How Does Ampleforth Work?
A unique monetary experiment where the AMPL token's supply automatically expands and contracts daily to target a CPI-adjusted 2019 USD value. It holds $30M in deposits with 5+ years of operation and no exploits. Its C+ grade reflects genuinely novel rebasing mechanisms that break standard DeFi composability and create reflexive selling dynamics during downturns.
TVL
$4M
Sector
DeFi
Risk Grade
B-
Value Grade
D+
Core Mechanisms
Token/Rebasing
NovelAMPL elastic supply token with daily rebases targeting CPI-adjusted 2019 USD
Genuinely novel since 2019. Few successful replications. Daily supply adjustments create unique market dynamics.
Oracle/CPI-Target
NovelChainlink oracle for CPI-adjusted price target and market price
Uses Chainlink for both market price and CPI data to calculate target price. Novel oracle use case for macroeconomic data.
Tranche/Structured
NovelSPOT structured product with senior (stable) and junior (volatile) tranches of AMPL
Novel tranching of a rebasing asset into stable and volatile components. Limited precedent for this design.
Token/Supply-Adjustment
Supply adjustment algorithm based on deviation from target price
While AMPL pioneered this, rebasing tokens are now an established category.
Governance/DAO
FORTH governance token
Standard governance token.
DeFi/Composability
AMPL integration across DeFi protocols with rebase-awareness requirements
Protocols must be rebase-aware to integrate AMPL correctly.
How the Pieces Interact
During contractions, rebases reduce wallet balances, creating reflexive selling pressure. Holders see balance decline and sell, pushing price further below target, triggering more negative rebases.
Rebasing fundamentally breaks standard DeFi composability. LP positions in non-rebase-aware AMMs lose rebase rewards. Lending protocols may miscalculate collateral values.
CPI data from Chainlink determines the target price. Oracle failure or delayed CPI updates could cause incorrect rebase calculations.
SPOT tranches redistribute rebase volatility between senior and junior holders. Under extreme rebase conditions, junior tranche holders could face amplified losses.
Governance changes to rebase parameters or oracle configuration could affect all AMPL holders.
What Could Go Wrong
- Elastic supply rebases reduce wallet balances during contractions, creating reflexive selling pressure and potential death spirals where declining price triggers further supply reduction.
- Rebasing mechanism fundamentally breaks DeFi composability. Lending, LP positions, and collateral accounting all malfunction with supply-changing tokens.
- SPOT tranche system is a novel layered structure with limited battle-testing, creating untested edge cases in the senior/junior tranche interaction.
Rebase Death Spiral
ModerateTrigger: AMPL price drops 50%+ below CPI-adjusted target and stays there for 30+ consecutive days, triggering sustained negative rebases
- 1.AMPL market price drops significantly below CPI-adjusted target price — Daily negative rebases reduce all holder wallet balances proportionally
- 2.Holders see declining balances and panic sell, pushing price further below target — Reflexive selling creates feedback loop: lower price triggers more negative rebases triggers more selling
- 3.DeFi protocols with AMPL exposure face accounting errors as balances change — LP positions, lending collateral, and vault balances all miscalculate due to rebasing
- 4.SPOT junior tranche absorbs amplified negative rebases — Junior tranche holders face leveraged losses; senior tranche protection may be tested
Risk Profile at a Glance
Overall: B- (31/100)
Lower score = safer