Cryptex's TCAP vs Alongside Crypto Market Index (AMKT)
Cryptex's Total Crypto Market Cap Token (TCAP) and the Alongside Crypto Market Index (AMKT) token are two different types of crypto index tokens that have been created to provide users with access to a variety of digital assets. Both tokens have some key differences that make them unique.
In this article, we'll explore the differences between Cryptex's TCAP and AMKT tokens and how they can be used to access digital assets.
The Cryptex Finance team has created Total Crypto Market Cap (TCAP), an Ethereum smart contract that tokenizes the total market capitalization of all cryptocurrencies and tokens listed by established crypto data providers. This token represents the market cap of the entire crypto market, and is similar to an exchange-traded fund (ETF) or index fund in traditional finance. It offers investors exposure to the wider crypto market by tracking an index of thousands of crypto assets, while providing stability due to the law of averages. The TCAP token is produced via the Cryptex protocol, a set of smart contracts built on Ethereum blockchain, which is governed by the ERC-20 governance token CTX.
Cryptex Finance, a company created by former investment manager Joseph Sticco, Ethereum developer Preston Van Loon, and Thomas Matzner, developed TCAP. This token is generated through the Cryptex protocol, a series of smart contracts that runs on Ethereum. The Cryptex protocol is managed with CTX, an ERC-20 governance token.
The value of TCAP is determined by a straightforward calculation. It takes the total market capitalization of several thousand cryptocurrencies and divides it by 10 billion. For example, if the total crypto market cap of the TCAP token index is $350 billion USD, the price of TCAP would be $35. Unlike fiat-backed stablecoins such as USD Coin (USDC), which are pegged to the dollar and maintain a fixed price, TCAP’s value fluctuates with the trends of the larger cryptocurrency market. The data that informs TCAP’s price is sourced through Chainlink, a decentralized network that provides price data from various sources to the Cryptex smart contract via oracles.
To mint TCAP, you must deposit enough ether (ETH) or DAI into a vault smart contract to back the token with 200% collateralization. You must keep the value of your collateral above this ratio or risk having it liquidated. You can retrieve your collateral by repaying the borrowed TCAP, which will then be burned. A fee is attached to this burning process that is allocated toward protocol development.
Cryptex governance works by allowing users who hold more than 100,000 CTX tokens to propose changes to the protocol. Additionally, users can delegate their CTX to another user to vote on their behalf. This means that any new products or changes to the code must have widespread support from the community. However, the Cryptex protocol is not completely decentralized as the Cryptex Finance team holds "guardian keys" which can be used to pause deposits and TCAP minting in the event of a bug or hack. This does not stop users from withdrawing their collateral. The cryptex token is also earned by providing liquidity in decentralized exchanges (DEX's) such as Uniswap.
TCAP is intended to meet the demand for financial products that give exposure to the crypto market as it matures. This sector is competitive, with cryptoassets such as AMKT, BASE, Phuture and DPI index tokens vying to offer indexes. The growth of these crypto derivative assets reinforces market stability and long-term crypto market development.
There are a few differences between the Alongside Crypto Market Index and TCAP:
- AMKT is fully collateralized by the assets it represents whilst TCAP is synthetic and backed by Collateralized Debt Positions.
- AMKT is fully redeemable for its underlying assets, whilst TCAP is not.
- AMKT currently does not have a governance token, each AMKT entitles its holders to a share of the vote inside the AMKT DAO whilst TCAP uses the Cryptex token for governance.
- AMKT's assets are held in secure custody by Coinbase Custody, whilst TCAP collateral is held on-chain.