Source: Wave Blocklike
Original Title: Witnessing the Charm Spiral “Rebase”: A bolder social experiment after AMPL
“Funds turn to the Rebase mechanism?
BASE is currently regarded as a bolder “social experiment” after AMPL. “
Following the slogan “DeFi one day, Amber year”, the community shouted “BASE one day, DeFi one year”. After a 10-fold increase in two days, BASE quickly entered a death spiral and experienced a -50% deflation.
In just a few days, BASE has almost reproduced the three-month journey of AMPL. In the fast-changing rhythm of the market, DeFi is again divided into “classical DeFi” and “new DeFi”, and a new concept of ReFi-RebaseFi has emerged. BASE may be a bolder “social experiment” after AMPL.
“Encryption Standard & Poor’s 500”
Algorithmic stablecoins and their respective mechanisms have once again attracted the attention of the market.
I believe that the market still has fresh memories of AMPL, which was born in July:
In June of this year, AMPL entered everyone’s field of vision with DeFi;
In July this year, crazy inflation started. The monthly income used to be as high as 510%. After a month or so of skyrocketing, the market value of AMPL suddenly began to plummet, dropping by 90%;
From August to October this year, AMPL has been in a state of no one for a long time. Around November, its market capitalization began to grow with low inflation, steadily
To understand algorithmic stablecoins, most people start with AMPL. In AMPL’s white paper, the main logic is to adjust the price of stablecoins through market supply and demand to maintain them at around $1.
Through the oracle machine, AMPL updates the coefficients every 24 hours and is automatically executed by the smart contract. This process is called “ Rebase “.
Under this mechanism, when AMPL is higher than the base price, supply is increased, and when it is lower than the base price, circulation is reduced. Simply put:
The process is like this: when the AMPL price is higher than $1, the price increases, the number of coins increases, and the coins in the investor’s wallet will increase.
If in the past 24 hours, the AMPL price has doubled, according to the smart contract, the system will increase the market supply to cause the AMPL price to fall, and the coins in the investor’s wallet will automatically increase by about double.
At this time, investors are faced with two choices: the first is to sell the additional currency to recover the principal; the second is to choose to buy more coins in the face of the rise in currency prices and the increase in currency volume. At this time, a large number of coin holders will spontaneously recommend this currency, forming a strong Fomo sentiment.
A blockchain application developer from the community gave a more accessible explanation: “
In the past month, the market value of AMPL has slowly recovered, and the increase has exceeded 100%. Some time ago, it has been maintained at more than $1 for more than 40 consecutive days.
In this context, the good appearance of the algorithmic stablecoin sector has given the market more expectations for BASE. After understanding the concept of AMPL, the concept becomes clearer.
BASE is called “a wilder AMPL.” In BASE , the process of Rebase is not the dollar, but the total market value of the entire crypto market (all tokens are equal in weight), and the object of Rebase is A fixed percentage of the total market value of the crypto market. It can be simply understood as:
The author from Bihu, “Xiaodou Xiaonezha”, wrote: “For the cryptocurrency market, Base is a highly diversified market index just like the Standard & Poor’s 500.”
According to the introduction, through the flexible supply agreement, the supply can be adjusted by inflation or deflation to achieve the target price equilibrium. The function of the Base protocol is to ensure that the base market price (mp) is equal to the target price (tp), namely:
When in the interrupted state, the mechanism will be used to adjust, namely:
“In fact, it is an air method to track the changes in the market value of all cryptocurrencies, but a Rebase mechanism is added to this, which makes people feel profitable, that is, arbitrage. Users make arbitrage, and the project is making consensus.”
Under this special setting, once falling into the group price fomo sentiment, the rapid rise and fall of the currency will occur frequently. BASE quickly entered a death spiral after tenfold in just two days. On the morning of December 7, BASE experienced a -50% deflation. Wan Hui Dovey, the founding partner of Primitive Ventures, said that he “has completed the three-month journey of AMPL in three days.”
At present, the algorithmic stablecoin sector of the rebase mechanism mainly includes AMPL, YAM, ESD, DSD, base, Basis Cash, Badger, etc., and a variety of innovative Rebase gameplay attract more people to enter the market.
The charm of Rebase and algorithmic stablecoin
Although algorithmic stablecoins are considered by many people to have too much FOMO sentiment, their endless performance also makes many people want to find out.
The overseas digital currency investor @bill the investor divided the development of unsecured stablecoins into three stages:
1. Pure Rebase stage, such as AMPL/YAM
2. Simulate USD bond mechanism stage, such as ESD/BASIS
3. In the mixed phase, part of the mortgage + part of the bond market adjustment
What is the current stage of the market?
James, the co-founder of CryptoBridge Capital, analyzed Blocklike: “The essence of Rebase is a type of synthetic asset. It uses algorithms to simulate and anchor the operation of a certain value indicator (such as the price, market value, and volatility of a specific asset). It is hoped to achieve the goal of synchronizing with the anchored valuable indicators. At present, the typical anchor asset is the US dollar, and it will gradually spread to anchor the price of more diversified assets, such as BTC and other public chain assets, indexes (standard General 500 or VIX, etc.) and even traditional assets such as US stocks.”
James reminded: “Therefore, the Rebase project will complete the cross-chain and on-chain of assets in the value index. However, this mechanism is quite experimental and does not really make the value transfer complete. You need to be wary of big players in the process of participation. With the help of capital advantage, we can devour other people’s capital pool shares, so as to complete the silent harvest under the cover of the Rebase mechanism.”
Facing the current algorithmic stablecoin market, the community generally maintains a rational view.
“AMPL has been developed to the present. I don’t think AMPL is so good, but since September 4th, the whole DeFi has been dull. It needs a new wave of DeFi boom, it needs stimulation, and Rebase currency is born with it. This kind of large ups and downs. AMPL is equivalent to a good social experiment. This mechanism is not necessarily the best when used in stable coins, but it can be used in other fields. Rebase is not the best idea for stable coins, but Other fields, such as BASE, benchmark the overall market value of cryptocurrencies, which is very good and relatively stable”, the DeFi field from the media explorer cat expressed his views on Blocklike.
At the same time, he also reminded investors to participate cautiously: “BASE is a creative project, and it does give people a refreshing feeling. However, it is best to participate in projects like the Rebase mechanism at the beginning, and the risks will follow. Become bigger. Of course, for high-quality projects, especially the first creative project, I think you can participate in the low point, as a contribution to a social experiment.”
No matter where this large-scale “social experiment” will develop, what can be seen is that more types of combinations and innovations are emerging in the Rebase mechanism, and the whole trend is also developing towards removing human factors. Perhaps this is what most people think. The ideal “Web 3” direction in China.
