Coinbase Ventures participates in Flatcoin project SPOT financing to create a low-volatility stablecoin alternative

The Ampleforth Foundation and the developer behind the protocol, Fragments, revealed that Coinbase Ventures invested US$1 million in Ampleforth’s decentralized low-volatility currency SPOT, another major step forward in the development of the “Flatcoin” product.

Fragments CEO Evan Kuo said that SPOT, as the result of its 5 years of research and development, aims to realize the vision of "better currency" through blockchain technology:

SPOT can create a better currency, Rather than just replicating the U.S. dollar on-chain, even if the latter meets the immediate needs of the market, we have been grappling with more important issues: inflation, durable stores of value, and reliance on centralized media.

It is reported that SPOT has been launched on Ethereum and will be launched on Coinbase Layer 2 Network Base’s decentralized exchange Aerodrome Finance next Monday.

What is SPOT?

As a decentralized and low-volatility digital asset, SPOT embodies the concept of "Flatcoin" and aims to become a substitute for today's legal stablecoins, combining the characteristics of currencies and commodities.

How to achieve low volatility?

SPOT official documentation points out that the low volatility characteristics of SPOT are achieved by tranching the volatility of Ampleforth’s native token AMPL into two derivative tokens:

Senior Tranche: Generate low volatility SPOT tokens.

Junior Tranche: Generates stAMPL (the pledged version of AMPL) to absorb most of the network volatility, thus protecting SPOT from significant price fluctuations.

Operating Mechanism

After users deposit AMPL into the SPOT protocol to mint corresponding amounts of SPOT and stAMPL, these graded assets will be bundled within a fixed period of one week and automatically converted back to AMPL upon expiration.

The SPOT protocol maintains the continuity of the protocol and limits the volatility of SPOT tokens by continuously recycling expired graded assets and replacing them with new graded assets, while transforming them into a store of value with commercial applications Method:

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

It is reported that SPOT’s minimum volatility will track the 2019 Consumer Price Index (CPI)-adjusted USD, and when the above-mentioned graded assets reach a fixed maturity, their volatility will be nearly consistent with the volatility of the AMPL token .

Coinbase CEO: “Flatcoin” is the next generation of stablecoins

Previously, as early as August last year, Coinbase CEO Brian Armstrong mentioned something like “Flatcoin” among the 10 “most interested” crypto ideas "The concept of a new currency concept suggests that the company's investment department may pay attention to such a product:

If you want to create a currency based on encryption technology, what would it look like? Completely decentralized and through a special algorithm. Track the Consumer Price Index to maintain your purchasing power.

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

Flatcoin is a better form of currency in the encryption field and the next iteration of stablecoins; although we I have not invested in related development, but I am very interested in it.

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