DEVELOPMENT

Coinbase Ventures invests in Flatcoin project SPOT financing, creating a low-volatility stablecoin alternative.

2024/7/9

The decentralized algorithmic currency protocol Ampleforth's subsidiary Flatcoin project SPOT announced yesterday that it has completed its latest round of strategic financing, with participation from Coinbase Ventures investing $1 million. It is reported that SPOT will soon be launched on Coinbase's in-house Layer 2 network Base.

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Coinbase Ventures Invests in Flatcoin Project SPOT

The Ampleforth Foundation and the protocol's developers Fragments revealed that Coinbase Ventures has invested $1 million in Ampleforth's decentralized low-volatility currency SPOT, further advancing the development of the "Flatcoin" product.

Evan Kuo, CEO of Fragments, stated that SPOT, as a result of 5 years of research and development, aims to achieve the vision of "better money" through blockchain technology:

SPOT is capable of creating better money, rather than merely replicating the dollar on-chain. While the latter meets the immediate needs of the market, we have been working to address more critical issues: currency inflation, a lasting store of value, and reliance on centralized intermediaries.

Reportedly, SPOT has been launched on Ethereum and will go live on the decentralized exchange of Coinbase Layer 2 network Base, Aerodrome Finance, next Monday.

What is SPOT?

As a decentralized and low-volatility digital asset, SPOT embodies the concept of "Flatcoin" and aims to be an alternative to today's fiat stablecoins, combining the characteristics of currency and commodities.

How Does It Achieve Low Volatility?

The official documentation of SPOT indicates that it achieves low volatility by tranching the volatility of the Ampleforth native token AMPL into two derivative tokens:

Senior Tranche: Generates the low-volatility SPOT tokens.
Junior Tranche: Generates a staking version of stAMPL AMPL, absorbing most of the network volatility to protect SPOT from significant price fluctuations.

Operation Mechanism

When users deposit AMPL into the SPOT protocol to mint the corresponding amount of SPOT and stAMPL, these tranching assets will be bundled for a fixed period of one week and automatically converted back to AMPL upon expiration.

The SPOT protocol maintains continuity by continuously recycling expired tranching assets and replacing them with new tranching assets to restrain the volatility of SPOT tokens, transforming them into a valuable storage of value for commercial applications:

SPOT disperses volatility into a continuously cycling derivative token, similar to other forms of perpetual contracts, with the goal of limiting volatility rather than completely eliminating it.

It is reported that the minimum volatility of SPOT will track the US dollar adjusted Consumer Price Index (CPI) from 2019, and when the tranching assets reach the fixed period, their volatility will be nearly identical to that of the AMPL token.

Coinbase CEO: "Flatcoin" is the Next Generation of Stablecoins

Earlier in August last year, Coinbase CEO Brian Armstrong mentioned a new currency concept similar to "Flatcoin" among the "most interesting" 10 crypto ideas, hinting that the company's investment department might take notice of such products:

What would a cryptocurrency look like if it were based on cryptographic technology? Completely decentralized, tracking the Consumer Price Index through a special algorithm to maintain its purchasing power.

Want to start a company but don't know what to do? Check out Coinbase CEO's sharing of ten blockchain application trends

Subsequently, Armstrong also indicated in an interview with Yahoo Finance a month later that he would pay special attention to L2 solutions and Flatcoin:

Flatcoin represents a better form of currency in the crypto space and is the next iteration of stablecoins; although we have not invested in its development ourselves, we are very interested in it.