AMPL’s ±2.5% Rebase Band: How a Small Nudge Supercharged Supply Cycles

TL;DR

• Neutral band change: In September 2024, AMPL narrowed its neutral supply bounds from ±5% to ±2.5% of the target oracle rate.
• Potency up, duration down: Average positive rebases jumped +31.7%; average negative rebases exploded +241.8%. Supply cycles that once lasted weeks now complete in ~5 days.
• Why it matters: Faster, punchier rebases sharpen price discovery, keep leverage products (stAMPL / SPOT) in play, and open fresh niches for arbitrage and liquidity provision.

What Changed in September 2024?

On August 27, 2024, Evan Kuo proposed tightening the neutral rebase band (deviation_ratio) from ±5% to ±2.5%, and adjusting the sigmoid rebase curve parameters for faster, more precise supply corrections. The process culminated in a signal vote (linked within the thread) and implementation in September 2024, enacting the narrower band that triggered the increased volatility and rebase frequency we’ve since observed.

In practical terms, smaller deviations now trigger larger counter-moves, meaning the protocol corrects sooner and with more impact.

Visualizing the Impact: Supercharged Supply Cycles

With a tighter corridor for neutrality, fewer price changes are “safe” within the bounds anymore. Naturally, the result is an amplification in the number of rebases. For a visual example, see the graphic below:

During September 2024, there were an additional five rebases that otherwise would have never happened thanks to the narrower ± 2.5% band.

There is increased confidence and a faster response rate of the protocol to correct back toward equilibrium, encouraging re-entries. The net result is that arbitrage plays have become substantially more common, feasible, and profitable. And on that note, the interconnected stAMPL and SPOT markets magnify these rebases, further intensifying supply adjustments.

Of course, there are differing practical implications depending on the stakeholder:

Overall, the modest tweak to AMPL’s rebase mechanism demonstrates the power and impact of precise adjustments yielding major results. Liquidity has and should be expected to continuously migrate toward strategies that thrive on the above volatility profiles and opportunities.

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