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.