Most recent update: [March 3rd , 2022]
No securities regulatory authority has expressed an opinion about the Crypto Contracts or AMP, made available on the VirgoCX Platform, including an opinion that AMP is not itself a security and/or derivative.
What is AMP?
Amp is a new digital collateral token that offers instant and verifiable assurances for value transfer. Amp allows networks to secure transactions for a vast array of assets and related use cases irreversibly. Amp was created as a result of a collaboration between Flexa and ConsenSys, with its staking platform supporting instant and verifiable collateralization of almost any type of value transfer. This could range from digital assets, physical assets, or multi-asset.
Amp utilizes a new ERC-20 compliant framework and universal extensibility to significantly improve the speed and security of asset transactions across exchanges, remittances, payments, and several other use cases. All smart contracts utilized by Amp have been audited by two leading security research firms, Trail of Bits and ConsenSys Diligence. Amp is also open source, meaning its code is available to developers should they choose to integrate it with any third-party application.
Amp is the primary collateral that secures all transactions on Flexa, with the latter also giving the Amp protocol its first collateral manager contract.
How Does Amp Work?
Amp offers an interface for verifiable collateralization, which is both versatile and straightforward. It does this by utilizing a system of collateral managers and collateral partitions. Collateral partitions are designated to any account, application, or transaction. They can also carry balances that can be verified on the Ethereum blockchain. On the other hand, collateral managers are smart contracts that can be utilized to lock, release, or redirect collateral in collateral partitions whenever needed to ensure value transfer can occur smoothly.
Amp is capable of supporting an array of use cases for collateralization. It also introduces predefined partition strategies; these can enable capabilities such as collateral models, which would allow tokens to be staked without having to be removed from their original address.
Founders And History Of Amp
Amp was launched in 2020; however, the Amp token has seen its value appreciated by over 400% despite the recent launch. It was created by Flexa in partnership with ConsenSys and has become the crypto collateral of choice on Flexa. Amp has gained significant traction in recent times and has a spending capacity worth $1.4 billion, meaning that the network can process $1.4 billion worth of transactions at any given point in time. The Amp token is essentially an upgrade to Flexacoin, bringing features such as collateral managers and partition strategies, providing instant digital asset collateralization.
Unique Features Of Amp
Amp is quickly becoming a critical feature in the future of digital and physical transfers, serving as collateral for any asset transfer. Amp has introduced two characteristics that make it stand out. These features are Collateral managers and token partitions.
Collateral managers: Collateral managers can be described as similar to escrow accounts. However, unlike escrow accounts, collateral managers are built with different rules and specifications that can be easily customized, thus being utilized for several use cases. Collateral managers can be created by users using Amp, which is used as collateral. These managers can then be used whenever value transfers are beneficial.
Token partitions: These can be compared to partitions on a traditional hard drive, where different partitioned regions can be managed differently. Partitions in the contract enable collateral managers to enforce additional rules in different spaces associated with the same address. This feature allows for users to stake tokens without actually having to transfer them to a smart contract.
Technology And Security
The governance mechanism on Amp utilizes off-chain voting, made possible through Snapshot, a gasless signature platform. Amp users can vote on a host of proposals brought in by the community. These proposals could include partnerships, grant recipients, DeFi collaborations, cross-chain integrations, and several others. Because the governance is off-chain, the votes accumulated act as signals and not binding resolutions. The token contract also does not have any administrative functionality. However, the contract is immutable.
The process is fairly straightforward.
- Introduction - Proposals are introduced in the forum for discussion within the community. Before submission, a proposal must be live on the community forum for at least 48 hours.
- Submission - Once the proposal has been live in the forum for 48 hours, the user can submit it to Snapshot. The user submitting the proposal must hold a minimum of 1,000,000,000 AMP (1% of total supply) to be a valid proposal. If the user does not have the required AMP to submit the proposal, others can submit it on their behalf.
- Voting - A vote is considered successful if a quorum of 5,000,000,000 AMP (5% of total supply) is achieved. Votes are passed through a simple majority system, and a vote is required to be active for at least 48 hours for consideration.
AMP has a market capitalization of $2,961,504,918.51 and a fully diluted market capitalization of $6,490,532,790.91. Its current circulating supply is 42,227,702,186 AMP, with a total supply of 99,213,408,535 AMP and a maximum supply of 92,547,638,199 AMP.
Risks Associated With Amp
Some observers note that the problem that Amp intends to solve is not a major problem. While transactions take a significant amount of time to get processed and settled, the delay occurs only when the network is overloaded, and transactions eventually are processed and settled. All Amp does is ensure that vendors do not have to wait for a transaction to complete before moving to a new customer or transaction.
The rewards paid to users to deposit their Amp into the collateral pool aren’t considered significant, with the interest rate standing at 2% per year, which is quite low in the crypto space.
Prior to listing AMP on the VirgoCX Platform, VirgoCX performed due diligence on AMP and determined that AMP is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:
- The creation, governance, and location of AMP and/or its primary development team;
- The supply, demand, maturity and liquidity of AMP; and
- Legal and regulatory risks associated with AMP.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.