Ampleforth Adaptive DeFi Token Price Drops 75% In Four Days
The price of the Ampleforth DeFi token, which has gained significant popularity among traders due to the rapid increase in the assets invested in it, has dropped by 50% over the past day, and since July 26 – by 75%. AMPL capitalization during the same time dropped from $ 700 million to $ 230 million.
AMPL is “adaptive money”, the turnover of which grows with the exchange rate. The opposite is also true, that is, when the rate decreases, the protocol will withdraw tokens from the account of each holder. As conceived by the developers, this approach allows maintaining the AMPL supply at the demand level using open market mechanisms.
In reality, traders were motivated to buy a token while its price was growing, increasing their assets not only due to the rise in the rate, but also due to the additional emission received on their accounts. As noted earlier, the situation can change rapidly, which actually happened. Now, when the AMPL price has dropped below the set mark, the protocol begins to withdraw tokens from traders’ wallets daily, prompting them to sell as soon as possible..
As market dynamics changed, the right to vote went to those who did not share the excitement about AMPL growth. The Block analyst Larry Chermak cites an excerpt from an earlier publication: “The growth of the token is most likely due to the actions of investors who do not understand the principles of its operation and are happy with the increase not only in the dollar value of their tokens, but also in their number. If so, then this is a double-edged sword “.
“Reflexivity works in two directions. You cannot have an ever-increasing supply without price implications. This is how this protocol was created, ”writes SpartanBlack.
However, there remain investors hoping for a repeat of the growth cycle after the current supply correction ends. Anyway, they now have a good example of how Ampleforth’s “adaptive money” can behave..
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