Amplify: Under the Hood
So what is Amplify? What makes it different from the many other exchanges out there, and how does it tie in with the Substratum Network?
Let’s take a closer look at the elements of this project.
We hope that by the time you finish reading, you’ll be as excited about Amplify as we are!
Amplify Exchange
Amplify Exchange launches in 2019 and aims to solve several pressing issues in the crypto world — issues that inhibit broader crypto adoption rates and create headaches for experienced crypto traders. Across two launch stages, we are creating an exchange that combines the security of a decentralized exchange with the speed and accessibility of a centralized one.
The Amplify Exchange will feature direct fiat-to-altcoin conversion options through a user-friendly interface — a vital and unprecedented feature for drawing in crypto novices. It will also offer advanced tools for more experienced traders, including charting capabilities, indicator suites, and basic order routing; traders can also custom code their own market indicators by using our scripting API.
Amplify Exchange is censorship-resistant because it operates on a peer-to-peer level via SubstratumNodes. Substratum node operators, who already use the Substratum network to provide censorship-proof internet access, can opt to handle routing and consensus labor for the exchange by operating an Amplify node in tandem. Amplify node operators will earn AMPX tokens alongside their SUB income stream; AMPX tokens will serve different uses as the exchange matures from stage one to stage two — which we will dive into more detail about below.
Stage One: Amplify Distributed
Amplify Distributed is the first phase of the Amplify Exchange; it operates similar to a centralized exchange. Backend web services similar to those supporting other exchanges will launch Amplify Exchange’s trading capabilities, including its many groundbreaking tools such as direct fiat-to-altcoin conversions. During this stage, traders will use AMPX tokens to pay exchange fees. The token is also used to convert fractional cryptocurrency value — which is commonly referred to as “Crypto Dust” — into AMPX; this solves the problem of holding values of cryptocurrency lower than the minimum trading, transfer, or withdrawal limit that usually sit idle in a users wallet.
Stage Two: Amplify Decentralized
Much of the infrastructure put in place in Amplify Distributed sticks around in phase two — Amplify Decentralized — but the heavy lifting of transaction management moves entirely to the Substratum network. In this truly decentralized phase, AMPX tokens aid a proof-of-stake process for adding new blocks to the exchange blockchain. Nodes will stake AMPX for the right to add a new block, earning additional AMPX (which are still also used to pay trading fees) if they win. Amplify’s unique Popularis protocol alternates reward distribution between even and odd blocks, ensuring that those who stake more of their wealth earn more overall by validating odd blocks, yet, those who stake relatively lower amounts of AMPX still benefit from an equal distribution of the block rewards by validating even blocks. Ultimately showing a democratic consensus method never before seen by the crypto community.
Decentralized exchanges offer many advantages over commonplace distributed exchanges. In addition to providing what many argue is a more ideologically consistent cryptocurrency exchange (why should a tool for decentralization funnel through a centralized entity?), decentralized exchanges are far less vulnerable to hacks. Hacking a decentralized exchange requires not just breaking into a hot wallet, but hacking the exchange’s blockchain — a virtually impossible task.
So why aren’t there more decentralized exchanges out there? The main obstacle is scalability. Decentralized exchanges can grind to a near-halt as the transaction volume that takes place on them increases; this is basically what happened to the Ethereum and Bitcoin networks about a year ago during “crypto-mania.” Decentralization is secure and egalitarian, but it’s not fast. That’s why the Amplify Exchange isn’t purely decentralized. Instead, it’s a decentralized/distributed hybrid managed through the Amplify Bridgechain.
Amplify Bridgechain
The Amplify Bridgechain bridges the gap between distributed and decentralized protocols. It provides a direct mirror between Decentralized and Distributed Amplify. The Amplify network handles off-chain transactions validated through decentralized nodes before syncing them to the Bridgechain distributed ledger, combining the security of a decentralized exchange with the speed of a distributed one. Amplify node operators earn AMPX when they add blocks to the Bridgechain.
SubstratumNode
Amplify isn’t starting from scratch — it’s simply a new addition to our team’s ecosystem that complements the SubstratumNode. These nodes handle internet routing requests via a peer-to-peer network of node operators who receive compensation in the form of SUB tokens for routing traffic and hosting web content. The Substratum network is open-source and dependent on the spare computing resources of node operators. Substratum’s peer-to-peer structure renders it immune to outside interference whether it’s outright censorship from government bodies (e.g., the “Great Firewall of China”) or throttling and network manipulation from Internet providers.
The Amplify Exchange is going to change the game when it comes to cryptocurrency trading. It offers something to everyone in the cryptocurrency world, whether they’re an experienced trader looking for institutional-quality tools or a newbie interested in exchanging a few dollars for a new altcoin. A unique hybrid decentralized/distributed design ensures that this exchange will stay secure, user-friendly, and liquid. No matter what element of the Amplify Exchange interests you most, we hope you’ll join us on this journey to the next era of crypto exchanges!
