What is Amp (AMP) and how to stake it? We will take deep dive into these questions in this guide along with the benefits and risks associated with staking Amp.
It’s become an increasingly popular way of earning passive income for the crypto community, to the point that the whole staking market has recently reached a value of $280 billion.
Not only can you earn interest on the crypto staked, but by staking, you also contribute to the security and decentralization of the network ecosystem.
It’s similar to having a savings account where, instead of a bank, you entrust a validator to hold your token or coin in exchange for proportional rewards paid out in the same cryptocurrency. Contrary to the interest earned with a bank savings account, though, the staking rewards in the crypto industry are much more attractive.
There are many staking options nowadays, and here we’ll look at how to earn Amp rewards. You can stake payments on Flexa, earn interest with Gemini, and learn about Amp to earn the token at Coinbase. Let’s see how you can get started.
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What Is the Amp Token?
Amp is an open-source ERC-20 token built on Ethereum as a collateral asset to facilitate fast and efficient value transfers for real-world applications. Amp helps users decentralize risk with smart contract features, purpose-built for collateral.
What Amp provides is a new collateral partition strategy designed to facilitate the interoperability in staking contracts. By using such partition strategies, Amp tokens can be allocated as collateral without requiring transfers to another smart contract, thus preserving asset custody while increasing the safety of staking collateral.
Two innovations make the Amp network unique: collateral managers and collateral token partitions.
- Collateral managers are smart contracts acting as escrow that can lock, release, and redirect collateral in partitions as needed to support value transfer activities. Collateral managers with Amp can be used by anyone in applications whenever value transfers or escrow accounts may be beneficial.
- Collateral token partitions can collateralize any account, application, or transaction whose balances can be directly verified on the Ethereum blockchain. Token partitions can be managed separately with Amp token contracts allowing different collateral managers to enforce rules upon separate and distinct spaces associated with the same digital address. This way, users can stake tokens without transferring them to a smart contract.
Amp as a Collateral Token
When transferring cryptocurrencies, several confirmations ensure the finality of the transactions. However, waiting for many confirmations may not be ideal when fast payments are required, for instance, in the case of merchant transactions. This has always been one of the main challenges cryptocurrencies face in real-world utility.
Amp acts as a clearing layer for transfers unlocking assets without waiting for several confirmations before being used efficiently. Using Amp as a collateral token, every Amp-related asset can be used immediately upon transfer and becomes a fast and secure medium of exchange for any digital or physical property, from fiat currencies to cryptocurrencies and Central Bank Digital Currency (CBDC).
How Does Amp Staking Work?
Amp is a scalable platform for collateralizing asset transfers. By staking Amp, any value transaction can be guaranteed, from digital payments to fiat currency exchange, loan distributions, property sales, and more.
The existence of collateral pools allows Amp to decentralize the risk of asset transfer in fraud-proof networks and real-world applications.
In return for staking Amp to a given wallet app, network participants receive a portion of the processing fees earned by the Flexa network for all transactions processed through that wallet.
How to Stake Amp on Flexa?
The most common and efficient way to earn passive income by staking AMP is to use the Flexa network through the official Flexa Capacity dApp.
However, other projects can use AMP as collateral for any form of value exchange via supported wallets and DeFi platforms.
Amp was created by Flexa, the company behind the Flexa network that enables fast and fraud-proof payments for merchants worldwide.
Flexa developed Amp in collaboration with Consensys. They built the first Amp collateral manager contract as open source. Flexa can secure fast payment authorizations by using Amp as collateral while the underlying asset remains unconfirmed and can approve merchant transactions in near real-time.
Stakers provide the collateral essential to Flexa Network to process merchant transactions. Token holders can put their Amp to work to collateralize payments on the network and get rewarded.
The token holder entrusts pools like the Flexa Capacity and instantly becomes an essential component in the network’s security infrastructure by staking Amp. This way, all staking holders use their collaborative power to make the network secure.
Flexa requires every wallet app to have its collateral pool which won’t be capped or closed. Anyone is free to buy and stake Amp in any pool — this is essential to ensure decentralization.
The annual percentage yield (APY), which is the annual earning that staking guarantees, depends on the number of transactions in a given wallet and the amount of Amp staked to that same wallet. Therefore, by providing 5% of the total staked Amp for a particular wallet, you would receive 5% of the total fees generated on Flexa by the users of that wallet.
Here’s the simple process to stake AMP on the Flexa network.
- Go to https://app.flexa.network and connect a cryptocurrency wallet like MetaMask or one of the available hardware wallets;
- Select one of the staking options displayed and click on the relevant option;
- The amount of Amp available will appear, then select the app to stake Amp and the quantity desired, then click ‘continue’;
- Wait for the confirmation, and you will see staked AMP balance and rewards appearing.
You may withdraw your staked Amp at any time by following the process below:
- Connect your wallet and click on ‘Move’;
- Choose the amount of Amp tokens to unstake and click continue;
- Wait for your collateral to unstake; timing depends on network conditions;
- Select "Move to wallet" to withdraw the tokens to your wallet. Click ‘Continue’;
- Wait for the transaction to confirm, and the AMP will be back in your wallet.
Earn Amp as Passive Income on Coinbase
Coinbase has been offering learning courses on cryptocurrency for a long time. When people complete the course, they earn some tokens or coins related to the course and get started on how to use cryptocurrency.
Earning AMP through Coinbase is not quite the same as staking the token because you won’t contribute to the security and functionality of the network by following the Coinbase educational course.
However, this method will encourage significant adoption, especially among new crypto enthusiasts who will contribute to improving Amp’s ability to collateralize applications for digital asset payments.
Earn AMP on Gemini
In 2020, Gemini was the first market to announce support for Amp, and through Gemini Earn, it pays interest to users in exchange for allowing Gemini to lend the token to third parties.
Like in the case of Coinbase, this type of passive income allows users to earn interest but not to secure the network, which only happens when staking directly through applications like Flexa.
Benefits and Risks of Staking AMP
Amp holders will directly benefit from staking when a wallet app becomes more successful. Users making more transactions within that wallet means that more rewards get distributed to the stakers of the collateral pool. Wallet apps performances contribute to the value of the Amp token, which contributes to the network's value.
This type of process has to be consistent over time. For the performance to be valuable, the number of transactions needs to grow along with the security and health of the network as collateralization of wallet apps becomes a crucial factor in the functional operation of the network.
The total staked volume of the Amp token offers a clear metric of the network's health; more staked Amp means that less number of tokens are available in the market, enhancing the scarcity property that can also drive the value of the crypto.
At any time, the staker is betting on the growth of the network; however, some may argue that this is true for every investment, not only in cryptocurrency.
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