Idea summary
Ample is an especially challenging asset for holders at this stage of its lifecycle. While the medium and long-term potential of Ample is bright, until the asset gains more steady, organic demand, it will continue to fluctuate around its “peg” and spend periods of time in both positive and negative rebase cycles, which has benefits and drawbacks for investors.
Mature financial ecosystems feature numerous products that provide options to invest in, speculate on, or use assets in ways that reduce the risk of capital loss. The Ampleforth Ecosystem currently lacks products such as these.
Also, Ample’s ability to organically increase its liquidity has not yet been fully appreciated or maximized in decentralized financial products. This is because Ample is not yet being used a fundamental part of a DeFi/Elastic Finance protocols in ways that take advantage of its unique strengths.
Wrapped Ample (wAMPL): A New Representative Money
Representative money has a long history in economics. For example, for about a century in the United States, silver certificates were issued, which gave the bearer the right to claim a certain amount of silver upon presenting the dollar at a bank. Representative monies are paired with commodity monies because they can be exchanged for the commodity (such as gold or silver).
Ample is a digital commodity money and is thus an very appropriate asset to pair with a representative money.
wAMPL would be a form of representative money that always entitles the bearer to claim a certain amount of AMPL, in this case 1 wAMPL = 100 AMPLs.
But, unlike physical representative monies, wAMPL would have an additional benefit: Because the asset is backed by an expansionary elastic currency (AMPL), wAMPLs would also produce passive income for holders. Also, AMPL sold during positive rebases would help to maintain the wAMPL system.
This presentation (click here to download) provides more information about how wAMPLs would work. In summary:
- AMPL holders would exchange 100 AMPLs for 1 wAMPL. Their AMPL would be locked in a smart contract and redeemable by anyone holding wAMPL token (wAMPL would be a tradable asset)
- Holders can be confident that the value of 1 wAMPL will never go below 100 AMPL because various mechanisms would be used to defend wAMPL’s peg, including:
- A percentage of surplus AMPL generated during positive rebases would be sold for ETH: If necessary, this ETH reserve would automatically be sold for AMPL to maintain the 1 wAMPL to 100 AMPL ratio
- Extra AMPL generated during positive rebases would be held in reserve to be depleted during negative rebases to reduce the likelihood that reserve ETH would be sold
- Holders of kMPL, the AmpleSense DAO’s upcoming multi-use asset would serve as a backstop for wAMPL’s value, meaning that a percentage of kMPL staked in contracts would be sold for AMPL if necessary to maintain the 100 AMPL to 1 wAMPL ratio. (kMPL holders would receive ETH rewards for providing this service.)
The wAMPL protocol would generate benefits for each participant in the system:
- wAMPL holders would be able to invest in AMPL with little downside (negative rebase risk). Their capital (in AMPL terms) would be preserved. They would also benefit from positive rebases because a percentage of ETH gained during positive rebases would be allocated to each wAMPL holder providing them with passive income and making the wAMPL’s true value 100 AMPL + ETH claimable by wAMPL holders
- kMPL holders staking in the system would receive ETH rewards in exchange for helping to crate a strong foundation for the system
It is also likely that wAMPL would be utilized across DeFI protocols, creating other opportunities for holders to benefit from lending, borrowing and trading — all while maintaining exposure to AMPL in a risk-minimized fashion.
The process of minting wAMPL would also drive organic demand for AMPL, and lock up more of the currency, which could lead to longer periods of expansion, benefiting Ample holders.
Idea implementation/execution:
The system would have the following components:
- Contracts required to mint wAMPL and lock AMPL in reserve for wAMPL holders to redeem
- A trustless accounting system that would keep track of the global ETH rewards claimable by wAMPL holders
- A rules based system that determines how much AMPL to sell during positive rebases, depending on the rebase amount
- A staking system that allows kMPL holders to earn rewards from backing wAMPL while not giving up other privileges of holding kMPL
- Sufficient ETH liquidity in the system to bootstrap it if it were launched during a negative Ample rebase cycle
For more information about the system design, please download this presentation (click here).
Budget/cost:
- Estimated smart contract development fee: $7,000 – $12,000
- Estimated audit fee: $9,000 – $14,000
- ETH to capitalize the system if launched during a negative rebase cycle: TBD
Examples of similar ideas: The wAMPL system has similarities to MakerDAO (in terms of kMPL holders serving as the ultimate backstop of the system) and cDAI, aDAI, which provide owners with interest income and are tradable. It is likely that we would look these systems while developing the smart contracts.
Idea Timeline:
- DAO Approval and Funding: 1 – 1.5 months
- Smart Contract Development, Testing and Front End Development: 1 – 2.5 Months
Wouldnt you dilute yourself if you bought during expansion periods? Let’s say you buy at 100m mcap then mcap becomes 200m. The 100 ampl you used expanded and became 200 ampl but you can only redeem back for 100. Also during retraction periods, you would get a better position if you bought this when ampl mcap is high. But for that use case why use wampl when you can sell at high mcap for tether or usdc for example and then redeem it back for more ampl after contraction is done.
My suggestion to make this idea better would be to make a token that represents a percentage of the ampl supply. That can be redeemed automatically via smart contract and vice versa that doesn’t reabse. Like ren btc. Lets say my theoretical token has like 10k supply. Each of them would represent 0.01% of the total ampl supply. It would be able to be redeemed both ways. Like to buy one you pay whatever 0.01% of the ampl supply is in ampl and lock it up. And vice versa you can redeem it for 0.01% of the ampl supply back. The locked up ampl for my theoretical token would continue to rebase. This alternative would remove the rebase and make it easier for newbies to understand the value of their holdings. It would also make taxes easier.
Thanks for your comment.
I think my experience with people looking at rebases / debases is that the concept of locking in a percentage of supply goes over their heads.
They understand conceptually that their % of the supply never changes. Yet practically, from a capital preservation perspective, it does not matter. If they have spent say $10,000 on AMPL and the supply debases by 50% they are down 50% plus in their investment. They only know: I spent $10,000, i now have $3500 (or less). If they spend $10,000 on wAMPL and redeem, at .73, they’ve only gone down by 30% or so.
In fact wAMPL makes the concept of buying during negative rebases stronger. For example they can buy 100 AMPL at .73 and sell 100 AMPL at 2.25. (But, they are protected from negative rebases.)
More likely, during positive rebases they will hold onto wAMPL for the interest income and watch the price increase by many multiples because of the attractiveness of the asset from a passive income perspective.
So, the wAMPL token is really for those who are interested in investing in AMPL, benefiting from positive rebases, but want that downside protection.
They don’t care about percentage of market share. And we’ve seen that message really not resonate with many investors. They care about capital preservation and profit generation.
Say AMPL goes from 1.45 when they purchase the token to .73. Well, the price of wAMPL may not decline much due to the interest that is accrued or has accrued to holders. In some respects, it could actually be an uncorrelated asset to AMPL, which is interesting also.
Also from a smart contract development perspective, and practically, I don’t see a simple way to let someone buy a % of market cap.
So this is simpler message to someone interested in investing in AMPL, but with little interest in preserving their % of the market share. For people interested in gaining more market share, they would simply hold naked AMPL.
This product would be for those individuals that want some upside benefit, but protection against the downside loss.
And from a communication perspective, the message is simple: buy wAMPL for 100 AMPLs. No negative rebase, gain interest over time.
Simple, attractive, noob friendly.
Very interesting ideas guys, I agree about reducing the complexity of the ‘Tokenomics’ of Ampl in some way, it’s not that it’s that hard to understand, but most people still think in ‘real’ money, ie £ and pence, so anything that brings them closer to that would encourage those types of investors. So my investment was worth x, now it’s worth 5x, or 0.7x ?.
Just a off the cuff remark, haven’t given it a huge amout of thought yet, but even a sA (stable Ample) tied to wA or Ampl, but worth something much more stable (eg 0.01 ETH), might be interesting. Like a ‘reward’ for holding a certain amout of A or wA.
In addition to my suggestion for the token idea I proposed. The price action of that token would be backed by both ampl price and supply. Any difference would be removed by arbitrage. Could be called something like ampl reserve. A token pegged to the ampl mcap. A reserve token backed by an Efi asset.