Ampleforth Review

What is Ampleforth?

Ampleforth is a protocol for a new type of money called smart commodity money. Technically, the protocol’s native token AMPL functions similarly to an algorithmic stablecoin, although the founders of the project deny this similarity. AMPL is, in fact, a unit of account.

The AMPL token functions as collateral in decentralized banking systems and as a smart alternative to existing traditional money. Thus, the main goal of the project is to create a new asset class whose price would not correlate either with the price of Bitcoin or with the price of any other asset. To solve this problem, the protocol adjusts not only the current and the future supply of tokens, but also the token balances in the holders’ wallets. At the same time, there is no single programmatic influence on prices.

Previously, the project was known as Fragments. Its development started in the spring and summer of 2018, and after large investors took notice of the project. Ampleforth attracted funding from investors such as Huobi, Coinbase’s CEO Brian Armstrong, and Pantera Capital.

How does Ampleforth work?

The Ampleforth protocol adjusts its token supply according to the market demand by using smart contracts. Ampleforth is running on Ethereum, hence its native token AMPL is an ERC-20 standard token. When demand for the token increases, the total supply of AMPLs increases as well, and vice versa. Thus, the purchasing power of each AMPL token remains stable regardless of the economic situation. Supply adjustments are made by changing the number of tokens across the balances of all AMPL wallet holders. This way, token holders always own the original percentage of the total AMPL supply regardless of changes in the number of tokens in the protocol and the user's wallet.

The current monetary system assumes that the money supply can only grow (by being printed) and cannot shrink (be destroyed). Ampleforth solves this problem by adjusting the token supply to meet the demand and maintain the token value. Let’s say, Alice has 100 AMPLs worth $100 in her wallet, that is 1 AMPL worth $1. When demand for AMPLs spikes and the market price of the token rises to $2, the Ampleforth protocol adjusts its supply so that Alice has 200 AMPLs worth $1 each.

The protocol gets AMPL rates from trusted providers (oracles). A decision to regulate the issuance and the current number of tokens across the wallets is made based on the token rate data received from the trusted exchanges. Changes in supply occur once a day, and information about them is completely open to the community due to being on-chain. All planned changes are visible on the project website’s user dashboard.

The main goal of Ampleforth is to provide a token with functionality similar to that of a stablecoin, but without the need for collateral in the form of US dollars (like with Tether) or locked Ethereum (like with DAI tokens).

How to use Ampleforth?

The AMPL token is an ERC-20 token. Thus, to interact with Ampleforth, wallets supporting ERC-20 tokens must be used. These are hardware wallets such as Trezor, Ledger, Keepkey, or software wallets such as Metamask, Trust Wallet, Coinbase Wallet, or Atomic Wallet.

AMPL's operating model makes it suitable for short, medium, and long-term uses. The token qualities allow using it for hedging and as a tool for passive earnings. 

Ampleforth token is not backed by any asset, making it a more feasible long-term alternative to crypto-backed stablecoins like DAI and possibly even fiat-backed stablecoins like Tether.

The Ampleforth protocol token can be actively used in a number of large projects. Among them are such DEXes as Uniswap and MoonSwap, where users can provide liquidity in tokens paired with AMPL. Furthermore, the Aave lending protocol allows users to lend and borrow AMPL tokens. The token also operates on Avalanche and Binance Chain networks and thus can be used to provide liquidity on Trader Joe's, Pangolin, and PancakeSwap. AMPL can be transferred to these networks via the native bridge available on the Ampleforth website.

Ampleforth's farming is done through the Geyser platform, which is an important part of the protocol ecosystem. Geyser is used to reward liquidity providers on popular platforms such as Uniswap, Aave, and Balancer. Ampleforth also offers AMPL tokens as rewards. Rewards increase depending on the amount of liquidity provided, as well as the duration of liquidity provision.

The AMPL token

The Ampleforth protocol has two native tokens. The first token is AMPL, which unlike the vast majority of cryptocurrencies does not have a fixed minimum or maximum supply. Instead, the number of AMPL tokens in circulation grows if the price stays above $1.06 and shrinks if the price falls below $0.96.

It's worth noting that the value of the token correlates with the price of the U.S. dollar in 2019. This means that in the future, unlike U.S. dollar-pegged stablecoins, the AMPL token will increase in price in dollar terms, because the annual rate of inflation of the U.S. dollar is approximately 5%.

Ampleforth was originally launched with a circulating supply of 50 million tokens. Those tokens were distributed as follows: 23.2% to the ecosystem; 18.5% to seed investors; 3.3% to Series A investors; 10% to Tokinex IEO participants; 25% to the Ampleforth team and advisors; and 20% to the treasury.

The second token of the platform is the FORTH management token. FORTH holders can vote for proposed changes to the Ampleforth protocol or delegate their votes to representatives to vote on their behalf. The FORTH token has protocol-enforced maximum inflation of 2% per year, and new FORTH token emissions are controlled by the DAO. 15 million FORTH have been minted at genesis and can be claimed by the community, members, and key participants. The initial supply was available immediately. The distribution of the FORTH token in the Ampleforth ecosystem was as follows: 67% FORTH to the AMPL community and 33% FORTH to early supporters (core development team, consultants, supporters, and the Ampleforth Foundation).

Is Ampleforth safe?

The Ampleforth team consists of nine people with extensive experience in a wide variety of industries. Evan Kuo is the CEO and co-founder of the project. He graduated from UCLA with a degree in Mechatronics, Robotics, and Automation (2002-2006). In the past, Evan worked as a product manager at Yahoo for a year and at a startup for marketers and publishers Sharethrough for two years. He was also a founder at Crowdrally (Facebook advertising), for four years and a founder and CEO at Pythagoras Pizza for four and a half years. 

Brandon Iles is the other co-founder of Ampleforth. Brandon graduated from Rice University with a degree in computer science. He worked as an ESI software engineer for two years, and as a software engineer at Google and Uber. 

Another Ampleforth publicly known member is a backend engineer Nithin Krishna. He graduated from the University of Southern California with a master's degree in data science. Nithin started as a software engineer at Codebrahma in Bangalore, India, and later was involved in programming and data science in different companies.

Partners

Due to the outstanding features of the AMPL token, the Ampleforth project has partnerships with some of the largest DeFi projects. Among them are Uniswap, Balancer, Aave, Mooniswap, Trader Joe's, Pangolin, and PancakeSwap. These partnerships allow AMPL holders to supply liquidity to the number of projects as well as provide loans, receiving AMPL tokens as rewards.

Also, there is an ecosystem built around the protocol. The community created a repository of Ampleforth links and projects. Mooncake allows using AMPL as collateral for liquidation-free tranched lending and borrowing. Buttonwood, which uses financial primitives to build the decentralized financial stack, features AMPL in their risk-tranching protocol ButtonTranche. ElasticSwap is a decentralized AMM for rebasing tokens featuring AMPL as a prominent pairing. And HourGlass, which offers financial derivatives, prominently features AMPL.

What's next?

The Ampleforth project does not have a clear roadmap. The map was published during the ICO, but since that day it has not been seen anywhere else, and the team states that the roadmap is currently under development. On the other hand, the project’s developers regularly share information with users on social networks.

According to available sources, the team is in the process of developing a token called SPOT, a perpetual note backed by collateralized AMPL derivatives.  Full documentation has not yet been released, but initial contracts are written and scheduled for an audit. 

Links

https://docs.ampleforth.org/

https://forum.ampleforth.org/