Ampleforth (AMPL) is a cryptocurrency built with a flexible supply that expands and shrinks on demand. According to co-founder Evan Kuo, the team attempted to learn from the shortcomings of the Gold Standard and Bitcoin (BTC) to create a more flexible currency system.
Investors hammer in bitcoin and gold
While many in the cryptocurrency see the inelastic supply of Bitcoin and gold as a major advantage over fiat currencies, the KO differs:
“The only problem with gold is when you start using it as base money or building blocks as part of the financial infrastructure.”
Since Kuo views Bitcoin as digital gold, the same problems arise. As demand increases, price rises, and if residents also expect prices to rise in the future, they begin to accumulate an asset. This leads to a contraction spiral. Ampleforth is designed with an automatically controlled flexible feed. Once a day, the offer will be automatically renewed or the contract concluded depending on the level of activity in the last 24 hours.
Create an asset without correlating with bitcoin and traditional assets
The total width is also adjusted, although the relative ownership of one another does not change. The balance price target was set in 2019, adjusted according to the CPI. Ko admitted that AMPL is unlikely to become a coin of the stack in the near future:
“It is true that we have this target price, and it is also true that it is likely to be more stable in the long run. But this is not a goal or a measure of long-term success.”
According to Kuo, one of the main goals of this project was to create an asset that does not match the traditional assets and Bitcoins. While Bitcoin and other cryptocurrencies have historically shown little correlation with traditional assets, every major cryptocurrency has followed Bitcoin's trajectory. This is a problem for coded investors as it is impossible to achieve diversification with highly correlated assets.
The possibility of compound price movements
An interesting result of Ampleforth's design is that an investor needs to evaluate his investments differently. AMPL has the ability to profit and complex loss.
Suppose an investor has 10 AMPLs bought for one dollar each, which makes his portfolio worth $ 10. Then the price increases 10% to $ 1.10 and the offer increases 10%, which increases investor deposits to 11 AMPL. The value of investor deposits increases to $ 12.10.
One possible strategy for “going ahead” is daily adjustments by analyzing data and forecasting future changes. Ko admitted that this might be a viable strategy, but not without caveats:
“You also have to remember that everyone else has data as well, so this is game theory. And yes, this strategy is definitely a good strategy. I mean, this is an interesting strategy. […] but it's not risk-free, because you bet.”