Proof & Assurance Market Protocol (AMP)
If you’re wondering what Proof or an Assurance Market Protocol is, you’re in the right place. Even after a look at the whitepaper, you can be a bit confused. As the crypto market evolves we see a growing number of trash coins, scams, duplicates, copies, and generally useless trash. Occasionally we see a solid coin with a quality team actually tackling a real market problem. Proof is one of those very few quality projects. I have yet to go a day without getting some sort of feedback from them. These are incredibly smart people who need a little help in the marketing department, but have the know-how to make this complex project happen. Mike is a BOSS and the team is equally high caliber.
- Proof is a utility token hosted on the Ethereum Block Chain.
- Now anyone can tokenize an asset. (Shipment, company, warehouse, conference tickets, etc.)
- Tokenized assets can be insured with the Assurance Market Protocol (AMP).
- Regular people can make money by doing exactly what multi-billion dollar banks currently do, researching and hedging their bets for or against the success of an insured asset.
- The fluctuations of the crypto market are hedged by placing real $money$ into an escrow account.
- The opportunity to make real profits and spur on innovation through crowd-based venture capital is awe inspiring.
My vision for a possibility of this platform is a van I bought coffee at recently, Drive Through Joe. I know, it sounds a bit sketch, buying coffee from a van, but it was really good coffee and I DON’T buy coffee from shops. Since they had been show such innovation by setting up as a StarBucks was being renovated, I wanted to support their ingenuity in timing. Let’s say they incorporate their LLC in New Jersey, they can tokenize the vision they hold for this coffee van. I buy $5K of the total $20K of tokens from this van operation and in exchange they agree to pay me 20% of *profits*. They also agree to pay insurers $500/mo in event they get a fine, robbed (not by the government), make someone sick, drive over a kid, or their van dies on them. That’s potentially a lot of insurance to pay-out so there is a lot staked that they will fail. I have faith that this idea will be a success because I see a real market need for them. They start accepting crypto and are therefore able to easily pay their monthly premium in ETH. They’re also able to share profits and pay their employees and get a rating commensurate with their worthiness to pay on their promises. Best part, we all made money by helping a small business succeed without any government protecting anyone from their own investment strategy.
Proof Solves Tokenization during a transition to crypto
Problem #1: What company understands tokenization?
Proof, while not the first, is the easiest to make a token. Just like shares of a company, you too can now tokenize anything without all the burdensome regulations imposed by governments. In the Proof Dashboard anyone can create a token of multiple classes, dictating the total number and price in several currencies. You have the ability to choose to make it private, exchangeable, connected to a smart contract, a legal contract, and you can market it with your own pictures. Everything you need for a successful ICO or tokenization. Put it on the blockchain that best fits your project, Proof for testing, Bitcoin, Ethereum, or HyperLedger Fabric. Oh an yes, that’s right, you read correctly you’ve got the ability to create an ICO landing page, hosted by Proof and can use their user interface (UI) to create a smart contract. Nowhere else on the internets can you find a company willing to take time from their day to not only host for you, but, create a platform to launch a token, help you troubleshoot, but guess what else. Failure protection. Don’t worry, it’s not some whack job socialist ponzi scheme, read on.
Problem #2: Mitigating the impact of frauds and failures
Here is the big solution, Assurance Market Protocol (AMP). Imagine buying the tokens of a startup yoga studio smoothie bar, what’s the chance you’re putting a dime anywhere near something like that. A bit difficult, right? How about this, you, like me are sure this will fail in an epic way, so we do research on the company. We then stake money against the asset otherwise to be looked at as in favor of its failure. Now there are 200K people who like us have done research on the people, project, vision, etc, and they believe it will succeed, so they want to support it. The asset holder (some people who put their money in to own tokens) want the project insured against fraud, failure, fire, a dead yoga student and a number of other catastrophes. Much like existing insurance products, Proof’s AMP platform creates an environment for just that to happen. Insurers can stake money in favor of the success of the token succeeding. Each month the company pays a what is equivalent to an insurance premium to the insurers. This is ALL written out in the token contract created at the time of creation.
What if Yoga Smoothies actually succeeds?
Now let’s be optimistic and say Yoga Smoothies is a huge hit and everyone loves it. They’re making record profits and are paying their premium on-time, every month to the people insuring their company (Jim LLC). Their pre-determined measures of success are met, now those of us who were wrong in our research and staked in favor of its EPIC FAILURE, lose our stake. That stake is split 47.5% to token holders/ YogaSmoothies because they succeeded in fulfilling their end of the contract. Another 47.5% goes to the insurers (Jim LLC) and lucky us, Proof Token holders get 5% of the awesomeness. This is however, quite unlucky for us who staked against Yoga Smoothies success, we lose all of our stake. With great reward comes great risk.
What happens when Yoga Smoothies fails?
Yoga Smoothies didn’t meet the pre-defined requirements for success. Now the people (Jim LLC) insuring this yoga studio got a monthly premium paid to them for 15 months and month 16 was the deadline. The deadline has passed and Jim LLC loses their stake which equated to 90% of the companies value. The insurers lose all their money with 47.5% going to the asset holder, Yoga Smootie or their token holders. If you’re with me and think Yoga Smoothies is stupid, then we just made 47.5% of the insured value because we did our research and successfully predicted the company’s failure. A fair bit of risk is socialized, but so is the gain, unless you’re a Proof token holder, then you win no matter what, with the missing 5% paid to you every time a payout is made.
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Other Cool Points of Proof
Project Investment Curation Process – When an asset is valued at over $100K USD AND is insured for more than 60% of that value, it is featured on the front page of Proof. This will be a centralized process conducted by Proof until the AMP platform is complete and able to complete the process based upon crowd knowledge. Buyers (Jill) need not worry about uncertainty when buying a tokenized asset. On the asset page, AMP integration allows the potential investor/buyer (Jill) to see how much of their investment is insured so as to make the most educated decision. The investor/buyer (Jill) is also able to review the insurance terms (are we insuring for earthquake damage in Southern California, or nuclear damage near Fukushima, Japan) as well as insurance payout triggers (insurance paid on failure to pay rent due to returns after Christmas returns, in January, fire, or robbery). All parties are able to see how much is staked for/against the asset as well. Best yet, a current, averaged rate of return is also posted along with the asset holder/token issuer’s rating combined with all the details of that rating.
Credit Worthiness & Reputation Ledger – Upon creation, Proof’s reputation system would average all token buyer ratings 1-5 Stars, then weight each rating based on the buyer’s holdings. If Bill Gates swoops in and buys $3M of an asset, he’ll get significantly more weight to his 4 Star rating than Bubbles from the trailer park who gave it a 1 Star review for his $20 worth of asset tokens. This all goes in to make a combined issuer rating. Now you can see a credible ranking of Yoga Smoothies based upon their previous business ventures and weed out scammers or the extremely high risk, brand new investments. It’s all stored on the Ethereum Blockchain, so no worries of it being manipulated after the fact.
Safe Holding of Fiat & Crypto – Proof users can use a credit card to buy crypto & sell it, initially, for USD or EUR credits. Proof is required to maintain money in a bank, though this bank has not yet been identified, which has both positives and negatives. In order to avoid being such an apparent scam like Tether, Proof created the Crypto Fiat smart contracts. This Crypto Fiat pegs Ether to EUR or USD in an Ethereum Wallet. This opens up a price prediction market, which leaves some obvious concern for market manipulation, but from my perspective, this is an acceptable level of risk due to the vast number of users and platforms on the ETH blockchain. The Crypto Fiat is designed to increase the ETH pool from commissions, which in my opinion will lead to potential failure or solvency problems at a minimum, due to speed of growth. This successfully mitigates exposure to theft, account freezing and flippant regulators thanks to the crypto being held by a smart contract.
Crypto – Fiat conversion – By allowing Proof users to switch from Crypto-USD (C-USD) and Crypto-Euro (C-EUR), any government censorship or arbitrary regulation is mitigated as well as small currency price fluctuations. I have great concern regarding the stability of this currency peg due to market laws. I simply fail to see a way to guarantee that a currency is always pegged to another, unless you run a large enough exchange, like Bitfinex, which would allow you to undermine any real market movements. Time will tell on this one.
Event Validation & Settlement Smart Contract (EVS) – It is long and sounds extremely complicated and it is, but this is the core of the platform. The EVS needs to ensure the contracts, both smart and written are compliant with the AMP platform, which is done in combination with prediction markets. EVS needs to read/write to control credit/reputation scores, read from the prediction market to reconcile with the token smart contracts and ensure control of the payout mechanisms, making it the most attacked and depended on protocol on the platform. It really is the proverbial keys to the kingdom. All the while, all money is locked up and controlled by this centerpiece.
Problem Mitigation (AKA Foresight) – This highlights just one reason I love Proof. They have incredible foresight. They’ve really taken the time to think through problems and are very honest about not having the answers to everything. They still provide their best answer, but recognize that significantly more work is needed to make the crypto space stable enough for mainstream adoption.
- Smart Contracts are seeded with a TON of ETH as a reserve.
- They want everyone to have the ability to buy fiat pegged tokens which contributes to the reserve.
- .5% of every fiat pegged token purchase gets tossed into the original reserve contract.
- 1% of each fiat pegged token purchase is a fee that mitigate price fluctuation.
- An ETH price prediction market is being created, which sounds very similar to futures trading, to put money into a big pot to actually support the pegged assets, unlike that scam garbage Tether.
Price Prediction Market – This generally utilizes Proof Token holders as backers of its value. If you didn’t realize that some of the ETH you contributed to the project was going towards backing a pegged asset, you should have read a little better. What that means is, if ETH price dumps in half today and $2M of C-USD is sold for USD on Proof, your money/seed funding is going to support that discrepancy. You also stand to gain based upon the exact same principle. Keep in mind, Proof token holders still benefit from all transactions. Members in the prediction market stake their ETH price predictions and win ETH based on those predictions. 10% of each stake is taken as a commission and put into a reserve fund. Reserve funds maintain 20% more ETH than the current market rate. This becomes incredibly difficult in markets like that of December 2017 where everything nearly doubled in 3 weeks. 30% of all commissions is given to Proof Token Holders (MORE MONEY) and 70% is put into the buffer fund. At present, the best plan to identify market movement and crypto price is through creation of an “Oracle”.
Oracle – This is just a fancy way of saying a running average of 20 of the highest volume exchanges to be sourced. This also removes outliers, but is still in need of some improvement in the future, which is conveyed in the whitepaper.
Safety – If you’re an early investor like me, this might make you cry inside, but it speaks volumes to the long-term stability of the company and platform. 50% of all proceeds were dedicated to the C-USD/C-EUR funds. Why might you cry? At time of the Pre-sale, ETH went from a peak to an ugly dip. The middle had the required 10 ETH minimum at around $2K. As of 29 Dec 2017, that’s $12K. You would have done way better in an ETH hodl than buying Proof, but that being said, we took a gamble to make this happen. Take the smart route and buy as much as you can on EtherDelta now that it’s basically free because the future is looking incredible.
Support the cause – 15% of all revenue Proof has promised to the Ethereum Foundation because they want to be a part of the solution rather than the problem. The ETH Blockchain has seen some incredible difficulties and Proof is stepping up, volunteering time to help better prepare it for coming change.
If this sort of thing interests you, I HIGHLY encourage you to check out Proof’s white paper, which I sourced all of this information from at, proofsuite.com/media/whitepaper.pdf
**That being said, they need to update their Apache and get some better site security to show a different error page, it’s vulnerable to a ton of different exploits.**
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