Please, if my understanding of how this works is incorrect I'd love to hear it.
But as I've come to know it,
- Bob spends his Bitcoin at Starbucks
- Starbucks is plugged into Flexa and so $4 of AMP is put up as collateral to guarantee that transaction
- The Bitcoin payment thus becomes "instant"
- Bob leaves with coffee
However, if there is a problem with the payment, if Bob finds a way to do a doublespend, then the AMP is liquidated in order to cover the cost of the coffee so the merchant loses nothing.
Ok, so a $4 cup of coffee is nothing, but what about a $10,000 or $25,000 purchase?
The problem being, a quick check on Messari reveals that the daily trading volume for AMP is only $1.2 million! That's literally nothing, an incredibly illiquid market with an orderbook that's probably not that deep. Liquidating $25,000 worth of AMP could be enough to meaningfully move the price of AMP down. Now you've just lowered the capacity of the network since the AMP collateral is worth less.
So basically, what I'm worried about is that the entire supposed capacity of Flexa is based on the price of AMP which is based on an extremely illiquid market that could crash in the event of a big liquidation.
Is this a real concern? Have I misunderstood the system somehow?
No comments:
Post a Comment