Rebase Cycles

The principles of game theory allow us to explain AMPL's day-to-day volatility, but that also applies to entire rebase cycles.

In this documentation, a rebase cycle is referred to as a period in time when the price deviates from the price target, experiences 1 + n rebases, and then returns back to the price target.

AMPL traders can expect any of the five following rebase scenarios, depending on AMPL’s price in relation to the supply:

1. Price Gain and Positive Rebase (GREEN): GREEN days feature the sharpest periods of growth when AMPL appreciates in price and supply.

2. Price Loss and Positive Rebase (YELLOW): YELLOW days are net negative price value days, meaning the inflationary effects of the positive rebase are most influential on price.

3. Price Equilibrium and Neutral Rebase (WHITE): These days are simply when the rebase is zero, meaning that the price is within the rebase threshold of +/- 5% of the price target.

4. Price Gain and Negative Rebase (MAGENTA): Opposite of YELLOW days, this is where the deflationary effects of the negative rebase are most influential.

5. Price Loss and Negative Rebase (RED): RED days feature the sharpest declines in growth when AMPL depreciates in both price and supply.

Each day the Ampleforth Protocol has been live can be categorized into one of the five colors above. The best way to visualize this concept is through a comparison between price change and supply change.

This concept is visible in the scatter plot below:

Price Change % vs. Rebase % since 2019

Above, WHITE days do not appear as a quadrant but as a data point on the vertical white line, which represents where the rebase percentage is zero.

The frequency of the above data points is shown below:

Number of days by color category since 2019