Cryptocurrencies with a focus on decentralized finance (DeFi) were really popular in 2020. By using smart contracts different models can be implemented easily in a form of tokens. The Ampleforth Blockchain is characterized by an unusual algorithm.
Since many cryptocurrencies are based on the same fundamentals and implement only a small percentage of blockchain potential, the Ampleforth blockchain was able to stand out thanks to a new method.
What Is Ampleforth?
Ampleforth is a cryptocurrency that is programmed using an unusual mechanism. As a result, a price of the coin is different from that of most cryptocurrencies.
The project was published as Testnet in 2018 and is now based on the Ethereum Blockchain (ERC-20). The founders of the project are Brandon Iles and Evan Kuo. The head office is in San Francisco.
The Ampleforth Blockchain has a different calculation of the price. While many assets such as gold or silver have a limited amount, cryptocurrencies can be designed individually. Also, the supply of digital currencies can be infinite, unlike that of physical goods.
Ampleforth made use of this property and thus enabled an elastic supply. This means that the token was released as a stablecoin and reflects the value of one US dollar. However, the number of tokens offered changes on a daily basis, which also results in a different price.
Three different smart contracts change the supply in relation to the demand every day. If the price of the token is above average, the credit on users’ wallets is reduced. However, if the price drops sharply, the number of tokens increases and the owner still holds the same amount of US dollars in his/her wallet. During the calculation, each user always receives the same percentage of the total amount of tokens. The circulating supply will only be adjusted if a significant discrepancy in the rate is apparent.
‘The AMPL protocol automatically adjusts supply in response to demand. When a price is high, wallet balances increase. When a price is low, wallet balances decrease.’ — Ampleforth website
Key Pros & Cons
Due to the elastic supply of tokens, an inflation rate is the same for every user. In contrast to fiat currencies, the share of the total sum always remains the same and therefore doesn’t lose its value. In addition, Ampleforth can help diversify a portfolio because it doesn’t depend on the Bitcoin price, unlike most cryptocurrencies.
However, it’s only beneficial as long as the US dollar is a stable currency. If the value of the US dollar decreases due to strong inflation, the value of the AMPL will decrease as well.
In addition, AMPL is a popular speculative object, since the calculation of the circulating supply is done only once a day. Until then, the currency price changes in response to supply and demand.
Conclusion: Ampleforth Has a Unique Structure
Thanks to its unique structure, the Ampleforth project has a good chance of establishing itself in the crypto market over the long term. While most cryptocurrencies have a fixed offer of tokens, AMPL is one of the few coins with an elastic supply. This makes it an interesting investment object, which can lead to good profits.