Ampleforth, together with Fragments and the Ampleforth Foundation, has introduced a new digital asset called SPOT. SPOT aims to provide a low-volatility option to fiat stablecoins by combining the features of commodity-based money and peer-to-peer digital cash.
To reduce volatility, SPOT utilizes a process called tranching. This involves dividing Ampleforth’s native currency, AMPL, into two assets. The “senior tranche” generates the low-volatility SPOT token, while the “junior tranche” is a staked version of AMPL that absorbs most of the network volatility, protecting SPOT from significant price fluctuations.
Users can deposit AMPL tokens to mint SPOT and stAMPL, and they can also redeem these derivative tokens for native AMPL at any time.
The tranches in SPOT have a fixed term of one week and automatically convert back to AMPL upon maturity. This continuous recycling of tranches helps maintain the stability of SPOT. While the aim is to manage volatility rather than eliminate it entirely, SPOT serves as a practical store-of-value.
The launch of SPOT is timely, considering concerns over inflation and geopolitical instability. The United States currently faces a national debt nearing $35 trillion, which could have repercussions on the global financial system that relies heavily on the U.S. dollar as its reserve currency.
Notably, former U.S. Speaker of the House Paul Ryan has suggested dollar-pegged fiat stablecoins as a solution to debt obligations. Furthermore, corporations are increasingly adopting Bitcoin treasury strategies to safeguard their wealth from monetary debasement.
SPOT’s stability is linked to the consumer price index, with its minimum volatility levels designed to reflect the 2019 adjusted U.S. dollar. By recycling maturing tranches and replacing them with new ones, SPOT maintains a consistent value.
Coinbase Ventures has shown confidence in SPOT by investing $1 million in the digital asset. This support from Coinbase Ventures helps develop SPOT as an alternative to traditional fiat stablecoins and other digital assets.
