How the (3,3) meme still could not solve the game theory behind rebase tokens.

OHM FORK CASE STUDY:

Olympus Dao was created by members of the Ampleforth community. Ampleforth was constructed to have negative/neutral/positive rebasing to create a stable coin that isn’t subject to inflation. The elastic model made a lot of sense except market participants had trouble psychologically holding the token during negative rebases. As a holder it felt like you were selling the bottom and you were incentivized to want to sell when it was under the price of $1.01. In a growing ecosystem of ponzinomics it had very bad game theory. Olympus Dao focused its Inelastic rebase model on game theory. Holders were insentivized to hold as they received daily compounding interest. It made timing the market increasingly difficult and the (3,3) meme was born.

Ohm and its forks seemed to solve the issue and it was until a long downturn that the proposed game theory wasn’t strong enough to incentive bag holders. Unfortunately the majority of crypto investors do not fully understand what they own. Also exceeding amounts of them don’t understand math or take proper accounting measures. As the price of Wonderland dropped from $10,000 to $2,000 even after people understood they were receiving a rebase of 0.6% every 8 hours they couldn’t determine how much they had dropped. Most bag holders could not wrap their heads around the math. Even with a growing treasury people still had a low sentiment as they focused on the $TIME price instead of $WMEMO. Also with the mint/bond discount these tokens have created downward pressure on the price as whales continued to go throught the 5 day vesting period over and over to capture the discount. Luckily the team at Wonderland has recognized the issue and have been in the process of training their holders to now be on a $WMEMO standard. I am very optimistic for the future of $WMEMO as it now can have utility and be multi chain.

From my observations I would say that the Olympus Dao rebase model works effectively as a way to crowd fund a large amount of liquidity. After the liquidity is raised the rebase model stops and the Dao needs to find an effective way to invest the treasury to grow the fund. Going forward we will see Ohm forks built more like “Snowdog” but without the rug pull. The market majority is not prepared to hold an Ohm fork over a long period of time and we will see this model fail to perform as a stable coin. I imagine most Ohm forks going forward will have a presribed amount of time they want to be a rebase token before switching people to a wrapped version that will operate like an ordinary token without rebase tokenonmics.

Another community that emerged from the Ampleforth community was the Amplesense Dao. Amplesense Dao ($KMPL) is creating the Elastic Vault which improves upon the game theory of Ampleforth. We addressed that Ampleforth created a stable coin that was resistant to inflation but the game theory was poor which made the volatility worse. After staking your Ampleforth ($AMPL) into the elastic vault you will not be subjected to negative rebases and experience a small positive rebase. During Neutral times you will more rebase tokens. When $AMPL is in positive rebase you will not experience the full rebase as some tokens are burned to distribute during negative and neutral periods. There is a lock up period as well so holders will not be able to try and time out the market. This elastic vault could really address a lot of the volatility and game theory issues that $AMPL has experienced and create the new reserved currency of Decentralized Finance. I recommend checking out some of their documentation to fully understand what they are trying to accomplish. https://amplesense.medium.com/introducing-the-elastic-vault-and-eefi-a-yield-generating-protocol-and-asset-powered-by-b2fdcf510e8

Tim Burt Wolf