Ampleforth Unveils LowVolatility Option as an Alternative to Fiat Stablecoins

Fragments, the developer behind the Ampleforth protocol, and the Ampleforth Foundation have revealed their plans to introduce a new digital asset called SPOT, which aims to provide a volatility-resistant alternative to fiat stablecoins. SPOT combines elements of commodity-based money and peer-to-peer digital cash to create a stable digital asset.
According to the technical documentation, SPOT achieves its volatility-reducing properties through a process called tranching, which segments the volatility of Ampleforth’s native currency, AMPL, into two separate assets. The first asset, known as the “senior tranche,” is the low-volatility SPOT token. The second asset is a staked version of AMPL called the “junior tranche,” which absorbs most of the network volatility, protecting SPOT from significant price swings.
Users of the protocol can deposit AMPL tokens to mint SPOT and stAMPL, and they can also redeem their derivative tokens for the native AMPL at any time. The tranches are bundled together based on their senior or junior status and have a fixed term of one week. Once the derivative assets reach their maturity date, they automatically convert to AMPL, and the protocol replaces them with new tranches of segmented-volatility assets.
The goal of segmenting volatility and recycling the tranches is to control volatility rather than eliminate it and direct it into a store-of-value with commercial applications. The minimum volatility levels of SPOT are expected to mirror the 2019 consumer price index-adjusted U.S. dollar.
Ampleforth’s introduction of SPOT comes at a time when concerns about inflation and geopolitical instability are rising, posing a potential threat to the current financial system. With the United States’ national debt reaching nearly $35 trillion and interest payments set to exceed national defense spending, some analysts fear that the country’s fiscal position could disrupt the global financial system, which heavily relies on the U.S. dollar as the reserve currency. To address this, former U.S. Speaker of the House Paul Ryan has suggested the use of dollar-pegged stablecoins to mitigate the effects of the massive debt caused by fiscal deficits and monetary printing.
Additionally, more companies are adopting Bitcoin treasury strategies to safeguard their wealth and purchasing power in the face of ongoing monetary debasement.