A new kind of money?
Money is an interesting construct. The history of money is littered with attempts of mankind trying to make sense of it. We are in the epoch of Fiat money, where money is not backed by any physical commodity. Instead it is issued by governments, or more correctly, their central banks. Depending on the stability of the issuing country, the demand and supply of its currencies, the relative values of different Fiat money are derived. Theoretically, we would want to maintain the stability of money so that it can be a good medium of exchange and a good store of value. In order to do this, central banks control and adjust the supply of money with the macroeconomics. However, central bankers are mere mortals. They may not have the complete information of the monetary system and they are prone to discretionary economic policies. So what if we replace the central bankers with a set of omnipotent smart contracts?
We end up with Ampleforth (AMPL), a new kind of adaptive money. AMPL rebases itself every 24 hours to match its supply and demand to a price target. The current price target set is USD1.009, a Consumer Price Index adjusted USD. The monetary protocol adjusts the supply of AMPL across all users wallets based on price feedback via oracles. For example, suppose you have 1000 AMPL in your wallet and the price of a volume weighted AMPL is say USD2 for the day. After the 24hr rebasement, you may have 2000 AMPL instead of 1000 AMPL. Thus, you are incentivized to sell the extra 1000 AMPL and lower the price of AMPL such that it is closer to its current price target. Similarly, if the price of a volume weighted AMPL is say USD0.50 for the day, the rebased wallet balance may be 500 AMPL instead of 1000 AMPL. Assuming the demand remains unchanged, the price of each AMPL will increase accordingly and again move closer to its price target. In short, based on the smart contract rule sets, AMPL always tends to its price target. Below is a snapshot of the smart contract's dashboard:
Irregardless of whether you buy into the story of this new kind of money, there are opportunities abound here. The current oracle rate at the time of writing is USD2.54. This means that there will be expansionary supply for the next rebase. In search for the correct market capitalization (read demand) during this early stage, AMPL may be in an expansionary mode for quite some time. Furthermore, by providing liquidity in UniSwap exchange for the ETH/AMPL pool, there are lucrative exchange fees to be made. Lastly, for the promotion launch period (83 days left), the protocol rewards liquidity providers via its Geyser platform with extra AMPL on top of the Uniswap exchange fees earned.
Full disclosure, I do not buy the AMPL story. I only buy the AMPL coin for short term gains. I think money should have intrinsic value backed by utility, like platinum or silver or Bitcoin SV. Not so much gold. And definitely not AMPL.