Announcing the SPOT/AMPL Pool
Now Live on Poolside!
We’re happy to announce that Poolside’s highly-anticipated SPOT/AMPL pool is live, signaling a new era for rebase tokens.
It’s been encouraging to see the unwavering support from the Ampleforth community as we reach another milestone in our journey. For reference, the FORTH DAO treasury backed the proposal to seed the pool. This meant leveraging 25,000 AMPL and 25,000 SPOT, which were used to mint and initialize the pool. As explained below, SPOT/AMPL is a great pair because AMPL highlights Poolside’s design as a rebasing commodity.
This post will give background on why this development is so significant to DeFi and what the launch of this pool means for Poolside and our liquidity providers (LPs).
How It All Started
In traditional finance, commodities like gold provide stability because of their consistent value. Rebasing commodities, introduced and standardized by AMPL, aim to offer a similar standard in the digital space. But how does it work?
Rebasing is a novel mechanism wherein the asset’s total supply adjusts or "rebases" periodically to target a specific price.
In the case of AMPL, the supply expands and contracts based on the 2019 Consumer Price Index, ensuring long-term purchasing power. This approach shifts the volatility from price to supply, a groundbreaking shift in how we perceive value in DeFi.
The Pitfalls of Traditional AMMs During DeFi Summer
Ampleforth’s explosion during 2020’s DeFi Summer catapulted AMPL into becoming the most traded asset on Uniswap for several weeks. LPs of this pool likely remember the driver of this – the additional yield earned from Ampleforth’s “smart faucets.”
However, LPs might not remember or even realize the losses they incurred in their positions. You might wonder, with such a unique asset mechanism, why weren’t LPs successful at maximizing their gains during this period? The answer lies in the AMM design.
Traditional AMMs like Uniswap were not built to handle the dynamic nature of rebase tokens. As a result, LPs often face "impermanent loss" - a phenomenon where providing liquidity to a pool might result in less monetary value than simply holding the tokens.
This loss is intensified for rebasing assets like AMPL. When AMPL rebases, especially on platforms like Uniswap, the AMM doesn't account for the supply changes correctly, leading to potential losses for LPs. Many LPs might not have realized this pain point, but it's pivotal for maximizing their investments.
Whereas most other Poolside tokens will tend to experience consistent positive rebases, AMPL experiences positive and negative rebases. For this reason, AMPL perfectly illustrates Poolside’s reservoirs and how they work.
Why SPOT/AMPL Pool is a Game-Changer on Poolside
Recognizing the unique challenges of rebase tokens, Poolside offers a revolutionary solution. Unlike other AMMs, Poolside is designed from the ground up to handle the intricacies of rebasing assets.
By integrating reservoirs, we directly combat the impermanent loss challenges, ensuring that tokens like AMPL are optimized for maximum benefit. This means LPs can now truly leverage the benefits of AMPL without the underlying pitfalls of traditional AMMs.
What are these benefits for LPs?
Swap Fees - By supplying liquidity, you can earn fees from swaps without worrying about impermanent loss or value leakage from rebases.
Liquidity Flexibility - LPs can opt for a double-sided (SPOT/AMPL) or single-sided deposit (AMPL) to gain exposure to the pool.
Transparent Withdrawal - LPs can withdraw and redeem from either a proportional share of the pool and reservoir or from a single-asset reservoir.
Get Started on Poolside Today
The world of DeFi is on the brink of a significant transformation, and with the SPOT/AMPL pool now live, Poolside is leading the charge. We invite our community and liquidity providers to participate in the future of decentralized finance, tailored to serve the unique needs of value-accruing assets.
To participate as an LP on Poolside, navigate to the Poolside application at poolside.party, decide on your liquidity approach (double-sided or single-sided), deposit your capital, and reap the rewards!
Ready to take a plunge? Experience a more intelligent DeFi ecosystem with Poolside and be a part of a community at the forefront of decentralized finance's future. See you Poolside!