Right now, this just stores a reference to the effect which is instantiated in the material. The effect instance can have parameters, but this is rarely used in the wild, so it is not yet implemented.
<material id="cos_bluegrit_FX_glow" name="cos_bluegrit_FX_glow">
<instance_effect url="FX_Particles.bdae#FX_Particles-fx">
<setparam ref="Diffuse-surface">
<surface type="2D">
<init_from>light001.tga</init_from>
<format>A8R8G8B8</format>
</surface>
</setparam>
<setparam ref="Diffuse" sid="Diffuse">
<sampler2D>
<source>Diffuse-surface</source>
<wrap_s>WRAP</wrap_s>
<wrap_t>WRAP</wrap_t>
<minfilter>NEAREST</minfilter>
<magfilter>LINEAR</magfilter>
</sampler2D>
</setparam>
<setparam ref="DiffuseColor">
<float4>1 1 1 1</float4>
</setparam>
<setparam ref="DiffuseSampler_scaleoffset">
<float4>1 1 1 1</float4>
</setparam>
<setparam ref="alphaFade">
<float>1</float>
</setparam>
<setparam ref="DiffuseTint" sid="DiffuseTint">
<float4>0.05000001 0.10000002 0.15000004 1</float4>
</setparam>
<setparam ref="DiffuseSampler_alpha-surface">
<surface type="2D">
<init_as_null/>
<format>A8R8G8B8</format>
</surface>
</setparam>
<setparam ref="DiffuseSampler_alpha" sid="DiffuseSampler_alpha">
<sampler2D>
<source>DiffuseSampler_alpha-surface</source>
<wrap_s>NONE</wrap_s>
<wrap_t>NONE</wrap_t>
<minfilter>NONE</minfilter>
<magfilter>NONE</magfilter>
</sampler2D>
</setparam>
<setparam ref="falloff">
<float>2</float>
</setparam>
<extra>
<technique profile="Glitch">
<setparam ref="FX_Particles-fx-profile_GLES2/CurrentTechnique">
<string>Ad_FALLOFF</string>
</setparam>
</technique>
</extra>
</instance_effect>