Author: MYKEY researcher Jiang Haibo

quick preview

• Author: MYKEY researcher Jiang Haibo

• quick preview

• Last week, the total market capitalization of major stablecoins increased by $465 million to $12.684 billion.

• After USDT’s circulating supply suspended growth for more than 20 days, an additional USD 120 million was issued on ETH and TRON last week.

• The circulation of TUSD increased by 106 million, and the circulation of DAI increased by 77.54 million. The circulation of TUSD and DAI increased by 79% and 37% respectively compared with a week ago.

• From June 23rd to July 23rd, the income of holding AMPL was 51.28 times, but the price of AMPL only increased by less than double.

1. Overview of Stablecoin Data

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market liquidity

Source: MYKEY, CoinMarketCap, Coin Metrics

At present, the market circulation of major stablecoins is about 12.684 billion US dollars, and the market value continues to grow.

Source: MYKEY, Coin Metrics

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Number of currency holding addresses

Source: MYKEY, DeBank

Last week, the number of major stablecoin holding addresses in the Ethereum network increased by 63,485 in total.

Source: MYKEY, DeBank

Active addresses

Active addresses

Source: MYKEY, Coin Metrics

Number of transactions on the chain in 24 hours

Number of transactions on the chain in 24 hours

Source: MYKEY, Coin Metrics

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Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Source: MYKEY, Coin Metrics

Last week, the average daily transaction volume of major stablecoins increased by an average of 13.94% compared with the previous week. The proportion of DAI's transaction volume increased, while the proportion of USDT's transaction volume decreased.

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2. Ampleforth with a monthly income of 51 times

AMPL is a synthetic commodity currency, which belongs to algorithmic stable currency according to the classification of stable currency. We know that any stable currency needs a certain mechanism to ensure that the price of the stable currency is anchored to the legal tender. For example, when the price of DAI is higher than $1, MKR holders can vote to increase the types of mortgage assets, increase the upper limit of DAI, and reduce the stability rate. Through these measures, the supply of DAI can be increased, so that the price of DAI can return to Around $1.

Ampleforth will also increase or decrease the supply of AMPL through certain measures to bring the price of AMPL back to around $1, but the approach is different from common stablecoins. The AMPL protocol automatically adjusts supply based on demand. When the price is too high, the wallet balance of all users increases; when the price is too low, the wallet balance decreases. Throughout the process, the proportion of AMPL held by users will not change. AMPL does not allow price fluctuations at all, but only when the fluctuations exceed a certain threshold will the increase or decrease of the balance occur. According to the description in the red paper, the threshold δ is set to 5%, and Pt is the target price.

Source: Ampleforth white paper

Ampleforth believes that in this way, it can make itself less connected to the cryptocurrency market, but this may not be the case. Let’s take a look at the data of the past month. From June 23rd to July 23rd, the circulation of AMPL rose from 5.61 million to 150 million; the price rose from $1.01 to $1.98; the market value of AMPL rose from $5.67 million to 296 million . It can be calculated that the income of holding AMPL in this month is 51.28 times, but the price of AMPL has only increased by less than double. It can also be seen from the figure below that although the price of AMPL is around $2.5 and the market value has also declined, the circulation has almost always been growing. The monthly circulation increased by 25.67 times.

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• Source: MYKEY, CoinMarketCap

• In order to avoid unnecessary over-correction, the increase or decrease in the supply of AMPL is not done overnight, but a smooth process. The AMPL protocol refers to the volume-weighted average price of the past 24 hours to implement supply changes, and divides the difference between the weighted average price and the target price by 10 to obtain the extent that the supply should change.

When the price of AMPL is $0.5, the wallet balance of AMPL will be reduced by 5%.

The supply of AMPL is readjusted at 10 o'clock every day, and there is a once-a-day arbitrage opportunity between Uniswap and other exchanges. When the supply of AMPL changes, the AMPL reserve in Uniswap will automatically adjust, and the relative value of AMPL and ETH will also change, so the price of AMPL on Uniswap will automatically change. In centralized exchanges (such as Bitfinex), it takes time to settle changes in the quantity of AMPL, and the price also needs to be adjusted manually. If you have a balance on both Uniswap and Bitfinex, you can buy on exchanges with low prices and sell on exchanges with high prices at the same time to complete the arbitrage transaction. On Uniswap, the liquidity and trading volume of the ETH-AMPL trading pair ranks first, which shows the degree of influence of Uniswap on the price of AMPL. As can be seen from the figure below, the price on Bitfinex will drop after 10 o’clock every day, which may be affected by arbitrage trading.

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Source: bitfinex.com

It should be noted that some centralized exchanges will close transactions and deposits and withdrawals before and after the daily readjustment of the amount of AMPL, and some exchanges do not even perform readjustment operations directly. Investors need to understand the relevant rules in advance.

AMPL is designed as a currency with a relatively stable value, but it is always easy to deviate from 1 dollar in the actual process. When the price fluctuates, the income will also be magnified due to the same direction change of the circulation. From a stablecoin perspective, AMPL is very impractical. Even if AMPL achieves price stability, it may not necessarily be meaningful. For example, the price of AMPL has been around $2.3 recently, but the number of AMPL has increased 13 times compared to 20 days ago.

Through the above analysis, we can also draw some empirical conclusions:

In the current situation where the price is high, the readjustment of the circulation at 10:00 is likely to cause a relatively large price drop, which may exceed the proportion of the increase in the balance of AMPL.

The benefits and risks of AMPL may be relatively large, and the above content is not intended as investment advice.

3. Readers ask questions

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3. Readers ask questions

1. What payment scenarios is Terra mainly used for?

Answer: Terra is mainly used in payment scenarios in Korean won. There are several evidences as follows.

1) The total historical trading volume of KRT (the price of KRT is the same as that of South Korean Won) is 1.46 trillion, which is 1.22 billion US dollars converted into US dollars; the total historical transaction volume of Luna is 1.673 billion, which is 650 million US dollars converted into US dollars at the current price. KRT has a high proportion of trading volume.