Stable currency report: Stable currency circulation grew across the board, with monthly gains from holding AMPL up to 51 times

Original title: cryptocurrency Stability Report 11: Overall Growth of Stability Currency in Circulation Holding AMPL 51 times in one month

Original text: Haibo Jiang, MYKEY researcher

In order to help cryptocurrency market participants keep updated on the development status of stable currency, we launched MYKEY Stability Currency Report to share our interpretation of the development status of stable currency and analysis of its development trend. We look forward to maintaining exchanges with our peers to jointly explore the development prospects of the stable currency.

Quick preview

Last week, the total market value of the major stabilizers rose $465 million to $12.684 billion.

After a pause of more than 20 days, USDT issued $120 million each on ETH and TRON last week.

The circulation of TUSD increased by 106 million, and that of DAI increased by 77.54 million. TUSD is up 79% and 37% respectively compared with DAI's circulation a week ago.

The proportion of DAI's trading volume goes up, while the proportion of USDT's trading volume goes down.

Between June 23 and July 23, AMPL circulation increased from 5.61 million to 150 million. The price rose to $1.98 from $1.01; Its current market value rose from $5.67 million to $296 million.

From June 23 to July 23, holding AMPL yielded 51.28 times, but the price of AMPL barely doubled.

I. Overview of stability currency data

We begin by reviewing the changes in the basic information of each stabilisation currency over the past week (18 July 2020-24 July 2020, the same below).

Market flow

Source: MYKEY, CoinMarketCap, Coin Metrics

At present, the market volume of the main stabilization currency is about $12.684 billion, and the market value continues to grow.

Source: MYKEY, Coin Metrics

Over the past week, the number of major stabilization currency in circulation has increased across the board, with the total market capitalization rising by $465 million. After a pause of more than 20 days, USDT issued $120 million each on ETH and TRON last week. TUSD circulation increased by 106 million, DAI circulation increased by 77.54 million, and USDC, PAX, BUSD, HUSD and GUSD circulation increased by 2.65 million, 14.58 million, 6.08 million, 17.13 million and 190,000 respectively. Compared with the previous week, TUSD and DAI saw an increase in circulation of 79% and 37%, respectively.

Address number of COINS held

Source: MYKEY, DeBank

Last week, the number of major stable currency addresses on the Ethereum network rose by 63,485.

Source: MYKEY, DeBank

The addresses of USDT, USDC, PAX, TUSD and DAI rose by 54,287, 4,644, 165, 311 and 4,078, respectively.

Number of active addresses

Source: MYKEY, Coin Metrics

Last week, the number of active addresses per day for the main stabilising currency fell by an average of 6.2% from the previous week, mainly due to the lower number of active addresses on July 18.

Number of transactions on the 24-hour chain

Source: MYKEY, Coin Metrics

The number of daily transactions in the main stability currency was up 0.31 per cent on average from the previous week.

Turnover on the chain 24 hours a day

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Last week, the average daily turnover of the main stabilisation currency was up 13.94% on average from the previous week. The proportion of DAI's trading volume goes up, while the proportion of USDT's trading volume goes down.

2. Ampleforth with a monthly return of 51 times

In the last stabilization coin report, we introduced a practical stabilization coin called Terra, which has 1.76 million users. In this installment, we introduce you to a very impractical stabilization project called Ampleforth. Ampleforth, with a market value of $580 million, managed to overtake Maker to rank 27th in CoinMarketCap.

AMPL is a synthetic commodity currency that is algorithmic in its classification as a stable currency. We know that any stable currency needs some mechanism to ensure that the price of the stable currency is anchored to the legal tender. When DAI is above $1, for example, MKR holders can vote to increase the variety of collateral assets, raise the DAI cap, and lower stable rates, which can increase the supply of DAI and bring DAI back around $1.

Ampleforth also takes steps to increase or decrease the supply of AMPL, bringing the PRICE of AMPL back to around $1, but in a different way from the usual stabilization currency. The AMPL agreement automatically adjusts supply according to demand. When the price is too high, the wallet balance of all users increases; When prices are too low, wallet balances decrease. The percentage of AMPL held by users does not change throughout the process. AMPL does not prohibit price fluctuations at all, but only increases or decreases the balance when the fluctuations exceed a certain threshold. As described in the Redbook, this threshold value is set to 5% and Pt is the target price.

Source: Ampleforth White Paper

Ampleforth thinks he can make himself less relevant to the cryptocurrency market in this way, but that may not be the case. Take a look at the past month's data. Between June 23 and July 23, AMPL circulation rose from 5.61 million to 150 million. The price rose to $1.98 from $1.01; Its current market value rose from $5.67 million to $296 million. It can be calculated that the gain from holding AMPL for this month is 51.28 times, but the price of AMPL has only increased by less than one time. As you can see from the chart below, while AMPL's price is around $2.50 and its market value has declined, the amount of money in circulation has increased almost all the time. The monthly flux increased 25.67 times.

Source: MYKEY, CoinMarketCap

To avoid unnecessary overcorrection, the increase or decrease of AMPL supply is not instantaneous, but a smooth process. The AMPL agreement takes into account the volume-weighted average price of the past 24 hours to execute changes in supply. The difference between the weighted average price and the target price is divided by 10 to determine how much supply should change.

When the price of AMPL is $1.50, AMPL's wallet balance increases by 50/10, or 5%.

When the price of AMPL is $0.50, the wallet balance of AMPL will be reduced by 5%.

The supply of AMPL is readjusted at 10pm each day and there is a once-a-day arbitrage opportunity between Uniswap and other exchanges. When the supply of AMPL changes, the AMPL reserve in Uniswap automatically adjusts, and the relative values of AMPL and ETH change, so the price of AMPL on Uniswap automatically changes. In a centralized exchange, such as Bitfinex, changes in the amount of AMPL take time to settle and prices have to be adjusted artificially. If you have a balance on both Uniswap and Bitfinex, you can buy on a low price exchange and sell on a high price exchange to complete the carry trade. On Uniswap, the ei-AMPL trading pair ranked first in both liquidity and trading volume, indicating the extent of Uniswap's influence on AMPL prices. As you can see from the chart below, the price on Bitfinex drops after 10pm each day, possibly due to carry trades.

Source: bitfinex.com

It should be noted that some centralized exchanges will close trading and withdraw before and after the daily number of AMPL is readjustment, and some exchanges even do not carry out the readjustment directly. Investors need to know relevant rules well in advance.

AMPL is designed to be a currency with a relatively stable value, but it is always easy to deviate from the dollar in practice. In the case of price fluctuations, returns are also amplified by changes in the same direction of flows. From a stability coin perspective, AMPL is very impractical. It doesn't necessarily make sense even if AMPL achieves price stability, such as the recent price of AMPL around $2.3, but the number of AMPL has increased 13-fold since 20 days ago.

Through the above analysis, we can also draw some empirical conclusions:

In today's high prices, the readjustment of the circulation completed at 10 o 'clock is likely to cause a significant price decline, which may exceed the proportion of the increase in THE AMPL balance.

Assuming a weighted average price of $2.50 for the day, earnings would be unaffected if the adjusted price fell by 15%.

The arbitrage between Uniswap/Bitfinex is theoretically possible.

AMPL's benefits and risks may be large, and the above is not considered investment advice.

3. Readers' questions

1. What payment scenarios is Terra mainly used for?

A: Terra is primarily used in KRW payment scenarios, with the following evidence.

1)KRT (the price of KRT is in line with KRT) has a total historical trading volume of 1.46 trillion USD, which amounts to 1.22 billion USD when converted into USD; Luna's total historical trading volume is $1.673 billion, or $650 million in today's dollars. KRT accounts for a high proportion of trading volume.

2)TerraKRW (KRT) has a current market value of $63.38 million, ranking 232nd in CoinMarketCap.

3)Terra was founded by the second largest e-commerce company in South Korea.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia