Coinbase Ventures and Ampleforth have announced a collaboration to create flatcoin technology called SPOT. Coinbase said it donated $1 million to the Flatcoin project, describing the move as a strategic funding round for the Ampleforth Foundation’s decentralised low-volatility commodity money, SPOT.
Flatcoins are coins backed by conventional currencies, such as the USDT and USDC, that comprise much of the $170 billion stablecoin market. Unlike bitcoin (BTC) and Ethereum (ETH), these flatcoins are designed for unique utility. Flatcoins like SPOT, introduced by a partnership between Coinbase Ventures and Ampleforth, are tailored to track living costs instead of being tied to a fiat currency like stablecoins. In the latest crypto news, the term “flatcoin” was said to have been coined by Balaji Srinivasan, former Coinbase CTO, and Sam Kazemian, founder of Frax Finance, in 2021. The crypto update points out that this coinage emerged during a discussion about the Frax Price Index.
Flatcoins, unlike Bitcoin (BTC) and Ethereum (ETH), use an “on-chain basket of goods” in the terms used by Srinivasan. He noted that, in contrast, if a particular fiat currency declines due to inflation, the stablecoins will not be stable, so the difference between stable coins and options like Bitcoin (BTC) and Ethereum (ETH) becomes negligible as they suffer the same fate.
Understanding SPOT
SPOT is tailored to merge the features of traditional money like the U.S. dollar and hard commodities such as gold or bitcoin (BTC) to produce a “fully decentralized” and “significantly less volatile” asset that can be used in the on-chain economy, the team said. It does not aim to follow the path of other stablecoins.
Apart from its “inflation-resistant” store of value protocol SPOT, Fragment also creates the unit of account protocol AMPL and DAO governance protocol FORTH. AMPL is a reconfiguring cryptocurrency with no specific asset backing. It depends on a flexible supply mechanism to balance its price, which lingers between $1 and $2. SPOT is a low-volatility version of AMPL, created to move less spontaneously in price.
When AMPL’s price changes substantially, SPOT’s price adjusts by little. SPOT was created by reconfiguring AMPL’s volatility into two continuous derivative assets: SPOT, which is less volatile and designed as a safer version of the asset to hold, and stAMPL, which is more volatile and designed to offer amplified exposure. The aim of this transparency is to produce low-volatility and decentralised money rather than digitise any traditional currency.
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SPOT’s Launch on Base Network
SPOT Flatcoin is currently available on Ethereum (ETH) and is set to launch on the Coinbase-incubated Layer 2 Network Base as part of the new launch. The latest crypto news states that new markets on the Base decentralised exchange Aerodrome Finance will go live on Monday.
Coinbase Ventures and Ampleforth: The Next Iteration of Stablecoins
In an interview with Brian Armstrong, Yahoo Finance Coinbase CEO in September 2023, he mentioned that flatcoins are the “next iteration of stablecoins”. He remarked that the idea is “a better form of money in the crypto space” relative to other cryptocurrencies and stablecoins. Armstrong further noted that while Coinbase was not working on any flatcoin idea, it considered it a viable option. Armstrong, in a crypto update, pointed to the idea of flat coins among the 10 ideas in crypto he was “most excited about,” signalling that the company’s venture investments might “go into things like that.” Other ideas that interest him include on-chain reputation, ads, capital formation, games, privacy for Layer 2 chains, and tokenizing real-world assets.
Conclusion
The investment by Coinbase Ventures and Ampleforth shows a substantial leap towards the growth of digital currencies, offering a stable and decentralized alternative in the crypto market. The collaboration indicates the potential for next-level growth in the financial technology sector. With this collaboration, Coinbase Ventures and Ampleforth have cleared the path for future innovations in the digital asset space. Stay informed with The Bit Journal for expert analysis and insights on these pivotal events.
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