In the recent period, with the volatility of BTC, Ethereum and other mainstream currencies are also in a similar market, but AMPL, a relatively old currency, has been inflated for many days. As shown below:
From October 17, 2020, the supply (supply) continues to rise
Grandpa of YAM, inventor of Rebase
Amplforth (AMPL) is indeed a very innovative currency. During the DeFi mania in August and September this year, the term “Rebase” was the concept proposed by AMPL and practiced, and the practice was very good. Later, the most famous imitation plate was YAM. Just by looking at the name, YAM means YFI+AMPL, so it is called YAM, but it happens to be a name for vegetables and fruits. Later, the farm currency is for fruits and fruits, which is even worse.
The so-called Rebase can now be simplified and understood, that is, the coins in the wallet will increase and decrease. If it is higher than 1.05, it will increase. If it becomes more, there will be an incentive to sell, and the price will drop; if it is lower than 0.95, it will decrease and change. There is no incentive to buy, and the price has increased.
Remarks: In other articles, some talk about 10% inflation per day starting at 2 US dollars. I did not say the reason. Let me tell you that 2 US dollars is twice the target price of 1 US dollars. At this time, it exceeds the target price of 100. %, under the 10-day inflation and deflation rule, 100%÷10 days=10% per day-this is a theoretical value. For specific daily inflation, please see the official website dashboard, which has a detailed introduction. The screenshot is as follows. Official website address:
Let’s take a look at the recent inflation situation, the link below:
The red arrow has been marked. The price of the oracle is 1.64$ and the target price is 1.021$. Of course, some people say that AMPL is the gambler’s favorite, but it is not. The gambler’s favorite is definitely a hundred times + leverage. This is still too slow.
Price deviation curve (similar to ECG)
The two pictures above are unstable stablecoins with price deviation percentages. To be honest, when I see this graph, I am quite comfortable when I am a student of science and engineering-it is really like an electrocardiogram.
Technically, AMPL is a stable currency. “Elastic supply” is just a mechanism behind the name. However, this stablecoin will not be stable temporarily (or for a long period of time in the future). It is because of instability that there is room for arbitrage, and it is because of the existence of arbitrageurs that the price will be returned. As a result, there is an ECG-like price deviation curve.
What is a death spiral?
After understanding the rebase and the ECG, you will be wise to ask a question. If the price drops to $0.5, then everyone loses interest in AMPL and no one buys it. Then in order to keep the currency price “stable”, rebase.
For example, suppose that you have 1000 coins in your hand. In the case of stable coins, it should be 1000 US dollars, one US dollar, and now one becomes 0.5 US dollars. At this time, you will rebase within 24 hours, and rebase for 10 days. 1000 coins will become 500 coins, so there are 500 dollars left, but one coin is still 1 dollar. The currency price has not changed, but the number of your currency has decreased.
Then, you think you should stop the loss in time and sell these coins. Many people sell the coins as you think. The price drops further, and the number of coins is still decreasing every day.
Total value = currency price * number of coins.
Both parameters fell at the same time, resulting in an accelerated decline, which is the death spiral.
The above content is reversed to understand that when the currency price is high, an upward spiral can also occur. So the death spiral and the ascending spiral are mirror images, and you can understand one by understanding the other.
The reason why the “death spiral” is always heard in the market is simple, the word is cooler than the upward spiral.
The issue of currency holding ratio
Whenever you buy AMPL, if you do not move these coins, the amount of AMPL you own will remain unchanged in the total supply or proportion of AMPL. Therefore, long-term holding is of course when the price is low, and when the price is low, the total quantity is often small, and the proportion of the same funds obtained is higher. As long as the death spiral does not continue, future benefits can be expected. Note that the death spiral will not happen is only based on experience, and cannot fully predict the future.
Basic investment strategy
The short-term investment timing of AMPL is okay if it falls below US$0.9, or it rises above US$1.1. Now is not a good time to enter the market.
Those who have already entered can exchange their principal, and the remaining coins can be used to watch it perform. If long-term investment can go down and buy more (because at any time you buy, your proportion is the same), hold it lightly. Because the death spiral did not kill it many times, it might not die next time. If it does not die, at this time, the proportion of low-price purchases will be constant, and it will be enough as the total market value expands in the future.
I personally prefer to open positions in batches after falling below 0.9. Overcome the death spiral and expand the proportion of currency holdings.
Of course, for large or professional investors, they are more concerned about the proportion of their own purchase of coins. For example, if you buy 1 million, the proportion is 0.264%, because the official website sees that the current total is 378.89 million (million). As shown below:
After ten o’clock in the morning next year, this total supply will increase and it is currently in the inflation stage.
to sum up
This article starts with Rebase, to the price fluctuation curve (ECG), to the principles of death spiral and ascending spiral, and finally gives basic investment strategies based on these principles. Of course, it is not a high-level gameplay. Senior players can deduce intraday trading based on the basic principles. Arbitrage, you can also do AMPL-related options.
