What is AMP?
AMP is a digital collateral token that offers instant, verifiable collateralization for any kind of value transfer. Flexa is the company that created AMP in collaboration with Consensys. Flexa developed and released the first AMP collateral manager contract as open source. Flexa is also the entity which owns the Flexa network - a payments network that enables fast and fraud-proof payments for merchants all over the world. By using AMP as collateral, Flexa can secure payment authorizations while the underlying asset remains unconfirmed, and approve merchant transactions in near real-time. It is just one use case of the AMP token. At a protocol level, staked AMP tokens are used as collateral to operationalize the Flexa payment network.
AMP token holders can stake their tokens on Flexa Capacity- a tool for supplying collateral to the Flexa network and allocating it toward Flexa-enabled wallets. Holders can also vote on AMP community proposals , future grant recipients, partnerships, cross-chain integrations, DeFi collaborations, and more. However, AMP’s off-chain governance, votes serve as non-binding signaling rather than binding resolutions.
On the technical side, AMP is an ERC-20 governance token that operates on the Ethereum (ETH) blockchain. The total supply of AMP is fixed at 100 billion tokens with no burning capabilities so this supply should never decrease.
How does AMP compare to Bitcoin?
AMP differs from Bitcoin in a few important ways.
First, Bitcoin is a “coin” and AMP is a “token.” That is because Bitcoin powers the Bitcoin blockchain, and it is mined by a decentralized network of computers that solve complicated maths puzzles to verify transactions. By contrast, AMP is a token that runs on the Ethereum blockchain. On Ethereum, ETH is the only coin that can be mined. And miners mine ETH to process AMP transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Being an ERC-20 token has perks. Blockchains aren’t great at speaking to each other—you can’t get an Ethereum contract to work with a Bitcoin smart contract without some complicated engineering. However, it’s very easy for ERC-20 tokens to speak to one another, which means that AMP can be used in most other decentralized finance applications.
Secondly, unlike Bitcoin, AMP is a governance token, meaning that you can use it to exert influence over the network. One AMP is equivalent to one vote. Although voting is non binding but rather serves as signalling for the protocol.
While, like Bitcoin, AMP can be used as a means of payment or a store of value, its market price may be very volatile and so it may not be useful for payments or storing value.
Finally, AMP’s market capitalization is smaller than Bitcoin’s. As of April 2022, AMP’s market capitalization was estimated to be $1.2 billion, as compared to Bitcoin’s market capitalization of $800 billion.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about AMP, including an opinion that AMP is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of AMP prior to making it available on Wealthsimple Crypto and has concluded that AMP is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated AMP based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of AMP, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created AMP;
- The supply, demand, maturity, utility and liquidity of AMP;
- Material technical risks associated with AMP, including any code defects, security breaches and other threats concerning AMP and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with AMP, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of AMP.
Like all other crypto assets, there are some general risks to investing in AMP. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure.
In addition to these general risks, Further, the AMP community, Flexa and the AMP development team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of AMP have no recourse to , the AMP development team, affiliated entities or Wealthsimple if AMP declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading AMP. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.