$AMPL is a Multifaceted Piece in a Game of 4D Chess — Learn How to Play
$AMPL is the most interesting game-theoretical cryptocurrency out there.
And if you acquire a deep understanding of its dynamic supply-based economics, you can dominate $AMPL trading, lending, borrowing, and invest with information asymmetry to come out on top every time.
That said, most people don’t know how to effectively trade or manage $AMPL. If they did, $AMPL wouldn’t be where it is today — it would be magnitudes bigger.
Why?
Because so many more people would play $AMPL chess! However, $AMPL is hard to wrap your head around and it takes time to learn. But once you do learn, playing with $AMPL can be incredibly lucrative. And with $AMPL’s market cap under $250 million, it’s still early to get ahead of the game with $AMPL information asymmetry.
Let’s get to it!
$AMPL — The Basics
I’m here to divulge advanced $AMPL alpha, so I’m not going to dive into the basics. But if you’re new to $AMPL or simply need a refresher, I encourage you to check out these links, in this order:
- $AMPL Basics Explained
- Technical Guide to $AMPL for Beginners
- Non-Technical $AMPL Guide for Beginners
- 6 $AMPL Misconceptions Debunked
Did you read them?
“Yes”
Good. Now we can get into the $AMPL information asymmetry.
How to Trade “Naked” $AMPL
There’s “$AMPL on Aave” — where lending and borrowing dynamics come into play — and then there’s “naked $AMPL” — where gains and losses are attributed to supply in addition to price.
Since $AMPL is unlike any other cryptocurrency, it doesn’t trade like any other cryptocurrency.
Common technical analysis methods such as simple moving averages, Fibonacci levels, and others will not be as effective for trading $AMPL. Rather, it’s the understanding of how the price and supply interact together. Once you understand this, you’ll know when to buy, sell, and hodl $AMPL to turn a profit.
How $AMPL Price & Supply Interact
As seen in the image above, the Ampleforth protocol propagates price-information into supply.
Price above the equilibrium threshold → supply increases = price-supply equilibrium
Price below the equilibrium threshold → supply decreases = price-supply equilibrium
The Ampleforth Redbook provides a good example and explains how the $AMPL price and supply interact to reach a price-supply equilibrium:
Okay. So if you want to trade $AMPL successfully, you will have to use supply in addition to price as a proxy for gains and losses. Period.
Now, let’s look at some strategies.
Pure “Naked” $AMPL Strategies:
1. Buy $AMPL when its price is within the Equilibrium Threshold and hold through positive rebases.
When you buy $AMPL within the equilibrium threshold, the supply and thus your $AMPL balance remains the same. If the price increases above the threshold ($1.10) and remains above at the time of rebasing, you benefit from a positive rebase (increase in supply).
If demand is strong enough (which can be fueled by increased $AMPL utilization & speculation), it’s probable that $AMPL remains above the threshold for a period of time (network expansion to meet demand) and continues to increase in price. If this happens you can benefit from multiple positive rebases + a higher $AMPL price.
When do you take profit?
As with any trade, this can be the tricky part. You need to try and judge the scale by which the $AMPL network is expanding. You can take quick profit when the price is high, or you can continue to hold and benefit from positive rebases (an increasing balance).
Locking in profits when the price is high is the safest option to lock in profits. But if you hold onto $AMPL (even as the price is coming back down) you can continue to increase your $AMPL balance with every rebase for as long as the price is above the equilibrium threshold. If you do this, there is potential to make even more profit than when the price of $AMPL was at its peak (because your $AMPL balance will be increasing).
And if the $AMPL network continues to grow and expand with increasing utilization and activity such as:
- $AMPL on Aave pool — increase in liquidity and borrow activity.
- $AMPL across chains — $AMPL on AVAX, $AMPL on Polygon, $AMPL on xyz chain, etc.
- $AMPL on new DeFi applications — Trader Joe, Pangolin, Benqui, Buttonwood Protocol products (i.e. tranched $AMPL), derivatives, etc.
- wAMPL — CEX listings, Balancer pools, utilization across DeFi protocols & products
Then it’s probable that $AMPL will remain in an expansive state (positive rebase territory) for a prolonged period of time to accommodate all of the demand from its increased utility.
Therefore, if you continue to hold $AMPL even as price drops, you will continue to profit for as long as the network continues to grow — You don’t need to time tops with $AMPL to profit.
That said, there’s a much greater potential for larger gains if you continue to hold onto $AMPL while continuing to increase your balance on dips. This is the strategy $AMPL maxis follow as they anticipate the $AMPL network to be larger in the future than it is today.
2. Buy $AMPL when it’s below $1.00
The price of $AMPL always reverts to its target price of around $1.06 (the protocol is designed this way). Therefore, a winning strategy is to simply buy $AMPL when it’s low and wait until its price goes back to or above its equilibrium price before you think about selling.
However, the thing with this strategy is that you’re buying $AMPL when it’s in negative rebase territory. Therefore, you may suffer some short-term pain from a decreasing $AMPL balance until price reaches equilibrium.
But the important thing to remember here is that when you buy $AMPL below $1.00, you’re capturing a % of the $AMPL network at a discount. Sure, the next day you can end up with fewer $AMPL tokens, but your percentage of the $AMPL network stays the same.
So if you believe the $AMPL network will grow larger, all you need to do is accumulate when its price is low and wait to be in profit. If/when $AMPL’s market cap reaches the size of $USDC, you’ll be glad you locked in your percent of the network at such low prices.
$AMPL on Aave Strategies
While buying and selling pure $AMPL (Naked $AMPL ) is a market cap game, lending and borrowing $AMPL turns it into a price game — with the added bonus of allowing for only upside on the market cap.
Let’s look at some strategies:
1. Borrow $AMPL when Positively Rebasing and HODL Increased $AMPL Balance
You want to hold $AMPL when it’s positively rebasing. Period. So, if you think the price of $AMPL is going up or if it has already begun trending up, borrow $AMPL on Aave and hold onto it for as long as it’s positively rebasing.
When $AMPL starts trending down and gets close to the negative rebase territory, repay the loan and keep the $AMPL earnings from the positive rebases. If it reaches the equilibrium threshold and starts trending up again, continue to hold your borrowed $AMPL and benefit from the positive rebase.
2. Borrow $AMPL when Positively Rebasing and Sell at the Top
This is the same strategy as above, only instead of holding $AMPL for the entirety of the positive rebase, you sell your earnings near the top to lock in profits from a high $AMPL price + earnings from the positive rebase(s) if you hold long enough.
You can then repay your borrowed $AMPL or continue to hold the borrowed $AMPL until it gets close to neutral territory before paying it back. If you choose to hold on, you will benefit from an increased $AMPL balance.
2. Borrow $AMPL and Short it
If you think the price of $AMPL is going to go down, you can borrow $AMPL on Aave and immediately sell it. If you are correct and the price goes down, you can buy $AMPL back at a discount, pay back your loan, and keep the difference.
For example:
Say you borrow 100,000 $AMPL at a $1.00 price thinking it’s going down. As soon as you borrow it, you turn around and sell it immediately. Say you’re correct and the price goes down to $0.80 within 3 days. If you’re satisfied with this drop, you can buy back the 100,000 $AMPL at a 20% discount and repay your debt. In this scenario, you close the position 20% up.
4. Lend $AMPL when Negatively Rebasing
If you are an $AMPL holder and want to offset losses from a negative rebase, you can deposit your $AMPL on Aave for the purpose of lending. When you do this, you dampen the effects of negative rebases because the borrower of your $AMPL experiences the rebase.
For example:
If the utilization of the $AMPL on Aave pool is at 50% during a negative rebase period, you will only experience negative rebases on 50% of your deposited $AMPL. Therefore, this is a good strategy for long-term $AMPL holders who want to maximize their profits in the future by saving $AMPL during negative rebase periods.
5. Lend $AMPL when Positively Rebasing — Profit from High APY %’s
If you’re a short-term profit-focused yield farmer who doesn’t care about growing your $AMPL balance, then lending $AMPL when it’s positively rebasing is the strategy for you. The APY %’s you can earn from lending $AMPL when it’s trending up (when the demand for borrowing is high), is off the charts.
Lenders can earn upwards of ~90,000% +.
Conclusion
$AMPL is a uniquely complicated digital asset to trade, borrow, and lend — there’s no question about that. But if you acquire asymmetric information you can dominate the $AMPL game of 4D chess.
As for the trading strategies and lending/borrowing scenarios laid out in this article, they can be tweaked and combined with one another to suit any individual’s preferences. Try them out, experiment a little, and come up with your own lucrative moves.
$AMPL isn’t going anywhere and it’s only a matter of time before its lucrative secrets become known. Soon, $AMPL demand and utilization will go off the charts.
Be ready for when this day comes.
