Inflation Resistance
Last updated
Last updated
The Ampleforth Protocol currently uses two active oracles to track US CPI: one from ampleforth.org and the other from Teller. This is how AMPL tracks CPI, making it inflation-resistant.
These oracles are how the protocol determines the Price Target over time, leading to its rise in value alongside rising aggregate US inflation.
To visualize this value capture, consider Truflation's aggregated US inflation rate (since 2021) below:
The concept of an inflation-resistant asset is not new in traditional finance (TradFi).
An example of a TradFi asset that attempts to offer the holder purchasing power protection is the Treasury Inflation-Protected Security (TIPS). TIPS is an inflation-pegged bond designed to shield investors from high inflation.
The critical difference here is that whereas TIPS are static, locked bonds (a form of regulated security), AMPL is an inflation-resistant, on-chain elastic commodity.
Being an elastic commodity makes AMPL highly desirable as a financial building block for producing or collateralizing other financial derivatives and assets. This is because AMPL:
Has an unbreakable unit of account
Is inflation-resistant
Features infinite scalability
Any given value can be transferred into the Ampleforth protocol to produce more AMPL tokens, which can then be used, for example, to collateralize and scale other assets.
