The Ampleforth protocol produces AMPL, a decentralized and durable digital currency, much like Bitcoin, but with a Unit of Account. AMPL’s unit is designed to be long-term stable, independent even of the movement of fiat currencies.
To calculate the AMPL price target denominated in dollars, the protocol Policy contract consumes the Personal Consumption Expenditures(PCE) as a measure of prices paid by consumers. There is no particular tie to the PCE as a data source specifically. Meaning, there is no “peg” to CPI, inflation, or PCE. PCE is simply used as one measuring stick to ensure constant unit value of AMPL through time.
When AMPL was launched in July of 2019, the PCE value was 109.195. Later PCE values are compared against this base value to produce a % price inflation since inception. For example:
Last month, a PCE value of 127.177 produced a price target of (127.177 / 109.195) = $1.16
You can view the history of the price feed and protocol operation on the Ampleforth dashboard.
PCE data is produced by the Bureau of Economic Analysis and updated monthly. One important aspect of the BEA is it may sometimes revise previously published data. We have seen a number of these revisions over time, but so far they’ve been small and over relatively recent data periods. However, last month there was a comprehensive revision going back to before the Ampleforth protocol was launched 4 years ago.
In addition to any other data changes, all values over this time span were scaled down:
The PCE in July 2019 when AMPL launched was 109.195
The recorded PCE for July 2019 today is now 103.422
This means that the protocol is calculating a price target of (120.550 / 109.195) = $1.10
rather than the more correct (120.550 / 103.422) = $1.16
Remove the baseCpi constant from the Ampleforth Policy Contract
Add a more generalized scaling factor into the CPI oracle Medianizer, and have this be configurable through governance
Essentially, the Policy should not be concerned with how data sources change or evolve. The policy contract will simply consume the dollar-denominated price target directly. These CPI formatting details are better encapsulated within the CPI oracle itself, which is further on the protocol’s periphery. This lets us more easily enshrine the core Policy contract behavior going forward by insulating it from future oracle changes.
Update the new scaling factor to be inline with the revised data
Continue exploring alternative data sources which do not revise past data. This removes the potential impacts of future revisions and reduces the need for governance intervention.
The fragments team is currently working on an implementation, but I wanted to post this early to streamline the governance timeline and coordinate community action. The changes are expected to be small and will be published when available.
Regarding #3, There is already an active proposal around including Truflation to the CPI calculation. Perhaps someone from the Truflation team can comment on their revision policies, but to my knowledge they do not revise previously published data.