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
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!