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Amplforth is a youthful stablecoin that operates through a rebasing system. Rebasing means that the number of AMPL, the stablecoin for Amplforth, in a holder's wallet can fluctuate as the market cap expands or contracts. This ensures that the percentage of the market cap you own today is protected from dilution over time from other investors. Amplforth utilizes rebasing to stay as close to the price target of $1.033 as possible.
Amplforth Rebasing
Rebasing is extremely lucrative during periods of market cap expansion for Amplforth. During what is referred to as the last great market expansion for Amplforth, the network grew from approximately $20 million in June of 2020 to over $780 million by the end of the expansion in August of 2020. This period experienced incredibly profitable rebases, some as high as 18, 21, even 27% in a single day.
The following chart is an example of the rebasing experienced during July of 2020. Categories are as follows from left to right: date, rebase %, oracle rate, price target, total AMPL suppy
During periods of negative rebasing, it is the opposite story. As the market cap contracts, Amplforth negatively rebases to reduce the total outstanding number of Amplforth day to day. These negative rebasing phases also have some fantastic opportunities for maximizing gains on Amplforth as well. While negative rebasing can look scary, this is the point in which to accumulate more Amplforth for cheaper as the price is generally under the $1.033 mark.
Why I am Accumulating Amplforth Right Now
Right now, Amplforth is well below its price target of $1.033. This is a great time to accumulate Amplforth despite the negative rebasing due to the low price point. I was able to buy Amplforth last night around $0.52 USD per AMPL. Below is the chart of recent Amplforth rebases. The link to this chart can be found here.
Buying at a price point so low allowed me to reinforce my current holdings of Amplforth by over doubling my total holdings for half the cost while also helping to counteract the negative rebasing that Amplforth has been experiencing for the past few weeks. Absent a complete failure of the entire Amplforth network, the price of each AMPL can only go so low before the price begins to push up as the negative rebasing kicks in. This means that as the rebasing catches up with the total market cap value, the price will begin to rise even if it is still negatively rebasing. If you had purchased any Amplforth prior to the sell off, now is still a great time to add to your holdings to ensure you maximize your profit as Amplforth recovers upward towards the $1.033 mark. No one can guarantee it will go up over the short run, but by understanding how the rebasing works, it can help to utilize it as a tool for maximizing returns, especially during a downturn in the markets or through intense volatility such as now.
The graph above shows multiple features. On the left circled in blue is the most recent market cap expansion that was discussed previously. The market cap expanded rapidly and led to a period of massive rebasing as the price skyrocketed up in the $2, $3, and even $4 range. The rest of the graph shows how Amplforth, over time, always pulls to the trend line in the middle. This is a visual example of the rebasing working to keep the price as close to $1.033 as possible. This most recent decline in price is no exception.
Amplforth has tremendous upside and appeal as a long term solution for stablecoins suitable in the decentralized finance space. The combination of AMPL, the stablecoin, and FORTH, the governance token, ensures that the control of the network remain decentralized, trustless, and secure.
If you are interested in Amplforth and would like to learn more, feel free to check out the links below for more information:
https://www.ampleforth.org/
https://atomicwallet.io/blog/academy/ampleforth-complete-guide
This isn't financial advice. While I aim to provide my insight as accurately and bias-free as possible, please do your own due diligence before choosing to invest in anything, including Amplforth.
