What is Ampleforth ( AMPL )
Ampleforth (AMPL) was introduced as an invention that could change the paradigms of many people in the world of finance and economy. Let's take a closer look at the Ampleforth project.
Decentralized finance (DeFi) managed to attract attention as the bad trend continues in many projects in the crypto market in 2020. The total value of assets locked in lending protocols experienced a rapid rise throughout the year.
And while there are many exciting projects in this area, one seems to stand out with its unique approach.
The project we mentioned above is Ampleforth (AMPL). This project aims to address some of the problems that even the most popular and widely adopted cryptocurrency Bitcoin has.
But for the AMPL narrative in this article to be more meaningful, let's first take a closer look at some of the problems that traditional fiat currencies and even Bitcoin have.
What is the Problem of Fiat Currencies?
We often use fiat currencies to exchange goods and services in our daily lives. For example, if you want to buy a product or a service, we usually pay using fiat currencies. Everything is going well until this stage.
According to Investopedia, the United States is currently the country with the highest GDP, the largest economy in the world. The US currency, the US currency, is used worldwide as a reserve currency, and approximately 88% of the daily transactions in the foreign exchange market are carried out in US dollars.
This may sound impressive. However, if you take a closer look at the purchasing power of the dollar, you can easily see that things have become slightly different over the years.
This infographic is one of the most popular online surfing images that clearly show how much the US Dollar has been devalued over time.
There are many reasons behind the devaluation of the US dollar. However, this depreciation is mostly related to inflation, and we can easily say that inflation is the main responsible for this situation. Many economists already agree that continuous inflation will occur if a country's money supply growth manages to outstrip economic growth.
However, there are many factors that affect the money supply. So much so recently, the coronavirus showed exactly how money can be printed to combat unexpected emergencies. Many countries have declared a compulsory curfew in succession, so in mid-March the global economy collapsed within a few days, causing many sectors to suffer.
In turn, governments around the world, including the US, have printed trillions of dollars to financially support businesses and individuals.
Although this move may seem like a viable approach, its effect cannot go beyond the valuation of circulating money. Thus, the money will lose some of its purchasing power over time.
It is also important to remind you that the decision to determine the value of your money is not yours. The value of money is determined by a particular group occupying important positions. This is exactly what people call centralization.
Simply, AMPL is a digital currency that adjusts its supply to market conditions. In summary, AMPL is a decentralized protocol that can be increased or downgraded in the circulating supply of existing tokens depending on market conditions.
There is also a perception in the market that AMPL is a stable cryptocurrency. However, AMPL is not a stable cryptocurrency. Although the protocol aims to keep the price relatively stable at $ 1, the value of AMPL is not fixed at $. Instead, the protocol automatically adjusts the AMPL supply in the market to increase or decrease the current market price. This can be easily explained by an example.
At the time of writing this article, the AMPL traded around $ 1.08,
This means that in order to lower the value of the circulating supply and reduce the price to the target price threshold, the protocol should increase the circulating supply. The protocol uses two scales to do this: oracle price and target price.
Although the concept behind it is invaluable, this does not alter the fact that the AMPL project should already overcome many challenges.
A project difficult to learn and understand
Understanding Ampleforth's working mechanism requires a more in-depth understanding of how different currencies work, as well as general economic awareness. Yet many people do not even know what advantages most popular cryptocurrency Bitcoin offers over fiat currencies.
As such, it is difficult to understand Ampleforth by a wide audience. Because although the design of Ampleforth (AMPL) is elegant, it is more complicated compared to Bitcoin. Therefore, more research is needed to fully understand the potential of AMPL.
Its value is not stable, at least for now
Until cryptocurrencies dominate fiat currencies, it is unlikely that the value of AMPL will be 100% stable. Regardless of how big the market value of AMPL is, sudden shocks in demand are likely to have an impact on the price. Although the protocol is intended to work exactly in this way, it will face problems facing stable cryptocurrencies in the future.
Ampleforth has succeeded in developing it as an excellent asset that embraces dreams with its endless supply, so that the investors do not even need to worry about the drop in AMPL price.
We also need to point out that the team behind the Ampleforth project is comprised of experienced and established professionals who have worked in leading companies around the world for many years.
It has managed to attract investments from the leading names in the industry, including Ampleforth, True Ventures, Pantera Capital, Huobi Capital, and even Brian Armstrong, the CEO of Coinbase.
The advisory board of the project consists of Pantera, Facebook, Hoover Institute and Libra Foundation professionals.