Summary of key points:
SPOT's low volatility mechanism: SPOT reduces volatility by dividing Ampleforth's native currency AMPL into two assets through a process called grading. This mechanism helps maintain SPOT's stability, making it a practical means of storing value.
Economic Context and Timing: SPOT’s launch comes at a time of major economic concerns, including rising inflation and a U.S. national debt approaching $35 trillion. This backdrop highlights the potential demand for a stable digital asset like SPOT.
Investment Confidence: Coinbase Ventures has invested $1 million in SPOT, demonstrating confidence in its potential as a low-volatility digital asset and alternative to traditional fiat stablecoins.


Ampleforth launches low-volatility crypto asset SPOT
Yerevan (CoinChapter.com) - Fragments, the developer of the Ampleforth protocol, and the Ampleforth Foundation have launched a new digital asset, SPOT. SPOT aims to be a low-volatility alternative to fiat stablecoins, combining the characteristics of commodity-based currencies and peer-to-peer digital cash.
SPOT reduces volatility through a grading process
SPOT achieves low volatility through a process called tiering. This splits the volatility of Ampleforth’s native currency, AMPL, into two assets. The “Premium Tier” produces low-volatility SPOT tokens. The “Primary Tier” is a staked version of AMPL that absorbs most of the network volatility, protecting SPOT from major price swings.


Simplified graphical hierarchical mechanism. Source:
Spot Technical Documentation
Users can deposit AMPL tokens to mint SPOT and stAMPL. They can also redeem these derivative tokens for native AMPL at any time.
Stability: How Weekly Grading Works
First, when AMPL is deposited into the SPOT protocol, it creates fixed-term tiers, divided into senior and junior tiers. Second, each tier has a fixed term of one week and automatically converts back to AMPL when it expires. Third, this continuous cycle of tiers helps maintain the stability of SPOT.
It is worth noting that this mechanism is similar to perpetual derivative contracts such as perpetual futures. The main purpose is to manage volatility rather than completely eliminate volatility, making SPOT a practical means of storing value.


Simplified illustration highlights the perpetual nature of SPOT classification. Source: Spot technical documentation
SPOT launches amid inflation and debt concerns
Interestingly, SPOT’s launch comes at a time of growing concerns over inflation and geopolitical instability.
USA
With a national debt approaching $35 trillion, annual interest payments are expected to exceed defense spending. Notably, analysts worry that this could affect the world's financial system, which relies heavily on the dollar as a reserve currency.


Map of debt-to-GDP ratios for countries around the world as of 2022. (Dark green indicates higher ratios, while orange indicates ratios below 25%). Source:
International Monetary Fund
Interestingly, former U.S. House Speaker Paul Ryan recently proposed a dollar-pegged fiat stablecoin as a solution to debt obligations. Additionally, businesses are increasingly adopting Bitcoin reserve strategies to protect their wealth from currency devaluation.
SPOT stability is correlated with the Consumer Price Index
Mainly, SPOT's minimum volatility level is designed to reflect the U.S. dollar adjusted for the consumer price index in 2019. Then, as the tranches expire, their volatility matches that of the underlying AMPL.
In addition, Ampleforth's spokesperson explained that the tranche volatility mechanism ensures that SPOT remains stable. In addition, by recycling expired tranches and replacing them with new ones, SPOT provides consistent value.
Coinbase Ventures invests $1 million in new digital asset
It is worth noting that Coinbase Ventures has invested $1 million in SPOT, showing confidence in this new type of digital asset. This funding supports the development of SPOT as an alternative to traditional legal stablecoins and other digital assets.