Wrapped $AMPL “wAMPL” 101
During the Ampleforth office hours on September 8, 2021, Evan Kuo announced an exciting new development in which $AMPL dev @aalavandhan has been working on — wrapped $AMPL (wAMPL).
According to Kuo, wrapped $AMPL is something that he and the team are excited about because of its potential to broaden platform access significantly with respect to integrations.
- How big a deal is this?
- What will wAMPL look like?
- How to wrap/unwrap $AMPL
- How will it impact $AMPL and the Ampleforth ecosystem?
In the following piece, I answer all of these questions and more as I divulge everything we know about wrapped $AMPL (wAMPL) thus far.
What is Wrapped $AMPL?
Wrapped $AMPL (wAMPL) is similar to wBTC or wETH in that it’s an ERC-20 token that has the same exact value as the asset it represents.
However, while wAMPL has its similarities with other “wrapped tokens”, it is of course uniquely different because of $AMPL’s daily rebases and elastic supply.
For example:
Typically in crypto when an asset is wrapped, we expect it to be 1:1 (i.e. 1 wBTC = 1 BTC, 1 wETH = 1 ETH).
wAMPL, on the other hand, is NOT a 1:1 representation of $AMPL. Rather, it is a floating price (non-rebasing) ERC20 token that is redeemable for $AMPL.
Here’s how it works:
When you “convert” $AMPL into wAMPL you’re just depositing $AMPL into the wrapper contract and receiving a token that represents what share of the total deposited $AMPL is yours
Example:
Alice deposits 100 $AMPL
Bob deposits 200 $AMPL
Alice gets 2 wAMPL
Bob gets 4 wAMPL
$AMPL rebases +100%, meaning the 300 $AMPL held by the wrapper contract now sits at 600 $AMPL. Alice’s 2 wAMPL, representing 1/3rd of the deposited $AMPL, is now a claim to 200 $AMPL. Bob’s is by the same logic now 400 $AMPL.
Due to this positive rebase, wAMPL appreciated in price.
At this point Alice can return her 2 wAMPL back to the wrapper contract, which will give her the 1/3rd of the deposited tokens she has a claim to, and thus she now has 200 $AMPL.
You’ll note that if she’d held that 100 $AMPL as $AMPL during this time of +100% rebase she would have ended up with the exact same amount of $AMPL as she did by wrapping and unwrapping.
In other words, wAMPL represents what the price of $AMPL would be if it never transferred price volatility into supply volatility. It just takes $AMPL’s supply volatility and puts it back on price like a traditional token.
Here’s another scenario to help you understand:
If you buy 100k wAMPL worth 1% of the $AMPL market cap, it will always be worth 1% of the $AMPL market cap with the supply changes reflected in its price.
It’s the same as if you bought 100k $AMPL and owned 1% of the market cap — you would still own 1% when the market cap doubles. But instead of a single 2 dollar coin, as with wAMPL, you have two 1 dollar coins.
In this way, the price of wAMPL is simply a representation of $AMPL and its supply/market cap. And wrapping your $AMPL for wAMPL does NOT avoid the rebase.
Moreover, another point worth mentioning is:
Since wAMPL and $AMPL are both Ethereum native, wAMPL will be entirely smart-contract-based and won’t require centralized custody the way wBTC does. In this way, it’s more like wETH and is sufficiently decentralized.
Converting $AMPL to wAMPL & Vice Versa
wAMPL is minted (created) by locking up (depositing) $AMPL into the wrapper contract. The $AMPL locked in the contract is a fixed percentage of $AMPL total supply and it continues to rebase as per usual.
As $AMPL rebases (supply adjusts up or down), so does the locked $AMPL in which the minted wAMPL is created from. Therefore, each account’s wAMPL balance represents the fixed percentage ownership of AMPL’s changing market cap.
However, wAMPL does not rebase. Instead, it reflects the supply changes from the rebase in its price. Therefore, the price of wAMPL will have volatile price swings in the same way that $BTC, $ETH, $LINK, or any other cryptocurrencies do.
When you redeem (unwrap) wAMPL for $AMPL, the number of $AMPL you receive will be dependent on the $AMPL supply.
For example:
For simple math, say 100K wAMPL = 1% of the AMPL market cap
- When the $AMPL supply is 100M, 100K wAMPL will be redeemable for 1M $AMPL
- When the $AMPL supply is 500M, 100K wAMPL will be redeemable for 5M $AMPL
How to Wrap $AMPL for wAMPL
You can wrap/unwrap $AMPL by using the Ampltools AMPL Wrapper web app — which is just an interface for connecting with the AMPL/wAMPL contract through your wallet (Metamask) to Wrap and Unwrap $AMPL.
The official on-chain contract calculates and executes how much $AMPL/wAMPL you will receive when wrapping/unwrapping.
How to Wrap:
- Connect Metamask/Brave wallet
- Set/Check $AMPL Allowance
- Set Amount $AMPL to Wrap/Unwrap
- Confirm transaction
- That’s a Wrap — you’re done.
Note: Make sure you TRIPLE CHECK GAS SETTINGS (PRICE AND LIMITS)
wAMPL to Broaden Platform Access & Boost Liquidity
wAMPL does not rebase, it simply tracks market cap — this makes it easier for platform integrations and for people to understand it.
Since wAMPL will not have the same intricacies as regular $AMPL in regards to daily rebases and fluctuating wallet balances, it will be much easier for exchanges to list wAMPL and for dapps to integrate it.
@Coquihall, an $AMPL fan, highlighted this point on Twitter:
If wAMPL does indeed get listed on major centralized exchanges as $FORTH did, we can expect to see a significant boost in liquidity and volume from an expansive audience of new users. This would benefit the entire $AMPL ecosystem and could result in a great supply expansion.
With wAMPL’s easier composability with existing crypto and DeFi ecosystems, a whole new realm of possible new use cases will open up to expand the utility of $AMPL.
Potential wAMPL use cases:
- Automatically rebalanced wAMPL Balancer pools
- wAMPL trading across DEXes (UniSwap, SushiSwap, TraderJoe, etc.)
- wAMPL can be more easily bridged across chains (Avalanche, Polygon, Fantom, Arbitrum, Optimisim, etc.)
- Lending/Borrowing wAMPL on Aave, Benqi, etc.
- wAMPL on centralized exchanges (Coinbase, Binance, etc.)
- + more
Increase in $AMPL utility = Increase in $AMPL supply.
Buy Pressure for wAMPL = $AMPL Buy Pressure
wAMPL and $AMPL are essentially the same — they both represent a portion of the $AMPL Network. And since you can wrap and unwrap at any time, buying wAMPL is like buying $AMPL because Arbitrators will constantly exchange between the two if there’s a price difference to be captured.
Also, wAMPL will increase $AMPL’s liquidity dramatically when listed on major CEXes, which will result in an increase in $AMPL supply.
These guys get it:
Final Thoughts
Wrapped $AMPL (wAMPL) is just 1 of many exciting new developments that will help increase $AMPL’s utilization and bring this revolutionary asset into the spotlight.
I encourage all of my fellow $AMPL maxis to follow along and support this new asset as it launches. As wAMPL could be what catalyzes newfound interest in $AMPL that leads to the next major supply expansion!
