Recently, with BTC fluctuating sideways, Ethereum and other mainstream currencies are also in a similar market, but AMPL, a relatively ancient currency, has been inflated for many days. As shown below:
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Grandpa of YAM, inventor of Rebase
Amplforth (AMPL) is indeed a very innovative currency. During the DeFi frenzy in August and September this year, the term "Rebase" was the concept proposed by AMPL and put into practice, and the practice was very good. Later, the most famous imitation disk was YAM. Looking at the name, you can know that YAM means YFI+AMPL, so it is called YAM, but it happens to be a vegetable and fruit name. Later, the farm currency is for fruit and fruit, not to mention.
The so-called rebase can now be simplified to understand, that is, the coins in the wallet will increase and decrease. If it is higher than 1.05, it will increase. There is less motivation to buy, and the price will go up.
Remarks: In other articles, some mentioned that 10% inflation started every day at 2 US dollars. They did not say the reason. Let me say here that 2 US dollars is twice the target price of 1 US dollar. At this time, it exceeded the target price of 100. %, under the rule of 10-day inflation and deflation, 100% ÷ 10 days = 10% per day - this is a theoretical value, the specific daily inflation depends on the dashboard of the official website, which has a detailed introduction, and the screenshot is as follows. Official website address:https://www.ampleforth.org/redbook/ampleforth_protocol/
Let's take a look at the recent inflation situation, the link below:https://www.ampleforth.org/dashboard/
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Price Deviation Curve (similar to ECG)
The above two pictures are price deviation percentages and unstable stablecoins. To be honest, when I was born in science and engineering, I was quite comfortable when I saw this line-it really looks like an electrocardiogram.
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What is a death spiral?
After understanding the rebase and ECG, you are smart enough to ask a question. If the price drops to 0.5 US dollars, then everyone loses interest in AMPL and no one buys it. Then, in order to keep the currency price "stable", rebase will be carried out.
For example, suppose you have 1,000 coins in your hand. In the case of stable coins, it should be 1,000 US dollars, one US dollar each, and now one becomes 0.5 US dollars. At this time, it will be rebase within 24 hours, and rebase within 10 days. Your 1000 coins will become 500 coins, so there is 500 US dollars left, but one coin is still 1 US dollar. The currency price has not changed, but the number of your currency has decreased.
Then, you think it’s time to stop the loss and sell these coins. Many people also sell 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.
The two parameters fall at the same time, resulting in an accelerated decline, which is the death spiral.
The above content can be understood in reverse. When the currency price is high, an upward spiral can also appear. So the death spiral and the ascending spiral are mirror images, and if one understands the other, then one can understand it.
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Currency ratio problem
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Basic Investment Strategy
The short-term investment timing of AMPL is fine if it falls below 0.9 US dollars, and it is also OK if it rises above 1.1 US dollars. Now is not a good time to enter the market.
Those who have already entered the market can exchange their principal, and the remaining coins can be held to watch its performance. If the long-term investment can be bought more and more as it falls (because your proportion of buying at any time remains unchanged), hold it lightly. Because the death spiral failed to kill it many times, it may not die next time. If you don't die, at this time, the proportion of buying at a low price is constant, and it will be fine as the total market value expands in the future.
I personally prefer to build positions in batches after falling below 0.9. Overcome the death spiral and expand the proportion of currency holdings.
Of course, for large investors or professional investors, they pay more attention to the proportion of coins they buy. For example, if you buy 1 million coins, the proportion is 0.264%, because the official website shows that the current total is 378.89 million (million). As shown below:
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Summarize
This article starts from Rebase, to the price fluctuation curve (ECG), to the principles of death spiral and upward spiral, and finally gives the basic investment strategy based on these principles. Of course, it is not a high-level game. Senior players can deduce intraday trading based on the basic principles For arbitrage, you can also do AMPL-related options.
