Fragments Inc., the team responsible for developing the Ampleforth protocol, has announced that Ampleforth will be integrated into popular blockchain Avalanche to facilitate the introduction of AMPL, a fully decentralized unit-of-account that can be used to denominate stable contracts.
The Ampleforth protocol holds promise as a decentralized alternative to stablecoins that can be used in core functionalities in the DeFi space such as lending, borrowing and the deployment of on-chain derivatives.
Ampleforth’s rebasing mechanism of daily adjusted supply levels enables the metric measurement of price value for users’ token accumulation, as opposed to the traditional method of price-tracked volatility. These systemic rules are then encoded on Ethereum via smart contracts.
For instance, if a user engages in a speculative prediction that Bitcoin (BTC) will reach $100,000 by the end of the year, and it comes true, they will be granted 5 AMPL tokens. However, if the leading asset falls short of the noted target, five tokens will be deducted. In this sense, if the AMPL ecosystem grows, the user attains more tokens and vice versa.
Establishing a dependable consistency in price levels and a fluidity in supply mechanics, all the while being a non-governed decentralized model, implies that AMPL could pose an alternative challenger to the hackneyed stablecoin model.
Evan Kuo, CEO of Fragments Inc., spoke of the importance of ensuring true decentralization throughout DeFi’s burgeoning ecosystems:
“It is ironic that the DeFi ecosystem currently relies so heavily on centralized stablecoins for liquidity and lending collateral. With the changing regulatory landscape and uncertainty around what the verdict around stablecoins will be, it’s important for DeFi to have a financial building block that’s decentralized, uncensorable and has some aspect of price predictability or stability.”
In late December 2018, the Fragment protocol rebranded its identity into what we know today as Ampleforth. The title was inspired by a poetic character working in the Ministry of Truth in George Orwell’s classically acclaimed novel 1984.
According to technical data from DeFi Llama, the blockchain network hosts 52 decentralized protocols amassing $8.62 billion in total value locked (TVL), the largest being Trader Joe, which comprises 30% of its market share.
Avalanche’s TVL figure has risen substantially since early August when it was trading in consolidation around the $200 million mark.