Alternative stability currency AMPL: Alternative scarcity

Original title: "AMPL: Alternative Scarcity"

The original author: NBSP; Blue fox notes

It's been a while since I've seen such a bold design, and AMPL impressed Blue Fox notes! Whether or not AMPL succeeds, it will leave its mark on encryption history. At the same time, it is bound to be a controversial project, which will be with it until it eventually succeeds or fails.

For this reason, the Blue Fox notes will keep an eye on its subsequent evolution.

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The vision and challenges of Bitcoin & NBSP;

Bitcoin was created in the hope of creating a system that is completely different from legal tender. It is an attempt to change problems such as monetary inflation and recurring economic crises in the credit economy. That was Mr Nakamoto's original vision: a peer-to-peer electronic cash payment system.

Over the course of more than a decade, Bitcoin has been a huge success, growing from a rarity to a cryptocurrency with a market value of more than $160 billion. In this development process, people gradually found that Bitcoin took on the characteristics of digital gold. Due to the expectation of its future rise, bitcoin holders were more willing to hoard it rather than use it for daily consumption and payment.

Bitcoin has come to occupy the place of digital gold, whose primary use is not as a medium of exchange or a unit of account, but as a store of value. (Of course, as long as it occupies the top spot in value storage, that means it still has plenty of room. Gold is also worth about $10 trillion today. Bitcoin has advantages over gold as a store of value. Bitcoin still has plenty of room to go.)

The direction of Bitcoin is largely determined by its intrinsic characteristics:

Hard top

With 21 million bitcoins, it won't issue more. As a result, it will only become scarcer. And scarcity leads to huge upside expectations. But at the same time, this has led people to store it as digital gold.

Throughput and speed limits

Bitcoin has a TPS of about 7, which makes it completely useless as a currency for everyday payments. This is acceptable for remittances, but unbearable for routine payments.

These intrinsic qualities of Bitcoin are great because they try to solve the problems of inflation and the credit economy, but given the development of the past decade or so, bitcoin still has a long way to go.

As Bitcoin moves toward digital gold and people expand their horizons, is it possible to design a stable cryptocurrency that can simultaneously store value, unit of account, and medium of exchange?

At present, there are three schools of stable currency experiments. First, stable currency anchored in USD, such as USDC, can be redeemed 1:1 with US dollar. The second is a stabilisation currency based on the overcollateralisation of encrypted assets, such as DAI, which is anchored against the DOLLAR but not hard. The last is a fully encrypted native decentralized stabilizers. As for the exploration of stable COINS, Blue Fox has previously published articles such as "The Holy Grail of Stable COINS: Exploration for A New Path" and "Meter's Path to Stable COINS: A Completely Different Exploration from Libra".

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AMPL is one of the boldest explorations of cryptocurrency experimentation.

AMPL is a continuation of cryptocurrency innovations. It combines some of the characteristics of bitcoin and fiat money, and if it can develop equilibrium, it has the potential to develop something completely new in the next decade. This, of course, comes with huge risks and uncertainties.

Also, AMPL is not currently seen as a stability coin. It's not backed by fiat money or other assets, it's more like cryptocurrency, trying to find some balance of cryptoassets, trying to develop a type of asset that is not highly relevant to Bitcoin and other cryptoassets.

It's unlikely to become a price stable cryptocurrency in the short term, and of course, if it has a chance to balance supply and demand in the future, it could have some of the effect of cryptographic native stabilizers. But that is unlikely to happen for a long time. Therefore, in the short term, AMPL is also an encrypted token with some volatility, rather than an encrypted native stability coin.

AMPL trying to become in the short term is not high correlation with other encryption currency assets, medium-term goal is to become one of the DeFi basic components, such as be decentralized encryption collateral, the ultimate goal is to become a better COINS, can both value stored at the same time, unit, and the properties of the medium of exchange, and with encryption native characteristics, there is no inflation, elastic supply, do not need to trust, not diluted, etc.

In short, AMPL's mechanics and vision make it a highly controversial project. People's views of it will be polarized.

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AMPL seeks a scarcity of ownership, not an absolute amount of scarcity & NBSP;

Unlike the absolute scarcity of bitcoin, AMPL pursues alternative scarcity. The lack of a fixed supply of AMPL breaks the hard-top mentality of the encryption world. But unlike the traditional fiat money inflation system, it has no hard top and can solve the problem of unlimited issuance and inflation. This is what makes AMPL unique: owner-based scarcity.

Specifically, it incorporates the idea of bitcoin not being diluted, so as long as a user has a certain percentage of AMPL, it will never be diluted. Why? Because it can be added and reduced by adding more AMPL, it is an elastic supply, but the percentage of user ownership remains the same. Of course, if you buy more, you increase the proportion.

That is, the number of tokens may rise or fall, but it is essentially similar to the fixed supply of bitcoin. If you have 1 BTC, then you have 1/21 million of the whole bitcoin, and as long as the market value of bitcoin goes up, then the value of 1 BTC itself goes up, because it's not going to issue additional shares.

Similarly, in AMPL, after a certain amount of AMPL is purchased, its share of the total AMPL token is fixed (assuming no buying or selling). When AMPL increases, the proportion of AMPL in the wallet will increase. As AMPL decreases, the percentage of AMPL in the wallet decreases. If a user holds AMPL for a long time, it essentially expects the overall market value of AMPL to rise. This is similar to bitcoin. Of course, there will also be a lot of users for a short - term quick buy and sell, in order to achieve arbitrage.

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AMPL applies the logic of supply and demand to elastic supply & NBSP;

As mentioned above, there is no fixed supply of AMPL, and the problem arises since there is no fixed supply. On what basis, then, will supply increase or decrease?

The basic logic of economics is based on supply and demand. This is the basis of all trades and the essence of markets. AMPL applies the logic of supply and demand to cryptocurrencies, viewing currencies as a commodity based on supply and demand.

Traditional monetary policy is generally an important tool to regulate the economy. The formulation and implementation of its policies involve political, economic and social factors and often face information asymmetry. This is why Hayek thought the traditional monetary system could not work effectively.

AMPL is relatively simple and crude, and the main logic determining its supply is the supply and demand relationship in the market. It does not link monetary policy to economic or social problems, such as the corporate credit crisis, employment and so many other complex issues.

Because its logic is relatively simple and transparent, its circulation and price fluctuations are clearly visible and predictable, which makes it possible to achieve some balance through the game mechanism of the market.

How does it work?

AMPL is a smart contract based on Ethereum that automatically adjusts the number of TOKENS AMPL has on all users' wallets. When the market price of AMPL is above a certain threshold of the target price, the scrip balance in the wallet automatically rises, which is equivalent to adding more COINS to all wallets on a pro rata basis. When the AMPL market price falls below a certain threshold of the target price, the token balance in the wallet decreases proportionally.

This is the most important "token base readjustment" in the AMPL protocol. The recalibration of the token base takes place every 24 hours (it is now 10 am Beijing time). This adjustment does not result in dilution, but increases or decreases in the same proportion.

Since adjustments are related to THE price of AMPL, this requires the involvement of a predictor. The AMPL protocol USES a market predictor system that includes whitelist independent data providers that provide 24-hour average prices based on volume weights to aggregators along the chain.

Depending on the price of AMPL, if the agreement finds that the total amount of AMPL needs to be readjusted, it will do so once a day. However, it has a supply smoothing process during implementation. This is also part of the AMPL protocol algorithm, which is designed to avoid protocol overreaction.

Specifically, if the exchange rate is 1.2AMPL: 1, the balance of each wallet should increase by 20% in AMPL tokens according to the AMPL mechanism, and if the exchange rate is 0.8AMPL: 1, the balance of each wallet should decrease by 20%. However, such adjustments are not immediately performed, and it has a period of excessive smoothing.

This period is in days, so this period can be counted as k days. In the case of the above 20% deviation, the agreement will update the balance of the wallet at 20%/k. If K is 10 days, then the update balance is 2% of the total. However, the percentage of this molecule is recalculated daily and performed every 24 hours, which is stateless. In other words, each day the agreement recalculates the target supply according to its latest price and adjusts the supply for k days in the future.

In summary, AMPL has a target price. If the target price is $1, the nominal exchange rate is above a certain threshold, and the agreement increases the number of tokens for all users year over year. If the AMPL price falls below a certain threshold of the target price, the agreement reduces the number of tokens held by the user.

(Flexible supply mechanism of AMPL, SOURCE:AMPL)

& have spent AMPL promotes gaming and arbitrage through the transmission of exchange rate price information.

The balance between supply and demand is realized through the transmission of price information and the promotion of game and arbitrage. This is a key point for THE AMPL to achieve its price balance.

Through timely transmission of AMPL price information, the amount of AMPL can be expected to increase or decrease each day. These are transparent and predictable. This drives the user's decisions and behavior. It's a completely decentralized network with many different actors. What drives participants' decisions is the price information of AMPL and the increase or decrease of its supply. In turn, participants' responses to supply and price information will affect price and supply, so as to finally achieve some kind of equilibrium.

(AMPL feedback Mechanism, SOURCE:AMPL)

In the case of a long-term holder, the number of tokens changes daily in proportion, but the corresponding proportions remain the same. Short-term traders, on the other hand, arbitrage through short-term trades to achieve an equilibrium between price and supply.

Assuming that the target price of AMPL is $1, a short-term trading user named LAN starts out holding 1AMPL, and due to increased demand, the market price rises to $1.2, 20% off the target price. The agreement will issue tokens, at which point Blue has 1.2 AMPL and the price remains at $1.20. That means blue can sell for an arbitrage.

When the AMPL price is pulled back to the target price, i.e., when the target price of 1AMPL is $1, Little Blue still has 1.2 AMPL if there is no short-term operation, and the overall proportion remains unchanged. If Blue sells and buys in the short term, there is an opportunity to gain more AMPL, and the overall percentage rises. Of course, this also involves the timing of the deal, there are certain difficulties. As of now, at the time of writing, THE PRICE of AMPL is $2.669, with a target price of $1.009. As demand continues to rise, this will lead to continued issuance of AMPL until demand drops, bringing the price back to the target price.

If the token quantity is reduced, Little Blue initially has 1AMPL at the price of 0.8 USD. Since the price is 20% lower than the target price, the token will be reduced year-on-year. At this time, Little Blue has 0.8AMPL and its unit price is still 0.8 USD. At this point, if LAN does nothing, when the market price returns to the target price, LAN will have 0.8 AMPL. If Blue bought more tokens at $0.8, it could increase its share.

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AMPL is a continuation of the bitcoin innovation & NBSP;

Human beings have never stopped experimenting and exploring the advance of money, from the initial shells, cattle, sheep, gold and silver to the later "jiaozi", and then the "legal tender" which separated from gold after 1971. The financial crisis of 2008 gave birth to Bitcoin, and bitcoin is just the beginning. With the development of blockchain and the Internet, the exploration of truly digital native cryptocurrencies will continue forever.

AMPL is still very early, and it's hard to say whether it will succeed in the future. But its uniqueness, it according to the requirements in terms of issuance and shrinking mechanism, which is one of the traditional economy cannot quickly and timely, it is a lot of make full use of the transparency of the block chain, passing the demand changes in a timely manner through the price it out, and to reflect to the supply, this is a new encryption monetary experiment.

AMPL is either a chicken feather or one of the biggest developments in encryption history.

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AMPL is based on an innovation on Ethereum & NBSP;

Ethereum pioneered intelligent contracts, which began the process of protocol governing the world. AMPL is a cryptocurrency that implements its protocol management based on Ethereum and takes full advantage of Ethereum's permistion-free features and security.

The idea of decentralisation is misleading. Whether it's bitcoin, ethereum, or any other token, its core is not so much decentralisation as a protocol-based game mechanism. It faces not institutional trust, but protocol trust. Agreements cannot be tampered with, and people play games based on transparent mechanisms.

The AMPL protocol is an intelligent contract built on Ethereum that has full protocol trust, that is, no trust. This is the basis for ensuring that its mechanism works.

If AMPL grows into a multi-billion - or multi-billion - dollar cryptocurrency, ethereum will rise in value as the public chain that carries it. From this perspective, if the AMPL succeeds, it could eventually propel Ethereum toward a trillion-dollar encrypted ecosystem.

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The source of VALUE and risk of AMPL & NBSP;

Through the above elaboration, we mentioned its innovative side, which is very impressive. However, there is another side to any innovation, and AMPL is no exception. AMPL is also subject to considerable uncertainty and risk. The risk of innovation projects is far greater than that of ordinary stable projects, which is the cost of innovation. If you are an investor, you should control the risk and make decisions carefully.

What are the risks? In addition to the general system risks such as intelligent contracts and prediction machines, it is necessary to mention the risk of the mechanism itself. That is the biggest uncertainty about its future.

Bitcoin's value is backed by an energy-based game mechanism, while DeFi is backed by asset collateral, so what does AMPL rely on? At the moment, it has a balance mechanism based on supply and demand, a trustless nature, and it relies on speculative games in which real value assets such as BTC and ETH are used to replace and support AMPL. If an asset such as ETH is taken out of the AMPL system, its price and market value fall, as does its supply. The fall in supply may or may not stop the fall in prices. At the heart of this is the real demand for AMPL and people's confidence in AMPL.

Current demand for AMPL is driven by speculative demand, which is expected to rise. Since its market price is higher than the target price, people can obtain more tokens by participating in AMPL, which is profitable, similar to the mining of asset collateral. However, the support of this value comes from the demand for buying, and whether it can be supported in the long term depends on the future equilibrium point.

Now that the market is up, everyone is confident to continue. If the market price is below the target price, will people buy for arbitrage to get back the target price? Or is the scrip shrinking, leading to further selling? Because people are selling, leading to further cutbacks, and then negative feedback? It all depends on people's confidence and market behaviour. This has yet to be tested in practice.

The market is in buoyant mood during AMPL increments, and AMPL will not be challenged. Whether it can safely survive an AMPL reduction is the most critical moment to test AMPL, as well as investor confidence and decision making. Once it survives, it will gain more confidence, which will help in its subsequent equilibrium.

All in all, AMPL's value comes from the external buying value that supports it for the time being, but whether it supports it for the long term depends on people's confidence. If it survives the decarbonization period, AMPL has a chance to make a successful transition, and if it does, it could become a potential candidate for cryptography native stabilizations with properties of value storage, medium of exchange, and unit of account, the holy grail of cryptography. If it can make this network effect, become DeFi mortgage asset, become a type of asset that has no correlation with other assets, then this may be its source of value. But at the moment, nothing is certain. It still needs to be proven in practice.

As a result, AMPL is still very young, and its ability to build consensus, sustain demand, and ride out the reduction phase are key to its success.

However, one of the most important factors for AMPL to successfully survive the deweighting period is the MEME memes from the community, which are the social psychological factors supporting AMPL in the downmarket period. This power is second only to the power of trade. If it implants AMPL, then it's half the battle. At present, no MEMes of AMPL have been formed at home or abroad, and some changes may occur in the future as AMPL continues to increase.

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