Review on Ampleforth by Merve Duru
The big disappointment in Ampleforth
There was a time when the price of AMPL stayed habitually above a dollar but once all the hype and glitter faded, Ampleforth began to sink below the dollar zone. With an almost constant negative rebase eating away value each and every day it became easy to see that Ampleforth is nothing but an experiment gone wrong. Firstly, the motivation behind the project is intended to guarantee stability through the daily rebase. This has by no means been accomplished in any way, as the price is constantly suppressed under a dollar with very brief bursts above a dollar. In the screenshot below, one can see that the time spent above a dollar is insignificant in comparison to the time spent below a dollar.
This means that a negative rebase is being triggered far more frequently than a positive one, negating any form of equilibrium. What is also very evident is that the zone of stability is rather at the $0.70 to $0.80 zone instead of being predominately at the $1.00 zone. What this in essence means is that the price of AMPL is stable in an area where value is being destroyed, rather than being stable in an area where it is preserved. Designed to find stability at a dollar but finding stability at $0.75 would be considered a failed attempt in my book.
I performed an experiment to see how the negative and positive rebases would offset each other over time and hopefully provide stability. I purchased a small bag of AMPL and just left it in my wallet for a number of months. What transpired was a complete loss of value, as the negative rebase simply destroyed my holdings. Some may argue that it is due to the altcoin market being hit so hard, which would bring me to my second point.
Uncorrelated Asset?
The second most important aspect of Ampleforth is that it is designed to be uncorrelated to Bitcoin and the altcoin market. This is clearly not the case as even recently, AMPL has surged above a dollar in tandem with the Bitcoin rally. Ampleforth does not have the independence it is designed to have and furthermore lacks the stability it is also designed to have. In a post some months back I highlighted a trading strategy for AMPL that I still believe is the only use case for this coin.
A very specific trade idea that can be utilized to make brief trades and significant profits. Apart from this idea, I would not speculate any further on the price of Ampleforth.
Besides the clear flaws in the performance of AMPL, there is another element that is rather strange. The nature of the dynamics of this project are almost schizophrenic! Devs want a coin that always returns to a dollar, while holders want a coin that surges way above a dollar. In the case of Bitcoin, the design is to see the value increase through the halving and other factors. This design is supported by the holders as they too want to see the value increase. Both parties have joined forces to reach a common goal. Ampleforth is divided in nature and design. If Ampleforth did what it was designed to do, holders would be disappointed. On the other hand, if AMPL fails and remains indefinitely above a dollar, holders would be ecstatic. Unfortunately it is failing and remaining below a dollar!
In my opinion, both parties cannot succeed and that in and of itself makes Ampleforth a useless endeavour. I will hold onto that little bag of AMPL in the hopes that a frenzy in the bull market will attract investors clueless of the design. This could push the price significantly above a dollar.
Views expressed here are my own opinions and do not constitute financial advice.
Pros
- ease of transaction
- safe
Cons
- investment loss risk
