Idea summary: Many Ampl buyers fail to manage the asset well, by not taking profits during positive rebase and buying more of network share during negative rebase. This is partly because many do not want to manage their position actively, do not have good trading skills or just want to passively hold the asset.
Some Ampl holders could benefit from an automated strategy that sells a pre-determined percentage (5%, 10%, 15%) of their Ampl holdings during positive rebase cycles into a stablecoin (Dai, USDC, etc.), this would function like an automated savings account, or negative rebase “insurance fund”. During negative rebase cycles all or a portion of this reserve could be used to buy Ampl.
If the negative rebase insurance fund became large enough it would create sell pressure during positive cycles, and buy pressure during negative cycles, helping to stabilize the protocol
Idea implementation/execution: This strategy is similar to TokenSets (https://www.tokensets.com/) an automated asset management platform. TokenSets is a “smart basket ERC20 token of crypto assets that automatically rebalances based on the strategy you choose.” The major tasks would be to develop one or more smart contracts that allow for automated buying and selling of Ampl at user-set intervals or at certain points.
Budget/cost: Budget unknown. Major expenses would include:
– Smart contract development and testing
– Smart contract audits
– Website design and development
Examples of similar ideas: The insurance product would be similar to TokenSets, mentioned above.
Idea timeline: About 1-2 months
We had a discussion about this idea before the DAO was established. I think it is an interesting one, an product that could help many non-trading Ampl holders to become more confident about holding Ample and better understand how it works.
My questions are around whether the product should use trading signals, rather than simple rebase status to determine when users buy and sell. There are many active “fast traders” of Ample who profit during positive and negative rebase strategies.
There is also the question of how the product would perform and be designed to improve yields. Here are my main questions about this idea:
– Would bots have a positive or negative impact on the “insurance fund”?
– Could the fund ever become large enough to influence Ampl cycles (would the fund accelerate or dampen them)?
– Should the fund be smarter about its triggers (by using market signals), rather than simply buying and selling during positive or negative rebase?
– Would the user be able to withdraw USDC or DAI to take profits automatically?
– During long positive cycles could the product provide yield in other ways, maybe by automatically buying other DeFi products during positive cycles to increase buying power during negative cycles, or lending a portion of the pool to provide interest for users?
– Are there ways for others to participate in or benefit from the fund, perhaps by lending DAI or USDC to the pool to increase its buying power in exchange for interest?
This is an interesting idea. Let’s continue the discussion and see how others react to it. I also think answering these questions could help flesh out the product idea and determine if people would be interested in using the product.
Okay fella’s, I’m not contract minded so apologies if this response just occupies space.
I think it’s almost inevitable that profiteers will build a bot to buy low and sell high. The nature of a currency that meanders over an equilibrium level is susceptable to such, and I do wonder whether this programmatic purchasing (in large enough volumes AT a large enough market cap) may stabilise the currency. Saying that, AMPL probably would be quite stable at a large enough market cap with just the rules it operates on currently.
To what extent would a trading bot/contract yield returns? I can’t visualise it, nor work it out.
If it does yield returns, will that increase the market cap? Exponentially?
If so, surely it would dump (market cap) eventually.
So would it be advantageous for both uninitiated hodler and network health to create a more visually informative way of understanding the long term financial position of moving into +&- rebases, and inform those hodling of the long term objective of increased market cap and token stability.
Education and the knowledge of how to act is more powerful to the individual than various complex programmed operations that act for the uneducated individual.
Let’s not forget we always risk reinventing the problems of the legacy financial system, where those who know how to use it, use it to a greater advantage and with more leverage than those that do not know.
Thanks for sharing your idea!
A uniswap 50/50 USDC/AMPL pool sort of does this already! The pool buys ampl when the price is low and sells when it is high to keep the 50/50 ratio, a simple (but limited) way of DCA’ing. You would need to time your exit in order to take full advantage of actualized profits.
There may be a better way to do this using balancer – smart pools are right around the corner. Time adjustable weights and configurable trading fees could be used to take better advantage of rebase events. I think it would make sense to backtest various pools (ETH/AMPL, DAI/AMPL, renBTC/AMPL) with simple + dynamic weights to figure out what works best.
Another notable feature of Balancer is that you can actually insert tokensets in as a weighted asset! I’ve played around with this a little bit, but I’m hesitant to actually build one until I can get around to backtesting the data.
My thoughts were something along the lines of initializing a pool with the given weights when AMPL is at a dollar (to have a meaningful baseline).
- 30% ETH 20 day moving average (risk management)
- 50% AMPL/ETH LP token (marker of market stability)
- 20% AMPL/LINK LP token (marker of market volatility)
I do not include AMPL as a stand-alone because Balancer is not yet compatible (gulp bug), but this can change soon. I imagine that the weights would be programmable to dynamically dollar cost average buy/sell based on some function of risk, where risk could be defined as expected time in negative rebase (i.e. using volume, momentum, etc).
Lastly, there is a proliferation of new protocols where you can obtain a small % of trading fees if you stake your LP tokens on the site. It may be worthwhile to consider a scheme where we aggregate this staking to earn sushi/kimchi/whatever tokens and market purchase ampl to put into a balancer pool like above.
Lmk what you all think!
50/50 USDC/Ampl smart pool seems pretty fair, TokenSet has its risk such as basket coins devaluing. We all cant ignore the fact BTC moves crypto markets as a whole in general. With a smart pool it would help non-traders benefit from positive rebases and dampen negatives. Certain, there are ample trading bots and will be more in the future, which ultimately will help stabilize ample price more. IMO any type of insurance product to save hodlers from specific rebases, negative, is a bad idea. The protocol is free flowing and should let be. Maybe someone can make a bot just to rebase everyday?
I believe creating a TokenSet would be interesting, especially if we tie it to a WVAP measurement along side RSI(?). Coupling $AMPL with assets such as aETH or price-discoverable assets could offer $AMPL the ability of being a foundational, base token in the respective basket.
Another idea, would be to create a balancer pool. Of course it would lean towards a higher AMPL weight, but implementing interest-bearing assets as an extra incentive may intrigue more participants.
If it’s an internally built mechanism you’re looking for, maybe this:
As participants deposit his/her Uniswap v2 / Mooniswap tokens to the Geyser, a representative Geyser token will be minted.
Upon so, the participant can deposit this into a pooled like mechanism in the DAO. Assuming the Ampleforth team + bootstrapped funds are available, it would add a liquidity mining factor similar to that of the Geyser. In essence, participants are either earning AMPL rewards, or the DAO can create their own governance token.
The only issue I see with this is that it’s comparable to some liquidity mining projects we see today.
– Unless it becomes widely used bots or the insurance fund itself wouldn’t have a big impact.
– The fund would dampen them and help keep the token at equilibrium. The only time the insurance fund would be idle would be during equilibrium. Thus it would short both positive and negative cycles creating buy and sell pressure. It would lengthen equilibrium the state the token aims for.
– Using market triggers would cause vulnerability to whale manipulation. Making it timed like the rebase would make it more of a force of nature that gives equal opportunity and would be in line with amples design philosophy.
– Yes, they would be able to opt-out and empty their insurance fund if they want to but it would be one way and they would have no insurance for negative rebases until they go through a positive cycle insured.
– The process of choosing other defi products or lending the fund out or farming with it would be subject to voting optimally.
– The only way I see outsiders lending money to the pool is if they agree their funds are locked down for a fixed number of positive rebases. If the lending period is too short and someone lends during negative rebase and money is used to compensate users by buying during negative rebase periods. If outsiders remove their lent money prematurely it could cause the pool to be bleed/drained out.