greater the complexity of the ecosystem built on fixed supply assets, the greater the risk of chain failure.
In order to solve this shortcoming, AMPL wants to adjust its supply fairly and automatically according to demand, without the need for any bank. AMPL is designed as the simplest and most direct solution to the problem of inelastic supply, which limits assets such as gold and bitcoin.
AMPL's smart contract design allows the increase and decrease of supply to be automatically executed without any need for a transfer between peers, and without the need for a bank. The currency agreement will automatically adjust the supply of AMPL in all user wallets based on the price. This means that the amount of AMPL you have will vary based on market conditions. When the price is high, the wallet balance will automatically increase. When the price is low, the wallet balance will automatically decrease. This supply adjustment operation is carried out once a day, which is called rebase.
This daily rebase operation is applied universally and proportionally across every wallet’s balance. This means AMPL is non-dilutive. Like Bitcoin, if you own 1% of the overall network you will always own 1% unless you actively make a transfer.
For this introductory article on Ampleforth I think we have already talked about several things. If you want to find out more details about this cryptocurrency, I suggest you follow me on Publish0x to receive the notification on the next article, which will be released next Sunday, dedicated to AMPL!
Suggest me with a comment some crypto you would like to see analyzed!
