A brief history
Built through close collaboration and partnership between Flexa and ConsenSys, Amp is a new staking platform designed to support the instant and verifiable collateralization of any type of value transfer. With cryptocurrencies, such as BTC for example, even though a transaction may show up in a receiver's wallet within seconds, the transaction is not fully confirmed until much later (30 to 60 min in most cases). That long wait time is what AMP and Flexa aim to solve. By using AMP to insure against loss, the Flexa network allows a merchant to accept an instant crypto transaction. The merchant pays a fee to accept cryptocurrency payments via the Flexa network. The Flexa fee is usually about 1% (compared to 3% from most credit card companies), but if a customer pulls off a double spend or there is some other problem with the crypto payment, the Flexa network reimburses the merchant.
AMP in practice
AMP tokens can be used as collateral through a simple process. First investors purchase AMP and stake it on the Flexa network. This stakes AMP and then acts as collateral against loss. If a merchant were to not receive their crypto payment staked AMP gets liquidated to cover the loss. Additionally, the 1% transaction fees that each merchant pays are used to buy AMP on the open market to be distributed to AMP stakers. With this model, you can see how AMP and Flexa work together to create a decentralized solution to crypto payments. The merchant can accept instant (zero confirmation) payments since they are insured against loss, and AMP stakers receive a passive income while accepting the risk that a small portion of their tokens could be sold to reimburse a merchant. Theoretically, the more merchants that accept crypto payments via Flexa, the higher the staking yield- where the staking yield comes from real-world use and does not depend on constant token inflation.