Between the Monk and Bull

If there is one thing that is always present in crypto - it’s volatility.

There’s no hiding from it. From a meme coin skyrocketing to 1000% in a few days, to Bitcoin losing 60-70% of its value a few months after hitting the top of the bull run. Volatility swings like a pendulum between the extremes of massive gains and losses.  

Most investors try to hedge against the volatility, while traders attempt to profit from it. The success rates of those strategies may vary, with a heavy reliance on skills, experience or just plain luck to be successful. 

While some are able to walk away with some profits during periods of massive gains, most participants in the crypto ecosystem are worse off than how they started or break even when those gains are harder to come by.  What if there was a way for an ecosystem to harvest volatility, to make life simpler for both traders and long term investors?

Enter stAmpl and Spot

Spot and stAmpl are two sibling assets that sit at opposite ends of the volatility spectrum and create opportunities for yield within the Ampleforth ecosystem.

Spot: Low Volatility in a Sea of Market Chaos

Spot is the world's first Low Volatility Asset. On average, it has smaller price changes than traditional crypto assets with movements that are highly concentrated within a range. Think of movements of a cents instead of dollars. Spot is able to maintain its low volatility behavior regardless of market conditions. Think of Spot as a serene, meditating Dalmatian that is calm, composed and unbothered by the chaos in the market.

stAmpl: A Leveraged Rollercoaster Ride 

stAmpl, on the other hand, is the leveraged high volatile sibling of Spot. It is like a wild bull, untamed, unpredictable, with amplified volatility riding the extremes of Ampl contractions and expansions. stAmpl is favorable for those who want exposure to amplified volatility, and during expansion cycles it can deliver outsized returns. 

Volatility Harvesting

The brilliance of the Ampl ecosystem lies in how these two extremes interact.

As part of the Spot v5.0 upgrade, stAmpl will now absorb all of the fees related to Spot minting and redeeming.  This captures the volatility that occurs between Ampl and Spot, since the price differences between the two will often present an opportunity for arbitraging. stAmpl capturing a % of the mint fees presents an opportunity to benefit from the volatility without being an active arbitrageur. 

Additionally, a new mechanism allows for yield distribution through a funding rate. When more Ampl is staked than needed to support Spot’s collateral, stAmpl pays a funding rate fee to Spot holders. When this rate is high, it will influence the Spot fair market value (fmv) to also rise over time.

This funding rate functions similarly to funding rates in perpetual futures markets, where long and short positions pay each other periodically (e.g., every 8 hours on most exchanges) to keep prices aligned with spot markets. 

But unlike centralized perp exchanges, the Spot funding rate remains inside the ecosystem. It is real yield, paid from one participant to another and not extracted by an external platform. 

• When stAmpl demand is high, Spot’s collateral is ‘enriched’ by  the funding rate, influencing a price increase.
• When stAmpl demand is low,  Spot pays a funding rate to stAmpl, resulting in a daily positive rebalance of the assets backing stAmpl.
• This self-correcting mechanism drives persistent demand on both sides.

No matter which way the pendulum swings, the Ampl ecosystem captures that energy and recycles it back to participants. Most crypto protocols rely on inflationary token rewards or unsustainable emissions to attract liquidity. 

The Ampl ecosystem is different. It offers native yield, based on real economic activity and volatility harvesting. The beauty of it all, as an Ampl holder, you benefit from stAmpl and Spot demand as all roads lead to Ampl expansion.

To summarize, Ampl has become the foundation for an ecosystem where participants can choose their volatility profile, and where value stays in house. No trading skills required. If you are conservative, most will benefit from simply buying and holding Spot to benefit from its funding rate increases, or lp it for 20-40% APY yield if you are a bit more savvy. Buy Ampl and stake it if you have a bit more appetite for high volatility. Or do a little bit of both and focus on one or the other depending on the state of the market.

Whether you're the calm Spot meditator or the raging stAmpl bull, the system will grow and thrive organically from the real yield incentives.

In the Ampl ecosystem, volatility isn’t something to fear, it’s something to harness.