AMPL Completes 75% 3-Day Plunge: What Does Negative Rebase Mean?

Ampleforth (AMPL), is one of the cryptocurrencies that lost the most over the past three days. It plunged by over 75% to reach a low at around $0.65 on some exchanges, putting holders in negative rebase territory.

AMPL Plunges 75% in 3 Days

Ampleforth is undoubtedly one of the most discussed and trending projects in the cryptocurrency field. It has been this way for about a month now.

Back towards the end of June, AMPL started trending upwards and reached a high at around $4, providing investors with what appeared to be a 300% return. That, however, wasn’t the case. Their returns over the past month have been exponentially higher. More on that later.

Over the past three days, however, the market is in despair. The price plunged from about $2.9 to a low of $0.65 on KuCoin today, charting a steep loss of about 77%.

amplusd_chart
AMPL/USDT, KuCoin. Chart by TradingView

What’s more important, however, is that this sent AMPL in the territory of negative rebases. Let’s see what this means.

What Does Negative Rebase Mean?

As CryptoPotato explained in detail, the protocol behind AMPL intends to keep its price relatively stable at around $1. The way it does that is by distributing new or taking out tokens of the total supply.

In other words, if the price is above $1, every token holder receives an additional amount of AMPLs right in their wallet.

This is why the returns that early investors saw were much higher than just 300%. Every day for the past month people were getting positive rebases, ranging between 3% and 20% of their total holdings. And because the demand for the coin was so high, their earnings skyrocketed. That’s why that 300% was perhaps in the range of 3000%, or even higher, for some people.

Today, however, the price dipped below $1. In order to achieve equilibrium, the protocol will deflate the supply, meaning that holders will actually see tokens disappear from their wallets.

It’s unclear what the reason for the massive dump is, but the most reasonable conclusion is that people who got in early and enjoyed a month of exponential growth are finally cashing out their profits.

A frequent observer and commentator BCCPonzi on Twitter reiterated that it was the “Ecosystem fund” unloading tokens.

The post AMPL Completes 75% 3-Day Plunge: What Does Negative Rebase Mean? appeared first on CryptoPotato.


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