Transcript of the Ampleforth office hours on 24.02.2021
Brandon:
I wish people on the outside could see how hard the team is working right now. I wasn’t sure I’d actually be able to make it on time today. We have three separate security audits going on.
Question 1:
Was your team considering Polkadot as bridging technology for multichain operation?
Evan:
Of course! We actually raised a strategic amount from Hypersphere (a venture arm of the web3 foundation).
Question 2:
Progress on multi-chain?
Brandon:
The audit for the onchain portion is basically complete and didn’t uncover any major issues. There’s still some work to be done around organizing relayers and ops. Luckily Chainsafe/Chainbridge makes this much easier to do than starting from scratch, and there are already existing deployments that show it in operation.
Question 3:
Rari Capital is in the process of developing their Fuse program which is (in their words) going to allow anybody to create a custom money market with their own assets. While details are still scarce and according to the Rari team $AMPL won’t be supported during the initial release, was curious to know if the team is aware of this development (or being in contact with the Rari team) since stable contract denomination is one key use case for $AMPL?
Brandon:
I don’t think we’ve had any direct contact with the Rari team. Not many details have been published on the MM system that’s in development, but I’ve been told they do expect to handle rebasing tokens after the first release. If there’s demand for this, we could perhaps spend more energy on it though.
Question 4:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2425270
I’m curious to know what the team’s thoughts are on this paper, Hayek Money: The cryptocurrency price stability solution by Ferdinando Ametrano pretty much outlined exactly what Ampleforth is 4 years before Ampleforth was created?
Evan:
That’s a great question, with a long answer.
Back around 2014 or so, some folks had come to realize that Bitcoin would never become price stable and therefore had limited utility. This was the beginning of serious explorations around decentralized stablecoins. Two papers in particular came into the awareness of the cryptocurrency community.
- Hayek Money — Ferdinando Ametrano
- Seigniorage Shares — Robert Sams
Both of these papers were intended to be designs for fully algorithmic stablecoins. The first paper “Hayek Money” has the same protocol as the original Ampleforth protocol. The second paper “Seigniorage Shares” builds on top of the work of Hayek Money and separates the system into a (vol-coin, stable-coin) pair where the supply of stablecoin is determined by incentives for purchasing vol-coin. Notably, the paper Seigniorage Shares specifically advises against distributing supply changes proportionally to users on the grounds that it would not result in a stable balance.
These two papers would go on to shape the understanding of stablecoins at large for the cryptocurrency community. And it’s a shame that they continue to today because they both make grave assumptions, that invalidate their claims altogether.
We were introduced to these papers early on and cited them in our original white paper. But eventually we noticed a number of glaringly bad assumptions that no academic peer-review would have missed. Interestingly, these are false assumptions that a technical community might miss, but no economic community would have let slip.
- They both assumed the Quantity Theory of Money to be true in the near term. That is to say, they both rely on supply adjustments perfectly offsetting price deviations. This is not true.
- Hayek Money assumed that price level stability was equivalent to balance level stability. This is not true.
- Seigniorage Shares further assumed that an ancillary marketplace of incentives for regulating the supply of stablecoins (ie: bond-token-like approaches) could reliably work with only free-market actors. This is not true.
Ultimately, Ametrano imagined an asset that was unbreakable but unstable. And Sams imagined an asset that was neither stable nor unbreakable.
Between the two, we were more interested in the unbreakable new asset. So we went on to wonder: i) How might this asset move in the marketplace? ii) What might be valuable about such an asset? iii) How might we implement such as asset. This ultimately led us to realize that the discarded approach of Hayek Money, while by no means what its author intended, could be quite important for different reasons.
This led us to:
a) Discover George Selgin’s work (answering: what might be ideologically valuable about this new asset in the long-run).
b) Induce the volatility fingerprint of AMPL (answering: what might be pragmatically valuable about this new asset today).
The Ampleforth protocol and thesis was then born.
Question 5:
Since ETH price reaching new highs and gas being in high demand, has this raised concern with the team on the need develop L2 solutions for the geyser or can we expect the v2 of geysers to cut the gas costs of staking/unstaking significantly?
On a related note is there any plan to include the ability to claim the geyser rewards without unstaking since some participants would like to enjoy compounding gains. Is there a reason for the function not to exist?
Brandon:
On L2 — That’s a complex issue. The high cost of transactions is definitely causing a lot of pain around the ecosystem, but L2 also doesn’t come without its own cost.
For example, there are already L2 systems on Ethereum that support high frequency trading (Loopring, IDEX, DeversiFi), but none of them have been able to match Uniswap’s volume. L2 risks fracturing the connections that makes DeFi so useful by creating lots of silos. ZK-based systems don’t support general contracts, and OR often has long exit periods on the order of weeks.
One benefit of the v2 of geyser is it will remove the need to migrate between different programs. This is also a generalized feature, so in a really successful scenario this could become a standard way to interface with these sorts of programs across the entire space. Stakes will also be transferrable between wallets via NFTs. So lots of cool new stuff.
On unstaking rewards… This was a difficult design tradeoff and I can see both sides of it. We ultimately didn’t want to encourage the mercenarial farming crowd that will “farm-to-dump”. We’ve seen real examples of how this can negatively impact token health in the marketplace. You could argue that some DeFi platforms entire existence are to exploit this market dynamic.
One of the two primary goals of the Geyser program was to distribute AMPL out into the community to people who are most aligned with the network’s success.
(By Geyser v2, I mean the v2 version of the Geyser codebase. We’re hoping that the next round of Geysers will be running this new code)
Question 6:
Anyone take George Hotz and CheapETH serious?
Brandon:
Geohot’s a pretty smart guy, but he also has a good (albeit wry) sense of humor. I hadn’t heard about CheapETH before, so not sure which side of the coin that is for him.
Question 7:
Will the geysers stay at the 3x multiplier going forward, or was the top off a one off just to save gas?
Brandon:
No planned changes to multipliers. Yeah the topoff was to allow the option for people to avoid the gas cost of migration.
Question 8:
Hi, is the Pescadero geyser SUSHI reward vesting schedule 6 months for the 2/3 amounts? On https://sushiswap.gitbook.io/sushiswap/faq it states “6 months from the moment they are earned. So if you earn 10 $SUSHI today you can harvest 1/3 immediately, and the remaining 2/3 after 6 months of waiting.” If so, will Sushi team will be releasing the 2/3 amounts 6 months from when the 1/3 was released to the geyser?
Brandon:
Yes, the word we’ve gotten from the Sushi team is that the remaining 2/3 will be delivered according to the 6 month schedule.
