Flare Networks: Revolutionizing Smart Contracts
A smart contract is a self-executing contract with the terms of the agreement between the counterparties being directly written into lines of code. Smart contracts hold many promises, allowing for the automatic and decentralized distribution of value and other digital assets in a secure, predetermined way.
The most popular smart contract platform at the moment is Ethereum. Ethereum smart contracts allow for design, development and scaling of thousands of versatile applications. Its Virtual Machine (EVM) Turing complete software enables simultaneous execution of operations by every node in the Ethereum network. Whenever smart contract transactions occur within the Ethereum blockchain, it takes computational power to validate them across the network. That's because Ethereum currently uses Proof of Work. Transactions require a fee in the form of “gas” which is paid with ETH. But there are some problems that have occured. Developing on the Ethereum network is not cheap anymore, and many DeFi projects are moving to other chains. Ethereum has had many scalability issues and problems with the fees. To make any change on Ethereum you have to wait for the transaction to be confirmed, and this might take a long time and cost a lot if the network fees are high. In simple words, the Ethereum network is currently inefficient, slow and expensive.
What is Flare?
And here comes a new project that wants to make smart contracts efficient, affordable and easily accessible to everybody. Flare Networks Limited is the company behind Flare Network, a new blockchain network that will have the EVM integrated and will be based on the Flare Consensus Protocol – the first Turing Complete Federated Byzantine Agreement protocol. Flare uses a modified version of the Avalanche protocol that uses Federated Byzantine Agreement (FBA), instead of Proof of Stake, as PoS systems are more vulnerable to Sybil attacks. Ethereum is transitioning to ETH 2.0, which will be a Proof of Stake network, and actually will create other problems, especially for DeFi projects. The only method to protect a network that uses Proof of Stake is to have the money locked that is greater than the value of what projects are tokenizing, and people won’t want to stake their ETH if they can get better returns from other networks and solutions, leading to a decline in the security of the network. Flare solves this problem by building a new way of scaling smart contract platforms that does not link the safety of the network with the value of its native token. Flare’s token is called Spark and is mainly required for spam control at the network, similar to XRP on the XRP Ledger.
Because the safety of the network is not contingent on the token itself (like in Proof of Stake networks), Spark can be used in ways which would be unsafe for other networks. First, Spark can be used as collateral within applications. Second, Spark as a contributor, but not the sole contributor, to an oracle providing on-chain time series data estimates, called the Flare Time Series Oracle (FTSO). Third, Spark as a governance methodology across all elements that rely on it.
Flare's goal is to make it possible for people to write smart contracts and deploy them across a number of different blockchains in a trustless manner, providing complete compatibility. Flare are positioning themselves to give users a high quality and low cost DeFi experience.
Flare exists to solve two key issues:
First, and of immediate importance to the building out of the industry is that 65% of the value that exists in public blockchains cannot currently be used in a trustless manner with smart contracts. In simple words, it means that many crypto, like XRP, Bitcoin, Litecoin and more that do not have smart contracts, can't be used trustlessly in other smart contract platforms and unlock their true value and use them on DeFi apps and add smart contract capabilites that can provide extra (passive) income opportunities and use cases.
Second, there are potential issues with how scaling is being implemented for smart contract networks today. The majority of new networks use Proof of Stake or its variants. These protocols derive network safety from their native token, while Flare Network solves that problem.
Flare allows for the creation of trustless IOUs (called “F-assets”) such as FXRP to interact with the ecosystem through a network of ‘agents’. Spark (FLR) is used as a collateral to secure the trustless issuance and redemption of F-Assets.
In simple words, through Spark (FLR) and F-Assets, the Flare Network will provide many passive income opportunities.
Spark (FLR) airdrop to XRP holders
100 Billion Spark (FLR) tokens will be created to mirror the quantity of XRP that exists. There are approximately 45 billion XRP tokens that do not belong to Ripple labs. The objective of the distribution is that XRP holders other than Ripple can claim approximately a 1:1 amount of Spark to their XRP holding. 45 billion Spark will be claimable by XRP holders and will be airdropped gradually once the Flare Network launches, as discussed here: https://flare.xyz/further-information-on-the-spark-token-distribution/
A snapshot was taken on the XRP Ledger addresses on December 12th 2020. XRP holders who had the XRP on supporting exchanges all they have to do is follow the announcements of their exchange and most will not need to do anything other than wait until the airdrop happens. If you used a non custodial (self-custody) wallet, you will receive your Spark directly to your wallet. The system will deliver them to the Flare address (Ethereum address format) with which you included for the claim. Flare uses the Ethereum Virtual Machine hence its addresses use the same format and same key derivation as Ethereum addresses.
Flare Finance airdrop to Spark holders
Flare Finance is the first (independent) project to be built on the Flare Network. It is a DeFi (decentralized finance) platform on the Flare Network bringing utility to Spark and other supported assets. Flare Finance will be launching 6 DeFi products that will serve as an all in one trust-free solution to traditional banking and investing.
Flare Finance will do an airdrop to Spark (FLR) holders. Distribution of the initial 40,000,000 YieldFlare will take place via an Initial DAO Offering. All holders of FLR (excluding the official Flare Foundation Addresses) will be airdropped a proportioned amount of the 40,000,000 DFLR (DAO Flare), which will then allow them to swap this for YFLR on the platform.
In simple words, XRP holders will get free Spark and Spark holders will get free DFLR/YFLR tokens.
Spark (FLR) = The native token of Flare Network, that will be airdropped to XRP holders.
FXRP = Trustless XRP IOU on the Flare Network.
YFLR = The native token of Flare Finance.
Overall, both Flare Network and Flare Finance are very exciting projects, which will make the DeFi experience better and bring further utility to many projects. With the rise of DeFi and smart contracts, crypto holders can now put their tokens to work to unlock more value, instead of just holding and waiting for price appreciation. The Flare Network highly incentivizes its users to participate in the network. It does so by giving them the ability to earn rewards in many different ways. There will be risk-free and low effort ways that users will be able to participate in the network and earn compounding yield.
Update June 2021: If you want to understand Flare Network and its ecosystem and see exclusive content, video tutorials and more, join my patreon: https://www.patreon.com/panosmek
Sources: