Wishing all my readers a Happy New Year and entering into my first article of 2021. I'm going through some very busy days. However, I have not lost a single contest since I became a member of the Publish0x, so I am compelled to make my own contribution to the ELI5AMPL contest as well. Please excuse any mistakes, and be sure to include your suggestions in the comment box.
Whenever i think about Ampleforth, My tongue always tingles with these words..
“Adaptive money built on sound economics.”
AMPL protocol
As we all know, AMPL protocol is a DEFI protocol. But apart from this, some features make it different. By linking cryptocurrency to fiat currency, the AMPL protocol was able to transform a new system and challenge the common stable coin concept. In addition to this, one of the major advantages of this protocol is that it overcomes the shortcomings by simultaneously acquiring the features of classical finance and decentralized finance.
Before entering detailed into Ampleforth, the basic thing that we needed to understand is, it is an elastic supply crypto-currency protocol that can expand and contract depending on market demand.
What is the circulation of money depending on the demand?
Many fiat currencies, such as the US dollar, follow an elastic supply. That is, the specific authority has the power to withdraw money from their circulation or to add more money depending on the need of the money. It helps in controlling inflation and keeping the value of money free from fluctuations.
But the distribution of most cryptocurrencies is predetermined so that we can not control the fluctuations in its value.
Now back to Ampleforth...
Ampleforth cryptocurrency.
Ampleforth is the first cryptocurrency in the world to have supply controlled by demand. The Ampleforth cryptocurrency, nicknamed Ample, is the ERC 20 token which built-in Ethereum network.
There is still a misconception among people that Ample is a stable coin. However, since the AMPL PROTOCOL does not eliminate volatility, it is not a stable coin. However, a rebase property with lowering volatility makes the Ample more stable.
Get to know Ampleforth better.
Many of you may still find it difficult to understand Amplefoth's rebasing mechanism and many of you probably know more about this than me. However, I will try to present it to you in a simple way with a small parable.
Imagine a water pump pumping water into a tank with many valves. The feature of this pump is that the amount of water coming through the pump fluctuates according to the variation in the voltage of the power supply to this pump. However, no matter how high the voltage, no matter how much water is pumped into the tank, the valves attached to the water tank increase the amount of water passing through them and maintain the water level in the water tank. Similarly, no matter how low the voltage and the level of water in the tank, the level of water in the tank remains the same by reducing the rate of water flowing through the valve. If there is only a small change in voltage, the valves will remain in their original state.
If you understand about this tank then it means that you have fully understood the mechanism of Amplefoth and that means it is over.
Let me go into a little more detail.
That is, the rebase mechanism of Ampleforth consists of three main stages.
Extension
Contraction
Equilibrium
Price oracles are very important in Amplefoth's rebase mechanism. These are based on the current AMPL / USD exchange rate and the Customer price index. Based on these, the $ AMPL target price is calculated.
This target price is the water level in the water tank I mentioned earlier.
Case 1: Imagine that the value of AMPL has gone up. In this case, the value of the $ AMPL to the target price is increased by increasing the number of tokens in all wallets that hold $ AMPL tokens. As the amount of water reaching the water tank increases due to the increase in voltage, more water is pumped through the valves and the water level in the tank is maintained.
Case 2: Imagine that the value of $ AMPL is low. In this case, the number of tokens in all wallets holding $ AMPL tokens decreases, bringing the value of $ AMPL to the target price. When the amount of water reaching the water tank decreases due to low voltage, some water is pumped through the valves and the water level in the tank is maintained.
Case 3:- If the current value of $ AMPL is less than 5%, the number of tokens in all wallets holding $ AMPL tokens will remain the same. This is similar to the fact that valves do not respond to small voltage fluctuations.
Some important things we need to know about AMPLEFORTH and AMPLEFORTH rebase.
Not more than once every 24 hours, the rebase feature is executed. At approximately 02:00 UTC, this rebase takes place
The protocol does not have a memory of the supply change of the previous day, so it must recalculate the possible supply change every day based on the latest information.
To prevent sharp supply modifications, the dampening factor is used.
The target price of $ AMP is the purchasing power of the US dollar.
The Ampleforth protocol is based in the Ethereum blockchain as a series of smart contracts deployed.
AMPL's total supply was 50 million when it was established.
As the cost of AMPL is not dependent on Bitcoin, the profit potential of AMPL trading is quite immense.
AMPL adopts the idea of flexible fiat currency supply and removes centralized control over this supply.
There are still keys with Ampleforth foundation in order to control Ample token. They can both pause changes in the value and even freeze all AMPL token's circulation.
Some of the $ AMP wallets are Trust Wallet, MyEtherWallet, Exodus Wallet, Coinomi, Atomic Wallet etc.
Uniswap (V2), Gemini, Poloniex, Sushiswap, and Bittrex are the top exchanges for trading in Amp at present.
The cumulative effect of $ AMP.
In fact, I was given such a name. This is because $ AMP behaviour has such an effect. You already know that the number of Ample tokens in the wallet will increase proportionately as the value of $ AMP increases. If the value of $ AMP stays higher than the target price, the number of Ample tokens in our wallet increases daily and a good amount of money accumulates in our wallet without doing anything. But it has not only a completely positive side but also a negative side. If the value of the $ AMP continues to fall below the target price, this could lead to a sharp decline in our wallet investment. Anyway, I have had Ampl in my wallet for the last two months but I can't say for sure that I haven't lost anything yet.
AMPL - History
Evan Kuo, the former CEO of Pythagoras Pizza, is known as the father of Ampleforth. With the support of the popular Hoover Institute 'Think-Tank' that assisted in writing the Ampleforth whitepaper, Kuo and Iles developed the Ampleforth cryptocurrency ...
Once Evan Kuo stated that Ampleforth's concept itself originated from looking at the two aspects that cryptocurrency aims to redesign: money and banking. Another interesting fact is that the cryptocurrency, Ample is modelled after a theoretical currency proposed by renowned economist and philosopher Fredrich Hayek called the Ducat.
Although Ampleforth is one of the most interesting cryptocurrency projects, it is still not considered a complete success.
But still, Ampleforth has the capabilities to create a shock-adaptive alternative to central bank money ...