KuCoin AMA Series - Ampleforth - Full Transcript
(UTC+8) 17:00:00, November 15, 2019, KuCoin hosted the AMA(Ask-Me-Anything) session with Ampleforth in our official English Telegram group, Indian Telegram group, Spanish Telegram group, Indonesian Telegram group, Korean Telegram group, French Telegram group, Dutch Telegram group and Vietnamese Telegram group.
The AMA session was composed of 2 sections: 1. Q&A from KuCoin 2. Q&A from audiences. During the last section, we randomly selected 200 participants to enjoy a share of AMPL incentives equivalent to 1000 USDT in the Telegram group.
The rewards will be distributed to winners who got full 5 points within 7-14 days.
*Winners must have filled in KuCoin accounts.
Introduction of Ampleforth:
AMPL is a digital commodity-money with near-perfect supply elasticity. The token utilizes an elastic supply policy that addresses the deflationary problems of natural commodity-monies by automatically increasing or decreasing the quantity of tokens each user holds based on the previous day’s average price. This novel supply policy also creates unique trading behaviors in the market, decoupling it from how other digital assets move, and adding diversity to the ecosystem.
Official Website: https://www.ampleforth.org/
*For ease of reading, some text has been deleted
Section I - Q&A from KuCoin
KuCoin: What led you to create AMPL? What were you seeing with Bitcoin that led you to invent this interesting protocol?
Evan Kuo: Brandon and I have always shared in this fascination with building something that could live beyond our time. Very few things have this lasting quality. People, machines, companies, banks, even governments come and go. But the Bitcoin protocol stood out as something that might live on. From our perspective, it was clear that Bitcoin’s creators had discovered something special — the ability to engineer scarcity in a purely digital context.
And through this discovery, Bitcoin’s creators succeeded in producing a digital gold. A commodity-money, something much more like a natural resource and much less like a bank — something potentially fundamental and lasting. Knowing that digital scarcity could be engineered, the next question was clear, “can we create something better than gold?” Not a bank, but a commodity-money. We thought perhaps that too could last. And what was wrong with gold anyways? What else was truly special about Bitcoin? What made it different from gold? We had so many questions, and not enough answers, so we sought help. The journey of answering our questions, that’s what led us to create the Ampleforth protocol.
KuCoin: So what are AMPLs? And what problem do they solve?
Evan Kuo: The AMPL is a commodity-money, like Bitcoin or gold, but with near-perfect supply elasticity, like fiat. It is the first sound money with elastic supply. We learned through our research, that the great virtue of natural commodity-monies, is they are absolutely scarce and decentralized. Since no individual can arbitrarily increase the total supply of natural commodity-monies, they are immune to runaway inflation. But we also learned that the great failing of natural commodity-monies is their supply in elasticity. They cannot efficiently respond to changes in demand— making them vulnerable to economic shocks and runaway deflation. This is why we transitioned into pure fiat to begin with. After the industrial revolution, it became possible to create paper-monies that were cheap to produce, but expensive to manufacture, allowing for high supply elasticity. For a time, under the Bretton woods system these paper monies were redeemable for gold, but in 1971 US president Richard Nixon was forced to cancel the dollar’s redeemability— to prevent a deflationary spiral. Had we switched gold for Bitcoin under this system, we would have been no better off. So we designed the AMPL to be a suitable base-money alternative to gold. The AMPL has an elastic supply policy that adjusts supply in response to demand. However, because the protocol’s supply changes are automatic and affect everyone equally, the AMPL is non-dilutive and can never be debased by inflation.
KuCoin: Supply elasticity stands out as a critical element of AMPL, is it this supply elasticity that is responsible for AMPL’s different movement pattern?
Evan Kuo: Yes. The Ampleforth protocol automatically increases or decreases the quantity of tokens each user holds based on the previous day’s average price. Gains and losses in the network are reflected in both the quantity of units held and the price per unit. This introduces a fundamentally new set of incentives, resulting in a different movement pattern at steady state. We expect this unique movement pattern will lead to lower long-run correlations with both Bitcoin and traditional assets, adding diversity to the ecosystem.
KuCoin: The Rebase system is the core of Ampleforth’s elastic supply. It is also a unique mechanism. Can you introduce this principle in vernacular and ordinary users?
Evan Kuo: The Rebase mechanism is simply the rebalancing event that happens every day. It looks at the previous day's average price and determines whether it should increase, decrease, or hold steady the total amount of AMPL in circulation. These rules are algorithmic and the logic is encoded into the blockchain. The unique way that Ampleforth adjusts supply is that the increases and decreases go to everyone globally, proportional to what they own. This means there's a long-term equilibrium, but it still remains non-dilutive. There's no special class of user who takes the profits from the minting of money. Rebase happens every day at the same time, 2AM UTC
KuCoin: What has made Ampleforth so popular with the DeFi community, can this be attributed to the daily supply adjustments?
Evan Kuo: I think in general the DeFi community tends to be more economically curious and innovative. They believe that financial applications are best positioned to leverage blockchain technology, many even consider Bitcoin to be the first DeFi application. The community resonates well with us, given our blockchain-native design and desire to innovate upon Bitcoin and natural commodity-monies. For a time, the broader community seemed to be stretching to find smart-contract applications to every-day problems. In a way, DeFi is a return towards the roots of crypto. I’m excited that people in the DeFi community are starting to understand the AMPL token is truly different and important.
KuCoin: In terms of technology implementation, Ampleforth did not build its own chain, but instead built on Ethereum. What was the technical consideration behind this?
Evan Kuo: We view Ampleforth as being blockchain agnostic. We'd like to be everywhere anyone is storing value or making transactions, rather than in our own separate silo. It's actually much safer to bootstrap a new monetary asset this way, because we can use the security of an established blockchain as we grow through time. Even ETC got 51% attacked, for example. Instead, we're natively multichain. As long as the AMPL on all the different chains are controlled by the same monetary policy, and tradeable with each other, then they are really all the same currency. And we could still choose to build our own chain in the future if we choose to.
KuCoin: Ampleforth has an impressive line up of investors, advisors and a strong team— how has that helped AMPL to date?
Evan Kuo: They have been completely essential.
Most token projects limit the use of their advisors and investors to PR and networking. But we looked to our advisors and investors for intellectual guidance, and selected them (or perhaps they selected us) based on knowledge and curiosity. Like I said, we wanted to build something with the potential to last—and we really had a lot of questions. Not everything in the space is truly new, and not everything that’s new is truly important. AMPL’s are both new and important. We credit our advisors and early investors with this.
KuCoin: The Chinese community seems important to AMPL, can you discuss how you view the eastern crypto community?
Evan Kuo: Several of the largest exchanges are in China. The biggest base of retail investors is in China. Even the government has recognized the importance of digital currencies. Taking the Chinese market seriously, was an obvious decision for us and should be for any serious crypto project. We’ve started assembling a fulltime team in Beijing and it’s one of the best decisions we’ve made.
KuCoin: AMPL’s are a brand new asset, what other opportunities exist with AMPL that don't exist with other coins?
Evan Kuo: The daily rebase mechanism creates a lot of interesting scenarios for traders and holders.On exchanges like KuCoin, each rebase creates an arbitrage opportunity-- after the supply adjusts but before the price corrects. On the other hand with decentralized exchanges like Uniswap, pricing reacts directly because the rebase changes the liquidity pool size that feeds into the Automated Market Maker (AMM). More on that here.
AMPL is also one of the few assets that are interesting to borrow. If you look at most activity on platforms like Compound, there are a lot of borrowers of stablecoins but other assets have almost no usage. If you borrow AMPL during an expansion period, however, a positive rebase would provide you more coins that don’t count against your borrow balance. You can get exposure to rebase activity directly by borrowing. More on that here.
KuCoin: The project has been live for about 4 months, would you say the protocol is doing what it has set out to do?
Evan Kuo: Generally yes, but there have certainly been hiccups. At a high level, we want the AMPL token to have:
Countercyclical supply elasticity
A unique movement pattern
Countercyclical supply elasticity strikes at the heart of the problem of natural commodity-monies, and the protocol is executing as expected. It can’t really fail in this regard. But as far as movement pattern goes, although the AMPL token is volatile by design and the fundamental incentive mechanism behind supply adjustments is affecting behavior, we’d like for price to “snap to” equilibria faster. One thing we noticed, was the supply adjustments were too slow to adapt to swings in demand. We had originally initialized the rebase_reaction_lag value to divide supply changes by 30 in order to prevent overcorrection. But have recently changed the value of the rebase_reaction_lag to 10, so supply adjustment will be considerably more responsive.
We expect that this will make the system behave more accordingly. It will still be volatile in supply, but will restore price to its target faster, especially as we attract more liquidity.
KuCoin: Is Ampleforth a replacement for Bitcoin?
Evan Kuo: We definitely think there’s a place in the world for Bitcoin. It is a great store of value and hedge against instability in the same way that gold is. Instead we think of Ampleforth as a natural complement, the next natural step after Bitcoin that can introduce further risk diversification.Right now, it’s smart to put a small amount of your total investment portfolio into digital assets. However, since all digital currencies are so strongly correlated with BTC there’s no reason to look further. With AMPL’s different movement pattern, we think AMPL will be the next interesting digital asset to add in a portfolio after Bitcoin.
KuCoin: In June of this year, Facebook announced the Libra project jointly with other giants, anchoring a basket of currencies including the US dollar. China also announced this year that the upcoming legal digital currency DCEP will bring what the whole industry will bring. The impact? What challenges and opportunities are there for Ampleforth?
Evan Kuo: I was pleased when Libra was announced, because it introduced the concept of base-monies to the general public. For a time I think many had confused stablecoins with base-monies. In the case of Libra the base-monies being used for collateral are central-bank notes, and the stablecoin (or media of exchange token) relies on this collateral. This is not unlike how gold was used as a base-money under the Bretton woods system. Ultimately we designed AMPL to be a commodity-money that would have been a suitable replacement for gold under that system.
And it helps when we encourage people to imagine a variation of Libra that is collateralized with decentralized assets.I think efforts like Libra and the Chinese digital currency accelerate innovation, but also the community’s general understanding of money, and I’m looking forward to seeing how it plays out. There’s a lot of interest around Staking applications and services lately. For ordinary people, will the Ampleforth project consider paying dividends to holders? Remember, minting new coins just to pay dividends doesn't come for free. One of AMPLs biggest strengths is that it's non-dilutive. There are a variety of ways to earn income from AMPL on DeFi, though. For example, via lending (like on Aave) or providing liquidity to exchanges like Uniswap to get a share of trading fees. We've also published a novel method of distribution for part of the Eco Fund where users can stake AMPLs to gain ownership over time. This is in development now, so keep an eye out for it!
Section II - Q&A from Audiences
Q1. The medium term use case mentioned for AMPL is as collateral. AMPL is not one of the coins being considered for the upcoming Multi-Collateral Dai, do you believe that avenue to be closed or are there any plans to introduce a similar CDP system?
The long term use case mentioned for AMPL is as a central-bank currency. For it to replace gold and act as a reserve it would have to be recognised as such, how do you see your project bringing about this acceptance of AMPL? (Assuming that governments even allow it)
A: I originally wrote that to help people contextualize what we meant by a decentralized bank. At the time, DAI was one of the only working examples of a decentralized bank and we wanted to ground the use case. Now there are lots of examples! We may still become apart of their ecosystem, but it will take time. The MKR project seems to be moving in the direction of collateralizing traditional assets. I know this is a contentious topic, but it underscores the need for things like the AMPL token. As it stands, they can't simply continue collateralizing only ETH .. that simply doesn't scale. And the alternative digital assets are far too correlated with BTC / ETH to de-risk the system. Right now AMPL is still new and needs more liquidity.
I think AMPL is designed to be a suitable alternative to such currencies. But this is very far down the road. To put things in context, it's still early for Bitcoin to be used as a reserve currency.
Q2. Within 24 hours there will be a price difference of AMPL. Does this less volatility reduce the attractiveness of traders? If I do not make it in time for this price difference, can I get any other benefit when investing in AMPL?
A: AMPL will actually be quite volatile for the near and mid-term, and has a relatively low market cap at the moment. I think there's plenty of opportunity for you
Q3. As you mention red bookin website ! So, What is RED Book ? whats the importance of redbook in Ampleforth ??
A：The "Red Book" is something we created to provide context for the AMPL token. We wrote an academic style whitepaper, with references that assume the context of a researcher in Economics. But then realized that most crypto enthusiasts haven't read the works of Friedman, Keynes, Hayek, Smith, etc .. and weren't familiar with important dichotomies like "rules v. discretion" or things like "triffin's dilemma". So much of what we appreciate about the space comes from that background, and we wanted to make it accessible to everyone. It's a crash course in monetary economics that any crypto enthusiast should read. It qualifies the AMPL token through the lens of 5-6 different peer-reviewed economic frameworks, and I think really presents the case.
Q4. What are the unique points of your promotion program compared with other crypto projects? Why should I choose Ampleforth for a long term investment?
What are you particularly proud of when you look back on your time at Ampleforth? Is there any interesting story related to Ampleforth and you?
A: Typically, when we talk to people in the space, they consider us to be the strongest project "economically." This makes it really easy for us to talk to pension funds, high networth individuals, academics, banks, etc .. But I also think it will become increasingly easy for us to talk to retail investors as they learn more. I'm often impressed by curiosity of crypto-enthusiasts. Even these questions are great!
I think I'm most proud of the fact that we've built a "truth seeking" organization. All of our efforts have been directed at answering the question of what role crypto plays in our future. We haven't been distracted by near-term trends, and have really focused on creating something new + important.
Q5. what are the meaning of Synthetic Commodities ? whats the workof these Synthetic Commodities and whats the main work of Ampleforth ?
A: A synthetic commodity money, is a money that has "absolute scarcity" (rules based scarcity) but no "non-montetary utility." It's like a commodity money in that it's scarce, but like fiat in that it has no non-monetary utility (can't eat it, etc..). Bitcoin was the first synthetic commodity money. More on that here:
Q6. As you know, Vietnam is a very vibrant market and most exchanges are competing campaigns here to entice users and grow.
With AMPL, you see how Vietnam is and how What is the plan to develop here? #AMA #Kucoin
A: I'm also excited by Vietnam, and would love to collaborate with you if you have inroads.