The fact that @Brandon lengthy message doesn’t mention sAMPL holders even once is simply unbelievable to me, but that’s the reality we’ve found ourselves in. Is he even aware that AMPL cannot be withdrawn from the Tranches? Seems like the Vault sunsetted long time ago for the team… sadly stAMPL holders knew it just lately.
stAMPL users retrospectively or other way have to be included in the equation. Simple as that.
Why not make the distribution 3 rounds?
Round 1 could be for forth holders
Round 2 Could be for stampl ampl holders.
Round 3 The remainder could be put into ampl liquidity.
After months without communication with the community, you show up to take control of the DAO, and now you’ve chosen to allocate DAO funds how you see fit, while burning the stampl and spot holders that kept your experimental project running. Unreal. I oppose your allocation plan and support a reallocation to the stampl users.
There’s been some more discussion in discord, so I encourage people to check there for more background and color. But one real question was whether we can keep Spot.
I talked this over the team and yeah that’s definitely something we can do, if there’s community support. The FORTH situation is essentially forced for security reasons. I don’t see a way to return to normal DAO operations with the kinds of security guarantees we would need. But Spot doesn’t have to be coupled with that decision, provided people are ok with it being governed by multisig. This isn’t uncommon across the DeFi, and AMPL is in the same situation. It’s even possible to make Spot immutable since it’s purely onchain and doesn’t need an oracle.
Let’s take a look at where it’s at right now.
The SPOT supply is 524,321.73.
~240k of that is in a UniV3 USDC 1% pool.
~70k is in a UniV3 USDC .3% pool.
~44k is in the Bill Broker
You can see the rest of the top holders here, but most of these are held in liquidity.
Spot holders are currently paying 15.29% every 30 days to hold these positions. That works out to 86.35% in a year. This is not a market fluctuation. These holders have been paying close to this rate for a full year already if you look at the chart.
A core pillar of the ecosystem is the idea that building a perfectly durable stablecoin is impossible. Volatility can’t be magically removed, it’s got to go somewhere. Spot holders are paying for stability by offloading the volatility. In a normal market, the cost of offloading that volatility would be based on the nature of that risk.
Is 86.35% per year a fair price for stability? That seems wrong on its face, and there’s no way LP positions are more than compensating for that. The holders of these Spot positions are either checked out or unaware of the instrument they’re using. In either case, these holders are not following would should be in their normal economic interests.
For stAMPL, before I pointed this out in Discord, stAMPL was paying 8% every 30 days. That means that stAMPL holders were being compensated 155.07% per year to hold a ~1.2x AMPL position. It’s come down slightly from then, but still we’re talking 6.97% per 30 days. To me that sounds like a very healthy compensation for holding a position that’s, at least compared to typical crypto leverage, not that far away from holding AMPL, which I’m assuming most of us here do already. But I can’t give financial advice, maybe that’s really not enough?
So what’s going on? Do SPOT holders care so much about stability they’re willing to pay over 85% per year for it? Is AMPL so risky that 155%/yr return isn’t enough to hold more exposure?
The Spot system itself is doing everything it was designed to. The whole model is that it’s supposed to bend, rather than break. Much of this liquidity was minted at a higher AMPL market cap than today. The forced selling from the FTX bankruptcy proceedings, along with follow on, and whatever else there was, resulted in a large change in the relative size of SPOT to AMPL and stAMPL, but that was a long time ago. I wouldn’t recommend making the SPOT incentive systems even more punishing, because I don’t think the market is reacting to it. What we’re talking about isn’t a failure of a system, it’s a failure of market formation–at least formation of a market of actors that follow what should be their economic incentives. That’s my read, anyway.
If people are taking actions to help the system, the best possible thing to do is to follow your economic incentives. Doing anything that costs you money, as a sense of sacrifice for the broader good, is actually counter productive.
Do I see these market dynamics changing? Given the relative immovability of the SPOT positions, I fully expect these SPOT holders to keep paying out until the system reaches an equilibrium again. At that point, yeah SPOT will be back to a normal state of balance where enrichment/debasement levels get back to parity. Then we’d have the same SPOT we also had but with a lower target price than at launch. It would restart just as it was designed.
We can keep playing this out. In fact, it does kind of prove the point of the whole approach. The markets would keep going, and maybe they’d become more active.
In short, there’s no reason that Spot has to be tied to FORTH. Given all the observations above, everyone on our team concluded that Spot never found its market. But it doesn’t need to change if we don’t want it to.
The team could run SPOT from the multisig, and we could continue like this. That way, the work wouldn’t go to waste. Maybe it would even be possible to salvage it later on, and community sentiment wouldn’t be as negative. I’m in favour of this approach.
Forth could be sunset, but SPOT/stAMPL shouldn’t be. If SPOT gets shut down, people who invested in it won’t get anything. With this approach, maybe a way forward could be found later on.
Given enough time for SPOT to play out, this post argues that it would slowly return to its boring, flatcoin state. It suggests that, due to unlucky market events, there is too much SPOT in relation to AMPL. If that’s the case, SPOT might have an easier time finding its market once its ratio and price relative to AMPL improve. The imbalance between SPOT and AMPL, along with SPOT’s unusual price, might explain why it has struggled to find a market in the first place.
I’m not opposed to the team controlling SPOT through its multisig. Who knows? Maybe down the line, once you guys are done working on Base or come up with a new idea, the team could return to SPOT. I’m in favour of this over deleting it forever.
Eventually, someone might come up with an idea or a key change that could turn everything around, or a product could be built on top of SPOT.
Heck, people held stAMPL in the vault as a leveraged AMPL position for years throughout the negative market downtrend, and they have almost nothing left. If SPOT is shut down, stAMPL holders’ leveraged positions will also be deleted, on top of the losses they’ve already suffered.
Might as well leave the vault and SPOT alive until SPOT has had time to play out and fix its ratio with AMPL. That way, the leveraged positions of people invested in the vault would also remain alive. This wouldn’t be as bitter a pill to swallow as the current proposal.
Honestly, I’m in favour of not shutting down SPOT or stAMPL. Forth DAO has become redundant, and even the most adamant people opposing the shutdown seem to recognise this.
I think SPOT can be left alone for now. Maybe, once it balances itself out, a use case or a way to salvage it could be found.
I don’t think SPOT is inherently redundant. It just hasn’t found its market yet, possibly due to a combination of unlucky events and the system being knocked out of balance, from what I can gather.
Even the Terra Luna community tried to salvage its ecosystem after it collapsed, and SPOT is nowhere near Terra Luna in terms of design or unsustainability.
The team is probably feeling more passionate and getting more support while working on the Base chain right now. That doesn’t mean the team has to close the door on SPOT forever. Maybe, down the line, someone will come up with an idea for SPOT V6. They might think, “We could have done this with that.” But that door would already be closed because SPOT had been sunset.
People holding stAMPL at this point are already down 99.5% from Operation Bootstrap anyway. I think they would probably prefer waiting for the system to rebalance itself, with the possibility of another iteration salvaging it later on, over a sunset that leaves them with just 0.5%.
SPOT continuing to exist, even if it hasn’t found a market yet and has an unusual price, is still better for AMPL than SPOT not existing at all. That’s at least my opinion.
You guys have worked on SPOT and AMPL for over five years. Deleting it all would be a shame.
AMPL alone is a unit of account. From what I can gather, it’s an ERC-20 token that shifts price volatility to supply volatility. The intended use case was always supposed to be SPOT. I also believe AMPL has struggled to find a use case outside SPOT.
Maybe finding a use case for AMPL outside SPOT could also help SPOT rebalance its ratio more quickly or build momentum. Shutting SPOT down forever would harm AMPL, too. It would hurt community sentiment and leave AMPL with a less clear path forward. This could eventually leave AMPL as an ERC-20 token with no clear direction, while even the remnants of its current community fade into obscurity.
AMPL without SPOT feels much closer to a plain ERC-20 token than AMPL with SPOT.
Shutting SPOT down would make community sentiment even worse than it already is.
The team clearly has a lot of passion for the Base chain right now. Maybe, later on, the team will do something with SPOT or AMPL on Base. You could also regain your passion for SPOT/AMPL on mainnet down the line. You never know when inspiration might strike or what the future holds.
Anyway, that’s my two cents.