Saturday, April 2, 2022

Why choosing Flexa over Standard Layer 2 - What challenges is Flexa solving for vendors, partners, consumers, and why collateral is key."

Answer to r/TrollypollyLiving from r/lcanhazreddits post on April 2nd, 2022

I asked for a minimum of ten upvotes to write this piece - so it's a community request).

5 min reading time.

I try to be simple through simplifaction and reference a source for further in-depth reading.

Legend:

  1. Bitcoin Lightning LN2 and its challenges
  2. Collateral - How Flexa solves the challenge of LN2 with their product
  3. Tyler on fraud, malpractice, and attacks
  4. Collateral - AMP. How adoption will drive AMP price up. And how Vendors can buy in and pool to benefit from it / motivation for participation/partnering.
  5. Flexa offering that is special and or currently unique
  6. What's in for the consumer?

Abstract:

I hope you read till the end and find clarity. I could go deeper on many points; ask in the comment section.

If you see any failures or disagree, start a discussion with me in the comments, I'm not all-knowing; I try to do my best here and share what I know and believe.

Love you all, stay hAMPpy.

Let us start...

1. Bitcoin Lightning LN2 and its challenges

Although Lighting has proven to work and is solid, according to Investopia (2021), there are still three main challenges with Lightning:

  1. one remains around transaction fees and how the system works; varying fees, opening and closing channels, routing fees - dependent on network activity, risk of problems with lacking the incentive to process occurs, causing delays or failure.
  2. offline transaction risks (required to be online at all times)
  3. Malicious Attacks through forced congestion and effects of large price swings and mining.

Above is a simplification to get you a taste of the hustle that Flexa solves for its customers. Explained next. If you want to read it in detail, below is the reference:

Investopia (2021), Bitcoin's Lightning Network: 3 Possible Problems. Accessed, April 2nd, 2022, https://www.investopedia.com/tech/bitcoin-lightning-network-problems/

2. Collateral - How Flexa solves the challenge of LN2 with their product

That is what AMP is about. Instead of exposing a vendor or payment processor to the risk described above, Flexa uses AMP as collateral. Flexa achieves instant payment; instead of waiting to process the transaction, the vendor gets paid from the staking pool in AMP. If any of the above challenges occur, Flexa is handling this in the background; the vendor/partner does not have to care; 100% secure for him. He gets paid all the time and instant.

3. Tyler on fraud, malpractice, and attacks

He calls this economic finality (when the value of the transaction arrives in your books) and questions the speed that block gets mined to cover for large retailers. On June 15th, he speaks about that from its 55min to 68min span on a stream. He claims that Lighting and the BTC price was 40K at that moment, has not enough capacity to cover large retailers. BTC had 2.5m an hour in September last year. Wallmart is 100 million an hour alone, and at that time, he calculates the BTC could only cover 2.5% of this. And this is only Walmart, so the network has no chance to process a few trillion global retail markets. This is complicated - watch from 55:00 min to 1:10:00. The lack of capacity presents a risk of not reaching economic finality (that's a bummer, I would never expose my business to this).

The solution is Amps collateral; this is where Flexa steps in if you partner with them; they provide that collateral through AMP and ensure the funds will reach economic finality.

Tyler Spalding, (2021), EP76: The Founder of Flexa Amptoken Tyler Spalding debates going Parabolic, accessed April 2nd, 2022, https://www.youtube.com/watch?v=BfExbsJgGWU

4. Collateral - AMP. How adoption will drive AMP price up. And how Vendors can buy in and pool to benefit from it / motivation for participation/partnering.

Simplified: They can hold the amount (cash, crypto, etc.) the consumer wants to pay with at the vendor in a Flexa account. Then, until the transaction clears, use collateral to pay the merchant instantly—minutes 30 to 33 in the video. As I understand, they can keep it if the transaction doesn't clear - it's locked in that period. So you, as a staking party and the vendor, are safe if a wallet or credit card tries to cheat—a pretty neat and secure way of educating the market.

In this process, two events happen:

  • Flexa takes a fee from the vendor and buys AMP on the open market, and pays it back to the staker as a reward (they keep a small portion). So the participants providing the collateral in AMP to the pools are the winners in this game.
  • These purchases will affect buy pressure and drive the price of Amp up constantly. That mechanic will create the Tyler candles "watch Poseidon's video, it's funny, but the guy is intelligent and has good content."

Flexa, according to Tylor (2022), is very clear that participating partners should hold AMP, so they were selective with venture capital investors to be actual users / have a use case. Still, everyone can buy Amp and be part of the staking systems. I don't understand this well enough, but with the latest development, a vendor can open their pools and earn the fees themself if they own a piece of Amp in their pool. If someone has more insight, please make a post; I'm eager to learn this. They discussed around 58min to 1:05min in the video.

More details here:

Around the Coin (2022), Episode 336: Tyler Spalding, Co-Founder of Flexa. Accessed at April 2nd, 2022 https://www.youtube.com/watch?v=32_3fUPJJVA&t=12s

Poseidon (2022), is amp crypto a good investement? Two words: Tyler Candles. Accessed at April 2nd, 2022, https://www.youtube.com/watch?v=ggVhHA4DHmM

5. Flexa offering that is special and or currently unique

Point 4 describes the uniqueness and what makes Flexa truly special. So is this a trading coin? Questionable; I bought it to stake it and hope the price goes where it's enough to replace salary at one point. But yes, you can trade it at one point for good profits if that is what you are in for with your investment and if the adoption comes.

6. What's in for the consumer?

Nothing, as a consumer, doesn't care; he wants to pay. He doesn't have to know about Flexa or AMP. He spends like today. So that's why consumer-oriented commercials or marketing is not what Flexa should focus on.

If you see any failures or disagree, start a discussion with me in the comments, I'm not all-knowing; I try to do my best here and share what I know and believe.

Love you all, stay hAMPpy.

Disclaimer: this is all financial opinion, not advice, do your research.


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