Ampleforth Review: AMPL Tokens Explained In This Comprehensive Guide
As the recent wave in decentralized finance is getting higher, more attention is now on protocols in its ecosystem. Several of the projects devise some means to maintain price parity with other cryptocurrencies.
Most of the stablecoins depend on deposits or to lock and redeem some assets for their price stability. While USDT gets backing from dollars deposited in a conventional custodian, DAI operates by locking assets in its Maker protocol.
However, Ampleforth takes a different pattern from other stablecoins while ensuring price stability. This new stablecoin adjusts its AMPL asset through ‘rebasing’ every 24 hours.
Thus, when there’s an increased demand for AMPL tokens that will lead to a rise in price, the supply will invariably increase. Similarly, where the demand dips, the supply will reduce as well.
Through ist operation, Ampleforth concurrently handles inflation and deflation via its flexibility. Thus, it creates a needed solution for both decentralized and classical finance.
In this Ampleforth review, we’ll explain its operability, token, and how you can get the coin.
What is Ampleforth?
Ampleforth is an Ethereum built decentralized finance protocol that handles demand through adjustments of its supply. It’s a financial block-building cryptocurrency.
The protocol uses its flexibility to maintain its price stability. For example, the token supply will also increase when there’s a high demand for the asset. In the same way, a reduction in demand results in a decreased supply. Thus, the protocol presents an asset that supply inflation can’t dilute. As a result, it will maintain its price stability irrespective of the price actions of other digital assets.
Ampleforth is uncollateralized and algorithmic, just like Bitcoin. However, its token, AMPL, is employed in denominating stable contracts.
History of Ampleforth
Evan Kuo created Ampleforth. Kuo is a qualified product manager that has a BS in Mechatronics, Robotics, and Automatic Engineering. He was also the CEO of Pythagoras Pizza in San Francisco. Through his passion for technical-economic mobility, he offered the tokenizing of his pizzeria franchise for his workers.
His primary motivation was his father’s death, and Kuo decides to make an invention that will outlive him. So, through his love and interest in technology and finance, he invented this unique cryptocurrency.
The Ampleforth team has other personalities comprising engineers, investors, academics, and others. One of the outstanding is Brandon Iles, the protocol’s co-founder, who was an ex-Google engineer. The founders and the entire Ampleforth team model the protocol after Fredrich Hayek’s theoretical currency known as the ‘Ducat.’
The great philosopher envisages a currency that retains its value and worth through the flexibility of its total supply. Thus, it can purchase everyday commodities like oil, food, house, and others.
How Does Ampleforth Work?
Ampleforth has a stablecoin and token AMPL. The protocol uses the feedback from a network of oracles to get price data and adjust accordingly by rebasing.
To eliminate any situation of centralization, the project combines data from multiple aggregators in its operations. It relies on both Chainlink oracles and the Ampleforth oracles to collate the price data for its adjustment.
The total supply of AMPL changes every 24 hours through the protocol’s algorithmic smart contract (at 2.00 UTC or 1 pm EST).
This change is to accommodate the current market demand for the AMPL. From its multiple aggregators, Ampleforth watches for deviations from the equilibrium price range of $0.96 – $1.06. The equilibrium price maintains a 5% positive or negative approximated estimation from $1 for AMPL tokens.
For a clearer understanding, the price adjustments of Ampleforth are of a 2019 US dollar. It doesn’t follow the current US dollar trend in value. Thus, the price of AMPL is not pegged to the US dollar, unlike other stablecoins.
So, there’ll be a future increase in USD value for the price of the AMPL token. This’s because the USD has a 2-3% inflation rate in a year. This implies that AMPL will not affect the 2-3% yearly loss in value like the USD. So the cryptocurrency maintains its purpose and uniqueness.
In its operability, when the AMPL’s price exceeds $1.06, the protocol makes a positive rebasing through expansion. This will automatically increase the supply of the AMPL.
Conversely, with a price below $0.96, the protocol makes a negative rebasing through a contraction, decreasing the total supply. The rebasing keeps swapping between the positive and negative until the AMPL market price again falls within the equilibrium range.
Through the protocol’s operation, AMPL token holders will notice a daily change in their wallet balances. Also, the AMPL token supply occurs in three different forms:
- Contraction form – When the price of the token is below $0.96. This results in the removal of tokens from the AMPL economy.
- Expansion form – When the price of the token is above $1.06. This results in the addition of new tokens to the AMPL economy.
- Equilibrium form – When the price range of the token is between $0.96 and $1.06.
It’s worthy to note that the Ampleforth foundation has a larger influence on the protocol’s ecosystem. For example, they can withhold the token supply changes as well as freeze the total circulating tokens.
What Makes Ampleforth Unique?
Ampleforth is different from other digital assets through its operation in providing a genuine low-linked asset for the following:
- A boost to diversify investors’ crypto portfolios.
- Secondary collateral or store of value for decentralized finance projects and apps.
- An alternative to centralized money that is shock-resistant.
The Ampleforth technology is based on the algorithm that empowers the ecosystem. It enforces expansion and contraction of the circulating of the total token supply in satisfaction of market demands. However, its uniqueness via flexibility keeps all its stakeholders undiluted.
The protocol aims to fit into the digital economy as the new base currency similar to gold. The precious stone before the dissolving of the Bretton Woods agreement was the base for several fiat currencies.
Furthermore, Ampleforth can be used as an arbitrage. This allows some investors the opportunity to reap some profits from the price increase before the next rebasing. The AMPL trading has great profit potential for traders that are quick to cash into the price changes.
The returns from such trading are independent of the entire crypto market because AMPL price is independent of Bitcoin.
Ampleforth expresses its uniqueness by maintaining its value and purchasing power over other crypto assets. This ‘s majorly due to its resistance to inflation, deflation, and other weakening conditions. Thus, the protocol reflects an attractive hedge and is the best choice than fiat currencies that easily be devalued.
Ampleforth Token (AMPL)
The Ampleform protocol has its native token called AMPL. Since the protocol is built on the Ethereum blockchain, the AMPL is an ERC-20 token stored in any compatible ERC-20 wallet.
Also, AMPL is the governance token of the Ampleforth ecosystem. AMPL holders make proposals and vote for changes on the Ampleforth platform. Alternatively, they can release their votes to the protocol’s delegates, who will represent and vote in their stead.
Ampleforth has a maximum supply of over 395 million AMPL with a circulating supply of 137,376,924 AMPL. The market cap is over $136 million. At the time of writing, the AMPL price is at $1.12, reflecting a 5.72% dip within the last 24 hours.
The Ampleforth protocol has no fixed maximum or minimum token supply, unlike other digital assets. The number of AMPL tokens circulating will either increase or decrease when the price is above or below $1, respectively.
The first two initial coin offerings (ICO) for Ampleforth in 2018 took place at the beginning and end of the year. While the first realized $3 million, the second earned $1.75 million sold at $0.32 and $1.06 per token, respectively. Also, the first ICO made a sale of 9.25 million AMPL tokens, while the second was 1.65 million AMPL tokens.
Also, the project had its first initial exchange offering (IEO) in June 2019 that sold AMPL at $0.98 per token. The offer, which was launched on Tokinex, lasted for just 11 seconds raised $4.9 million. The AMPL, through the IEO, required fulfillment of KYC for participation. The IEO made a sale of 5 million AMPL tokens.
At the time of its launch, Ampleforth has a total of 50 million AMPL tokens. From its transparency report, the tokens were shared as follows:
- 5% – Seed investors. This includes investors such as Brian Armstrong and Pantera.
- 2% – The ecosystem. This includes funds for developing collaborations and promoting community growth.
- 10% – Tokinex IEO participants
- 3% – Series A investors. This includes investors such as Huobi Capital and others.
- 25% – The Ampleforth team and advisors. This includes both the existing and future protocol’s advisors and employees.
- 20% – The Treasury. This is meant to maintain the protocol’s foundation properly and subsequent redistribution to future users.
From its recent report in 2020, the changes in its token distribution show that the protocol community holds over 42.5%. The Ampleforth liquidity mining programs now have an allocation of 23.5% of the tokens.
AMPL Price Analysis
The price history of Ampleforth is quite captivating, unlike some cryptocurrencies. From its time of the market introduction in June 2019, the digital asset has its price swinging between $0.5 and $1.5.
With a recent hike in its demand, the price of AMPL surged above $4 per token. Furthermore, the cryptocurrency maintained a price level that is well above $1.5 for several weeks. This’s completely bullish from the expected AMPL equilibrium price range of $0.96 – $1.06.
The increasing price trend for AMPL lies in the excessive rate of demand for the AMPL tokens. So, the protocol’s rebasing adjustment rate in its token supply was slightly lower than that of the demand. Hence the consistently high price of AMPL for the longer period.
Furthermore, through the protocol’s modification of AMPL total supply, there are constant daily resets. But when it applies for over 10 days in which the demand continuously increases or decreases very quickly, there could be a gap in the demand-supply protocol rebasing.
So, with a consistent increase in the AMPL demand, the supply will increase for a closing up. This will reflect an increase in the market cap of the protocol, as indicated in the June 2021 price performance.
Its stance through the rebasing technology helps the protocol stabilize its market price as it returns to its equilibrium price range. However, this brings a high supply and market cap as the crypto retains its price per token before the hike in its demand-supply period.
According to the operability of Ampleforth, the AMPL holders have a definite fraction of AMPL circulating supply instead of just a fixed number of tokens. So when Ampleforth is rebasing, it will either increase or decrease the circulating AMPL supply rather than the number of holders tokens.
The change in circulating supply reflects on all the holders’ wallets which will also adjust proportionally. However, the percentage of AMPL supply in all the AMPL wallets remains the same for the holders.
So, for a holder selling his AMPL tokens at $4 per token makes a huge profit. This’s because both the token’s value and supply have increased. Thus, the number of AMPL tokens in the holder’s wallet will increase as well.
The Ampleforth Geyser
The Ampleforth Geyser is used in incentivizing users to promote the provision of liquidity on the platform. The Geyser is a partnership between Ampleforth and Uniswap.
The project offers AMPL tokens as rewards to users who deposit their AMPL holding within the Uniswap protocol. The reward increases with an increase in both the number of AMPL tokens deposited and the deposit period.
Since Ampleforth runs on the Ethereum blockchain, the deposits are made in equivalence of ETH. So for any amount of AMPL you wish to deposit, you will use the Ethereum equivalence.
After the deposit, you’ll get a slow drip of Uniswap V2 tokens (UNI-V2 Liquidity Provider tokens). It’s the staking of the Uniswap V2 tokens in the Ampleforth Geyser that empowers you to receive the AMPL rewards.
How to Buy AMPL
When you’re considering buying AMPL, you’ll get the tokens from a trusted and reputable crypto exchange that lists the cryptocurrency. But AMPL is listed in just a handful of crypto platforms.
However, there are still some platforms where you can but or trade AMPL using fiat currencies and other cryptocurrencies. The most centralized platform purchasing AMP is Kucoin. You can also buy AMPL from a decentralized crypto exchange such as Uniswap.
It should be a surprise for the huge trading volume of AMPL tokens in a centralized platform where prices can be manipulated. Nevertheless, Ampleforth technology distinguishes it by making it less susceptible to such manipulation through the following:
- The protocol operates with an automatic readjustment of its supply according to the available demand. Thus, though a trader makes cash in from the arbitrage, the stability for the supply and price gradually returns without distorting the market.
- Not all the AMPL tokens are in circulation in comparison with its demand. This’s because, from the token distribution, the users don’t have a larger percentage of the AMPL.
- The daily trading volume is negligible in comparison with the protocol’s market cap. This is because most AMPL holders prefer to utilize the Ampleforth Geyser rewards by staking their holding. As a result, this reduces the number of trading transactions in Ampleforth’s ecosystem.
You can buy Ampleforth from Coinbase. The platform supports the buying of AMPL through an exchange with another crypto such as Bitcoin or Ethereum. The following are your quick steps:
- Register or sign up for an account on the platform
- Verify your account through ID upload
- Deposit your fiat currency
- Buy Bitcoin or Ethereum for the exchange
- Exchange the Bitcoin or Ethereum for AMPL
Ampleforth Crypto Wallets
Being built on the Ethereum blockchain, the AMPL token is an ERC-20 token. Thus, it can be stored in any compatible ERC-20 wallet. Some of the ERC-20 compatible hardware wallets include Trezor, Ledger, Keepkey, and others.
Similarly, some software wallets for storing AMPL tokens include Exodus Wallet (desktop and mobile), MyEtherWallet (web), and Coinomi (mobile). Others are Trust Wallet (mobile), the Coinbase Wallet (mobile), Atomic Wallet (desktop and mobile), etc.
Conclusion of Ampleforth Review
The Ampleforth protocol brought a huge solution to and reapplication of funds both to centralized and decentralized finance. Its operability pushes it as the future hope in the world of cryptocurrency. However, the project has two flaws; it can be copied theoretically. Also, the Ampleforth Foundation and investors have a larger percentage in the AMPL token distribution.
Through its algorithmic technology, the protocol can easily readjust its supply as the market demand changes. In addition, it ascertains the real-time market price via a network of multiple aggregators or oracles which assist in its rebasing process.
Ampleforth aims to emerge as the global denationalized currency. This will bring competition among other existing currencies, thereby increasing the value of the currency. Moreover, individuals can then access all previously inaccessible currencies through the competition.
However, Ampleforth will become open for overthrow by another asset through such competition. The major loophole in the protocol lies in its AMPL token distribution that allocates a larger percentage to the Foundation.
Nevertheless, the current situation and solution from Ampleforth to decentralized finance is quite outstanding. Moreover, the protocol brought in some unique and different approaches into the cryptocurrency space that reveal a transformation for global finance.