SPOTLight Series 2: Analyzing Gains Captured by Vault Stakers During Latest AMPL Rebase Cycle
AMPL has recently undergone its most significant positive rebase cycle since the inception of SPOT in Q4 of 2022, which led to a significant surge in AMPL. During this recent cycle, AMPL appreciated from a market cap of ~$20 million to upwards of $60 million in roughly six weeks. With Vault holders experiencing their first supply expansion, it is advantageous to analyze the benefits versus risks of actively staking AMPL in the Vault to gain additional rebase leverage.
For those of you who are unfamiliar with the Rollover Vault and how it works, please first read our first article on this topic below:
We began our analysis by tracking historical data for daily rebase percentages, oracle rates, and total supply of AMPL. By leveraging these data points, we calculated the growth in token holdings and market share for non-leveraged and leveraged scenarios (1.22x exposure). Our primary focus was from November 1 to November 30, 2023. While the exact rebase multiplier associated with the Rollover Vault fluctuates, for the purposes of this article, we have chosen to keep the multiplier at a standard average rate of 1.22x.
Findings for Initial 1,000 AMPL Deposit
To begin, we will examine the benefits of this recent AMPL positive rebase cycle for a smaller holder (1,000 AMPL). Assuming 1,000 AMPL (valued at $1,312 on 31 October) was deposited before the rebase event on November 1st, the leverage effect becomes immediately evident. While a non-leveraged strategy would have steadily increased AMPL holdings, the leveraged approach (1.22x) significantly accelerated growth.
At the end of the month, that initial 1,000 AMPL would have expanded up to 2,277.96 AMPL valued at $2654,57 or approximately a 102% gain.
The most significant impact can be realized in examining the market share percentage captured thanks to the 1.22x leverage exposure. Starting at a network ownership of a modest 0.00354% after the first rebase, the depositor would have seen their market share increase significantly to 0.00409337%, or roughly a 15.4% increase in their total market share.
When visualizing this deviation, it becomes evident how important supply capture becomes later during the rebase cycle, as shown below:
Findings for Initial 25,000 AMPL Deposit
Larger investors have routinely moved in and out of positions of 25,000 AMPL or greater. Let us next infer that a holder purchases 25,000 AMPL before the November 1st rebase, valued at an initial $32,800. Thanks to the benefits of compounding, the deviation between Vault stakers and regular holders is even more significant (in value terms).
By November 30th, the initial 25,000 AMPL would have appreciated to 56,949 AMPL, equating to an increase of 127.8% or a dollar value of $70,642.
More notable, as demonstrated in the 1,000 AMPL example above, is the market share capture with larger holders, which is especially significant. Rising from a 0.08868724% market share after the first rebase, the larger holder would end up with a market share of 0.10233431% on November 30th, an equal gain of 15.4% thanks to the Vault.
Thus, the results were more pronounced with the larger deposit of 25,000 AMPL. The leveraging effect scaled proportionally, demonstrating that higher stakes could yield significantly larger rewards.
November 2023 in the Ampleforth ecosystem served as a compelling case study for understanding the impact of obtaining leverage through the Vault by staking AMPL for stAMPL. The data suggests that during long-term periods of growth, maintaining positions in the Vault is far more advantageous than holding open, liquid positions.
The price of AMPL peaked at $1.88 during this rebase cycle, meaning that Vault stakers did give back some dollar value by maintaining their positions as AMPL price returned to fair value. However, Vault stakers still more than doubled their initial positions while securing additional market share over the AMPL network as price returned to the mean. This market capture is quite significant versus non-stakers, as shown in the chart below:
What the above chart shows is that during positive rebase cycles, Vault stakers (who are taking on the risk to insulate SPOT holders) benefit significantly versus non-stakers in terms of capturing overall network ownership.
With that in mind, for non-stakers, even though their actual number of tokens changes with each rebase, their percentage share of the total supply remains constant. In other words, the AMPL network remains non-dilutive for all participants outside of the Vault.
Vault stakers are essentially capturing the excess value that otherwise would have gone to AMPL prior to minting SPOT and stAMPL. This is also why, during negative rebase cycles, Vault stakers would lose an equivalent value in network ownership against normal AMPL holders. This is where the risk truly becomes relevant.
In conclusion, while stakers may increase their network share faster, non-stakers’ relative position remains unaffected by others’ staking or leveraging activities. Their share will only change if they themselves acquire more AMPL.