Quarter 3 of 2023 has been all about building, development, and expansion for the Ampleforth ecosystem. Q3 has been a bit of a non-story overall, with the blockchain economy largely trending slightly down or sideways. Despite being a little boring, it has been the perfect environment for projects like Ampleforth (and the newly launched Poolside by ButtonWood) to establish a foundation further.
Much of the conversation has centered around the regulatory environment for crypto within the United States, punctuated by several major key losses by the Security and Exchange Commission (SEC) in federal court. This includes a landmark win by Ripple Labs (XRP) versus the SEC at the beginning of the quarter in July and even a most recent loss by the SEC versus Grayscale. Presently, there are still two major cases out there that the SEC is fighting to win: both versus crypto exchanges in Binance and Coinbase, respectively.
Even with the lawsuits and regulatory uncertainty, conversations surrounding innovation and DeFi development have not slowed — things have actually continued to accelerate. One such innovation that has routinely been in the headlines is that of flatcoins — i.e. SPOT.
Below, we discuss the token performance of the AMPL and SPOT tokens, key ecosystem and governance updates, and what we have to look forward to entering Q4.
Project documentation for SPOT has continued to be slowly released and updated throughout Q3 2023 and serves as the best place to get completely caught up with project development.
Check out the docs below:
It has been a largely volatile 90D for AMPL. For the opening two months of Q3, AMPL continued in a largely uninterrupted market decline, falling from a high of $34 million market cap to well under $20 million (as low as ~$17.5 million). Since then, however, AMPL has rallied hard in the month of September off the lows, rising back to its current valuation of $24 million entering Q4.
This has been a bounce back of over 20% since late August and has even sparked AMPL’s first positive rebase cycle since the beginning of July, over 10 weeks ago. Year-over-year growth is still in the negative at a significant -46% but appears less significant when considering the bigger picture.
The positive rebase over the past several days for AMPL to finish Q3 marks the first time Vault Stakers (stAMPL) have seen gains from their leverage since it launched. The Vault was officially released in Q3 2023 and is an integral tool in automating the rollover of tranche collateral for SPOT.
During a cycle of positive rebases, the Vault features a rebase multiplier — a form of measurement of how sensitive the value of AMPL in the vault is to rebases. For example, a 1% rebase would mean that AMPL value within the vault increases by 1 * 1.2 for a 1.2% rebase. At the time of writing, the Vault is offering a rebase multiplier of ~1.27.
An important note for AMPL (and SPOT) is the slight rebound in inflation over the past few months. Previously, US inflation had been on a long, steady decline from its peak of over 9% about one year ago. In Q3 2023, however, inflation has bounced slightly — up from our last quarterly report of 2.48% to 2.6%, according to Truflation. The official government-reported inflation is 3.7% YoY.
Because of this, AMPL’s price target has risen slightly from $1.159 in Q2 up to $1.165 here in Q3 2023. It is worth noting that the Federal Reserve has, for the time being, paused its interest rate hikes at 5.25–5.5%. At the very least, there is some form of stability in lending markets now, with expectations normalizing (albeit at a much, much higher rate than previously). Nevertheless, market expectations of a Fed pivot may have to wait until 2024, based on circulating reports.
The SPOT token is quickly approaching one year since its inception (December 2022). Moving into Q4, SPOT remains at or extremely near its peak limit of ~768,000 SPOT (~$870k USD). SPOT has seen much use within the Ampleforth ecosystem, including over 1 million SPOT minted since its inception.
Otherwise, as far as price action, SPOT has been extremely stable, reliable, and predictable (as it is designed to be). What SPOT has continuously demonstrated throughout 2023 is that its collateral model and overall functionality work exactly as intended. SPOT has continued to remain insulated from AMPL’s negative rebase cycles, ensuring value is retained versus volatility (and inflation) for SPOT holders over the long run.
Ecosystem and Community Updates
Say Hello to Poolside!
Poolside is a decentralized Automated Market Maker (AMM) protocol designed to mitigate the issues faced by rebasing and yield-bearing tokens in traditional AMMs, such as mispricing and unfair losses to liquidity providers (LPs).
By introducing a novel mechanism known as reservoirs, Poolside ensures that assets remain accurately priced and LPs don’t suffer from unnecessary divergence loss, thereby maximizing swap fee potential. Unlike traditional AMMs, where rebasing affects token prices adversely, Poolside’s design keeps yield for LPs and maintains liquidity during rebase events.
The SPOT/AMPL pool, recently launched on Poolside, heralds a new chapter for rebasing assets by leveraging the unique rebasing mechanism of AMPL to showcase Poolside’s value proposition. Backed by the FORTH DAO treasury, this pool leverages 25,000 AMPL and 25,000 SPOT for initialization.
The SPOT/AMPL pool addresses the challenges of impermanent loss faced by LPs, especially with rebasing assets like AMPL. Doing so enables LPs to benefit from swap fees without worrying about value leakage or impermanent loss, offering a more flexible and beneficial liquidity provision environment.
Poolside and the SPOT/AMPL pool signify a significant stride towards a more intelligent DeFi ecosystem, providing a solution for the unique challenges posed by rebasing assets and yield-bearing tokens, thereby leading towards a more robust and efficient decentralized finance landscape.
Ampleforth and Seamless
Seamless Protocol, launched on the Layer-2 network Base, represents a next-gen DeFi Liquidity Protocol to enhance experiences for liquidity providers (LPs) and borrowers. Developed by a collaborative effort among Seashell, RNG Labs, and Loreum Labs, with advisement from Ampleforth and others, this protocol is essentially a fork of Aave v3, facilitating undercollateralized borrowing on-chain through smart contracts with pre-defined borrowing strategies.
Unlike traditional loan systems, Seamless’s borrowing strategies resemble single-purpose loans where liquidity usage is predefined, thus eliminating misuse by borrowers. This is seen as an advancement over other crypto protocols, often requiring off-chain and on-chain steps for undercollateralized borrowing. Seamless Protocol’s core strategy is to integrate these steps, providing full visibility to Liquidity Suppliers on how funds are utilized via on-chain smart contracts.
The noteworthy part of this setup is using Ampleforth’s Geyser v2 for liquidity mining, which emphasizes a decentralized, permissionless, and predictable distribution of ecosystem funds to liquidity providers, aligning with the broader objectives of fostering a healthy AMPL ecosystem. The AMPL Geyser distributes AMPL tokens from the ecosystem fund to liquidity providers on decentralized exchanges based on the amount and duration of liquidity provided.
This collaboration with Seamless Protocol could potentially open up new avenues for the Ampleforth ecosystem, particularly if future developments like one-click leverage minting or liquidity providing come to fruition, which could further integrate and leverage AMPL within DeFi innovatively.
Rotation Vault and stAMPL
The SPOT Rotation Vault and stAMPL are integral parts of the SPOT flatcoin ecosystem, aiming to ensure stability and scalability. The vault automates the rotation of AMPL tranches, which act as collateral for SPOT. As tranches mature, they are replaced with fresh ones to maintain the backing of SPOT. Users can participate by staking their AMPL in the vault, and in return, they continue to enjoy rebase exposure and accumulate fees from the vault’s rotation work without the risk of impermanent loss associated with other DeFi protocols.
The mechanism offers a reliable collateral base for DeFi protocols and DAOs, aiding them in enhancing liquidity provision or lending activities while contributing to the decentralization and stabilization of the ecosystem. Staked AMPL (stAMPL) allows stakeholders to benefit from the growth of the SPOT flatcoin, thus fostering a robust, scalable, and more liquid DeFi market, reinforcing the decentralized nature of the ecosystem, and setting the stage for future evolution in decentralized finance.
The Vault is live and features 3% of the total AMPL network (~772.8k AMPL or ~$1 million).
Two proposals were officially voted on and passed by the FORTH DAO in Q3. Those two proposals are as follows:
1. Proposal to Seed Liquidity for AMPL-SPOT Pair on [Poolside] — Passed with 646.88k FORTH
This proposal suggested deploying seed liquidity as an AMPL-SPOT pair onto Poolside.
The proposal aims to increase the utility and liquidity of SPOT while supporting the growth of Poolside, a new AMM designed especially for rebasing assets. By doing so, FORTH DAO will earn fees from the swaps on the platform. Poolside’s unique model minimizes impermanent losses for liquidity providers, making it an optimal choice for the AMPL-SPOT pool.
2. Geyser Refresh for Q3 2023 — Passed with 747.8k FORTH
This passed proposal involved renewing and configuring geysers for the FORTH token.
The proposal was a simple program refresh for Q3 2023. It involved continuing 4 months of funding for Beehive v5 (Uniswap v2 via ETH/AMPL pair) and Fly (Uniswap v3 via SPOT/USDC) pair.
Looking Forward to Q4 2023
The third quarter of 2023 has showcased significant advancements within the SPOT and AMPL ecosystem, reflecting the broader trends and evolving narratives within crypto. One of the notable highlights of this period has been the growing interest and discourse around flatcoins, with influential figures like Coinbase CEO Brian Armstrong championing them as the next iteration of stablecoins.
This endorsement not only underscores the potential of flatcoins but aligns well with the foundational principles of the SPOT/AMPL ecosystem, which are rooted in fostering stability and mitigating inflationary pressures within the decentralized finance (DeFi) space. Armstrong’s commentary and the ensuing media attention on flatcoins have served to galvanize a narrative that echoes the core value proposition of SPOT.
As we transition into the fourth quarter of 2023, the resonance of the flatcoin narrative, championed by industry leaders and reflected in the media, augurs well for the SPOT/AMPL ecosystem. It places the ecosystem at the vanguard of a movement that seeks to harmonize the decentralized financial infrastructure with the economic imperatives of stability and value retention. SPOT will officially cross one year since its launch in Q4 2023.