Ampleforth (AMPL) is a relatively new project that is distinguished by its supply and demand regulating mechanism. Clearly defined and well-functioning economy tokens Unfortunately, this is still a rarity for most projects, so we decided to focus on this project and familiarize our readers with how Ampleforth (AMPL) works.
Ampleforth (AMPL) - what is it?
Ampleforth is somewhat unusual stable coin, or kryptowalutywhich is supposed to maintain the requested price. Many existing and popularized on the cryptocurrency market stable coins - like Tether (USDT), True USD (TUSD) or USD Coin USDC - are centrally controlled.
The security of our funds is based, among others on trust in the issuer of such tokens. They can manually lock someone's account or steal money from us and run away with them. Everything, of course, theoretical, but you must admit that it does pose a certain danger.
Stable coin publishers are not much different from central banks. They print their cryptocurrencies, govern the supply and make sure that their token is worth the same amount of money, i.e. $ 1. The mechanism is no different from ordinary fiat money (EUR, USD, PLN), based on the belief of users that one coin or banknote is worth something / much, that certain goods and services can be bought for them.
Ampleforth, on the other hand, is decentralized and virtually maintenance-free. A target price has been set and is now $ 1,009. The mechanism regulating the money supply allows for a deviation from this price of +/- 5%. If the average market price of AMPL tokens is higher or lower than the allowed range, the mechanism provided for in the smart contract reduces or increases the number of tokens in circulation.
Printing of money is to make people start selling tokens on the stock exchange, lowering the price. Disappearing tokens from portfolios is to check that the pressure of sellers will be lower and the price will return to around $ 1.
All of this also has another advantage. Ampleforth's price volatility should only be slightly influenced by momentary price fluctuations Bitcoin. Ampleforth should therefore not be dependent on the current economic situation, in which when bitcoin falls, all altcoiny They fall.
Ampleforth (AMPL) - how to earn? when is it lost?
The current Ampleforth (AMPL) price is over $ 2. It seems frivolous, since AMPL is to cost $ 1,009 ultimately. So who is buying it today for $ 2,8 and why?
When the average AMPL price is higher than the tolerable range (currently around $ 1,06), once a day, around 4 a.m. CET (UTC + 2: 00 summer), the tokens are reprinted, the process is called pass.
Newly printed tokens are proportionally distributed to all AMPL holders (the tokens must be kept in your own wallet or on the KuCoin or Bitfinex account).
The higher the average stock price, the more tokens go to our wallets. At the current very high prices, Ampleforth can earn up to 10-20% every day. Yes, a day!
As a result, they buy AMPL even at $ 3 for a few days of high Ampleforth valuations, we can double our ownership. We get new tokens for free, so the average purchase price drops to $ 1,5.
We can sell the received tokens on the exchange at any time. In fact, we get them to persuade us to sell AMPL and thus lower the price of the token. However, at the moment we have the initial stage of project development, increasing market capitalization. More people are still joining the token holders.
Paradoxically, AMPL holders do not want to sell them at high prices, because the high price guarantees them a daily high rebase, the accumulation of which may be more profitable than selling tokens bought for $ 1 for $ 3. This is the token economy that is worth knowing.
Can you lose on your Ampleforth investment?
Of course! We have two opposite feedbacks. If the price is high, we get a lot of tokens for free that we can sell for high marks. The portfolio is growing rapidly along with investor satisfaction.
However, the exact opposite mechanism may be with prices below the expected price range. If the Ampleforth price drops below $ 0,96, the rebase will be negative, i.e. tokens will disappear from our wallets.
This process is designed to reduce the supply of tokens. People will be selling less tokens on the exchange, because they will have less and less.
However, in the present initial period of the project, people may want to get rid of their AMPL tokens so as not to waste money through negative rebase. They will only want to take profits from a positive rebase with a negative rebase, which will further lower the price and make the negative rebase even lower.
You should be careful about this and get to know the project well before investing in it.