Ethereum World News had a chance to speak with Simon Manka, Head of Growth at Amplefort; a new project focused on developing a “smart commodity token” that changes its supply according to prices —and has been able to achieve very important partnerships since its launch less than 3 months ago.
EWN: What makes Ampleforth so special when compared to other tokens?
Simon Manka: When you look at a normal token, you just look at the token and you feel like “I have a thousand tokens” and the price goes up and then you made money, or if you have a thousand tokens and the price goes down, you just lost money.
With us, almost anything is possible. You could buy high, sell low and still make money because, if you have tokens during an expansion and you get more and more of it, it doesn’t matter if the price went down. If I give you 10 more tokens worth a dollar and 10 cents each and the price goes from a dollar 10 cents to a dollar and 9 cents, even though you went down in price, you went from a dollar 10 to a dollar nine. Now you have ten more tokens. You have a lot more money. Does that make sense?
EWN: Well, yeah, it does. And that’s that’s what and what brings me to the next question, because the whole technology behind Ampleforth seems to me that could be benefitial for bot trading and scalping instead of day trading or position trading. Is this accurate?
Simon Manka: No. I would say actually that’s only one of a number of things you can do. If you had any other token, you could try to day trade it quickly. But if you held your token, let’s say you had the token or any other token besides ours, and nothing happened to the price, if you bought 100 bitcoin and it was ten thousand dollars, if ten years passed and you had the same price, ten years later, you basically just lost ten years. You don’t lose money technically, but you lost ten years. There are limited strategies…
With us, you have more opportunities. Let’s say on day one you get more tokens. Let’s say you get 1 percent more tokens on day 1 and then you hold it. So you’re not just a quick trader, you’re gonna hold it for another day. Let’s say you get another 1 percent. Well, now you’re compounding on top of the previous day. So certainly the fast trading elements are still available as you play unique ones, because if there’s a supply change every day at the same time and everyone knows it, you can do fast trading techniques. But also in the long term, you have this ability to actually compound gains or actually compound losses as well. The other side of it.
So it’s actually like a whole new
thing… you almost need an entirely new set of trading strategies
EWN: What happenes during that “reset” time (just after the rebase function is executed)? I mean, Imagine I have a position still opened in one of the exchanges. What happens to my tokens and my positions during that reset since there’s a shift in the number of tokens i have?
Simon Manka: Every day, all wallet holders are affected the exact same way. So based on the 24 hour volume weighted average price, if that if that price is above a threshold that we’ve set, everyone gets more tokens. If the price for the last 24 hours that the average weighted price is below that target, everybody loses tokens. So the interesting thing that happens is that everyone knows what will happen because you can check out what the 24 hour average price was. Everyone knows if they’re going to get more or less tokens.
EWN: If you’re trading, technically the tokens are not in your
wallet but in the exchange’s wallet. How will the orders change once there’s a
change in the total supply? since tokens that are being traded are in the
exchanges’ wallets and the Oracles won’t know who has what amount of Amples
Simon Manka: The exchanges have to work that through themselves. Right now we are on Bitfinex and Ethfinex. So those two exchanges, obviously have a big pool of tokens and then they do some internal accounting to know how many every person has. The orders are filled to the extent that they can be.
So let’s say you have an order to buy 10 tokens or sell 10 tokens, and somehow it goes down from 10, now, you no longer have ten tokens but, let’s say, 9.99 tokens. It’ll fill the order to the extent that it can and just cancel the rest.
EWN: How do Oracles know and calculate the price and the amount of tokens
that need to be fixed?
Simon Manka: There’s a few data feeds. The oracles take those data feeds, they average them and then they base off that to do all the calculations. So this information is all really clear. Some of it comes from the Bitfinex trading volume. There’s also like Uniswap and a couple other exchanges. So we’re taking all that information, pulling it and measuring the data feeds.
EWN: Can a novice trader have peace of mind that no one will, for
example, try to manipulate the prices just before the reset occurrs? Because if
you know the prices are going to reset, basically, you can try to manipulate
the market before that event.
Simon Manka: Yeah. They do. They can. So the first thing is you can’t really defeat the oracles in the feeds.
There’s two questions in manipulation and one is the oracles. The oracles are totally good, that data coming in is definitely accurate and it’s not manipulated as it comes from other sources. But people can try to do that all they want, it doesn’t matter.
So for example, let’s say right beforehand —right before the reset— you’re going to try to manipulate it. You can’t, because there’s a 24 hour volume weighted average price. You could if you tried to manipulate it for all 24 hours, you could. But if you just try to do it at the last second, you would not have much impact on the 24 hour weighted volume average.
But what you could do, let’s say, you know you know for a fact that the rebase happens at 4:00 p.m Eastern (because that’s what it is… Every day at 4:00 p.m. Eastern.) You don’t have to hold Amples at all. In fact, we would encourage you to do whatever you do, however you want, whatever strategy you want. You can just wait until 3:59 p.m. and buy Amples —let’s say you buy one hundred dollars. You get one hundred Amples— and then the rebase goes up. And then, you know, 30 minutes later when the trading window opens again, you can just sell them right away.
So if you bought a hundred, now you’ve been given three Amples it it was three percent. And each Ample is worth a dollar or even a thousan… Let’s say you bought a thousand; you have now you have 30 more Amples, right? You could sell those 30 dollars worth Amples just at when the trading window reopens. You only have to hold it for like one block and that’s totally fine.
That’s actually one of the most interesting things about the project, and why exchanges and other people are interested in it, because we have this daily moment in time which encourages people to do that. We encourage volume, We encourage people to do these things, which makes us really interesting to exchanges and It also makes us extremely interesting to DeFi, which is what we do next.
Bitfinex just announced there’s only four projects that they’re going to allow to be used as collateral for margin trading, and we’re one of the four because in the short term, we’re really interesting to trade. In the short term, we’re uncorrelated to other crypto assets. So we’re really good tool for portfolio diversification. Also, in the medium term we’re a really good input into DeFi, especially as collateral and we intend to validate that that’s true. We’re only alive for 51 days and Bitfinex chose us over all these other products. We’re also going to be an interesting input into projects like Compound
EWN: Ampleforth is not related to Bitcoin. Would you think that this technology could attract more traditional investor into the world of crypto trading and maybe even institutional investors even tough they’re not familiarized with cryptocurrencies?
Simon Manka: Yes, I think so. And I’ll give you two reasons why and one piece of evidence. Pantera Capital, FBG, Huobi Capital, and Brian Armstrong, the CEO and founder of Coinbase are amount our investors. But those are all crypto investors. I think I can affirmatively say we’ll attract institutional investors because we have a who’s who of all the best crypto investors —Arrington Capital as well.
We also have non crypto investors. We’re running a few projects that actually had investors that have nothing to do with the crypto space. And the only reason they’re interested in it is exactly what your question was. Could we attract people who aren’t in the crypto space? Institutional investors? We already have. And we’re going to continue to do that, because, if you look at our investors page, you’ll see all these founders and ventures that are just non crypto investors. So, yes, I think we’re gonna get more of them in that regard..
Why do i think that?, well, right now everything moves in the same direction as Bitcoin for the most part. So a lot of these institutional investors, they have they put a premium on portfolio diversification and risk management. But if they want to go into crypto, they don’t have many options for risk management. They essentially can only pick Bitcoin and Ethereum and everything moves in the same direction. So they can’t even execute on their fund mandates, which are like, “hey, we could go into crypto, except we don’t have any way to make any hedges on the space.” So Ampleforth, because of its daily rebase, has a different movement pattern.
If bitcoin stayed in ten thousand dollars and one Ampleforth stayed at one dollar and twenty cents. Well, the next day, if they stated the same amount, bitcoin would be ten thousand dollars, nothing happened. The price of Ample would stay the same. It’d be a dollar 20, except you’d also get more Amples.
So even though it looks like the
price was the same. There’s different movement pattern. The value is actually
price times quantity and not just price. So the value of ours went up, but
everything else stayed the same, which allows for a different movement pattern,
which is why institutional investors would be interested in this..
EWN: You have a lot of interesting partnerships right now. Can you
share a little more about them? Maybe share some new partnerships you are
Simon Manka: Yeah, we luckily we have a lot of partnerships that are already approved and signed and we’re just waiting on announcing. But since we have a plan on how we’re going to announce them, I can’t share with you, but yeah, we have a bunch.
So we’re sitting in a good spot. It’s nice because all these investors that we have hooked us up with portfolio companies, etcetera, that we can partner with.
EWN: Yeah, you have achieved a lot in just a little amount of time
Simon Manka: Yeah. That’s the one thing about us. We’re the first kind of new and interesting thing since Ethereum. First it was Bitcoin; everybody copied Bitcoin, then it was Ethereum and people copied Ethereum.
In our timeline we’re the first sound money with an elastic supply. So no one else has ever had a supply that changes every day.
EWN: Another question… Right now, why is Ampleforth being traded far from the 1$ zone?
Simon Manka: That’s because it’s a common misconception. It’s pretty much passed, but we never thought we were a stable coin. If you go to our whitepaper, it says we’re not a stablecoin.
Here’s the problem. Anytime you do something new, you have a very difficult time explaining it to people. That’s how you kind of know you have something new and different because people try to compare it to things they know. So if you see that we have a target price for a dollar you must say, Oh! It’s a stablecoin,! but we have a target price that totally, totally floats.
On top of that, we have nothing mechanically to like adjust the price, we’re not tied to a dollar. It can trade at zero cents or a penny, or it could trade at six hundred dollars tomorrow. We don’t put any thing in place to do that,and that’s why it’s all over the place: It’s not stable and this is exactly how it’s supposed to be.
To put it more simply, the only
thing we do is we expand and contract everyone’s wallets every day by the same
amount. When we’re above target, we give everybody coins. And because everybody
has different profiles and appetites for risk, some people are like, oh, I’m
going to hold this and I’m going to try to compound my gates, other people are
like, oh, I’m going to get rid of this and other people are like, I’m going to
wait and see what people do.
So it’s a game of chicken every
day. Every day when people get more, we just keep giving tokens until people
sell and that pushes the price down. It’s a lot of sell pressure.
The opposite shoe: We’re in a decline right now. Every day that the supply contracts, it gets cheaper and cheaper to buy more of the network. So everyday tokens are taken away, not only is the price below a dollar, you can get a token that might be worth a dollar for 70 cents or whatever. But now you get more percentage of that network every day. So as more tokens get taken away, it gets easier and easier for someone to step in and buy up more than that work and therefore push the price up more easily. So every day that it goes on where there’s more tokens taken, it’s easier for the next buyer to push the price up on it.
One really interesting thing there, thinking about it, a percentage of a bigger number is a bigger number. So on the upside you have the potential for exponential upside, but on the downside, the opposite happens. If you have a hundred and it goes down by one percent, it will go to ninety nine. But then if it goes down again it won’t go down like an exponential compounding, it’ll go slower. It’s almost like a softening dampening thing where it’s harder to push it down but it’s easy to push it up.
EWN: What is your background in the full crypto / finance world?
What makes your team so special?
Simon Manka: Yeah, I think we’re pretty interesting there. Like you can get most of the information from our website, but the most interesting thing is that we have two guys from Google and like lots of people worked at Google, so there’s thousands of employees at Google. But the interesting thing there is a lot of people claim to be from Google, which is true: You could be anyone to Google… You you could be an engineer. You could be a salesperson, a good marketing person. Or you could be like a cook. It doesn’t mean that you’re all the same.
But within that, there’s levels of engineers as well. So if you asked around what you find in Silicon Valley —which is where we’re at— you’d find that there’s this like 15 person team which is in charge of the Google search algorithm. And it’s actually really the team that if you enter anywhere —Uber, AirBnb, Microsoft, Amazon, anybody— and you ask an engineer where they want to be, everybody would say “I want to be on the Google search team.” It’s THE best engineering team basically anywhere in the world. And the theory is like if you fired everyone from Google except those 15 guys, it would be cool to be completely fine.
So this is basically the team with the best engineers in the entire world. And we have one guy, one of the co-founders that is from there. He managed that team and he took one of his guys with him over here. So we have two guys on that team.
So it’s like the craziest thing because there’s so few people that are from that team. It’s hyper competitive to get on it. So that’s really interesting. We have guys from Uber and everywhere else that you could think that are good. USC, a few others too
EWN: Is there anything else you would like to share with our readers?
Simon Manka: There’s a couple of interesting things. One, our CBO, our chief business officer, Richie. He’s currently in China for the next two months because we have a bunch we have like we have a few investors over there that are pretty important to our team and we’re building our Asian presence.
The other more important thing is this. If you look at DeFi right now, there’s a bit of an interesting problem. And that problem is lots of people want to lend, but not that many people want to borrow money. So this needs some attention because DeFi needs new assets that are different in order to compel people to participate in this space and they need new instruments that are attractive to actually borrow.
And so right now, the only people who borrow are people who borrow stable coins. And so they use borrowing to put in a leveraged long position in some other asset. They have like four extra fees that they have to deal with: They have to to get it off of their borrowing platform and pay a gas fee to put it out in an exchange, make a purchase, pay and exchange fee, then they have to sell it and they pay another fee on the sale, and they also maybe have to pay a fee on to take it out, and then they have to use a gas fee to just send it back there.
There’s also some timing risks. They depend on exchanges and this whole process doesn’t always happen quickly. They can’t just go in and out of the positions that are transferred around instantly
The interesting thing with Ampleforth is that it is really interesting to borrow because, let’s say let’s say I borrow a thousand Amples and I need to pay back a thousand Ample. But every day I get compounding gains. In theory, the first thing is I don’t have to pay all those fees I just said, because I just get the Ample. And if you make a smart investment at the right time, if it just keeps going up, it could in theory double to 2000 Amples. You can just return a thousand Ample that you borrowed and have a thousand Amples that’s just yours.
So that’s why all these guys are really interested in DeFI because they can’t get anyone to borrow their assets. They get some people to do it in that one example. But there’s nothing new or compelling. There’s no reason why you should borrow REP or ETH or XLM or whatever. There’s no reason to borrow any of those things because they’re just they just act exactly the same. Whereas Ample is like, oh, I get these and I might be able to, like, just benefit from the pause, rebase payback, my right amount and have lunch. So that’s pretty interesting.
EWN: And finally… What’s your prediction for BTC by the end of the year?
Simon Manka: Lol, you won’t get that answer from me! Maybe I’ll get some guys from my team to give you one