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Jun 23, 2022

Flare Network (FLR): A Spark for Cross-Chain Interoperability

The XRP Ledger is considered to be a global foreign exchange and payment network. Even though it’s fully optimized for these aforementioned uses, XRP Ledger’s functionality is relatively limited. Flare Network’s blockchain project is designed to expand XRP’s functionality by supporting smart contracts with the XRP token. As a blockchain network, Flare is built with the Flare Consensus Protocol. The native token of Flare Network is a pegged and algorithmically managed stablecoin, with the goal of maintaining consistent usage costs and facilitating DeFi use cases. Here's a closer look at Flare Network and its native FLR token.

What is Flare Network?

The Flare Network is a decentralized blockchain system that uses the Flare Consensus Protocol. While proof-of-work (PoS) systems typically have scalability limits, Flare pushes past these limits with a permissionless network that consists of a stabilized coin.

Flare Network (native token: FLR) is a new project that's set to fully launch during summer 2022. Over the past few years, the Flare Network team has worked on customizing, integrating, auditing and verifying every building block of the network's infrastructure to ensure that the entire system is well-designed. Keep in mind that this system is the very first Federated Byzantine Agreement protocol. The main use case for this network involves providing inputs for DeFi platforms.

The reason why Flare Network is widely anticipated by DeFi platforms — as well as crypto investors — is because of the difficulties of obtaining consensus in a standard decentralized system. The most advanced decentralized networks are tasked with implementing incentivization models and cryptographic proofs to display Byzantine fault tolerance and synchrony. Flare Network is well-equipped to handle these tasks.

Flare Network's native token is referred to as Spark (FLR). The purpose of this token is to make sure that spam attacks are prevented. After all, if transactions were completely free of charge, users would be able to spam and congest Flare Network with pointless transactions.

Flare Network: FLR Utility

Some of the additional functionality of Flare Network’s Spark token extends to:

  • Providing data via an on-chain oracle

  • Taking part in protocol governance

  • Collateralization of decentralized apps

The three aforementioned use cases facilitate an ecosystem that relies on Spark. This ecosystem comprises what are known as Spark Dependent Applications, which accommodate trustless token representations on different networks. Even if another network doesn't support smart contracts natively, Spark allows for cross-chain interoperability. A trustless version of the XRP token, known as FXRP, is available on the Flare Network and can be made (and later redeemed) by any XRP holders via smart contracts.

In July 2021, Flare Network took the initiative to provide XRP holders with a sizable airdrop that amounted to 100 billion FLR tokens. When the subsequent airdrop begins at the launch of Flare, all eligible XRP holders will immediately receive around 15% of the Flare Network Spark tokens that they can claim. After the initial airdrop, holders are allowed to claim an additional 3% of tokens each month, for anywhere from 25–34 months.

Keep in mind that every XRP owner is able to claim the FLR token. It's also possible for XRP holders to claim more than one Flare Network spark token for every XRP token. The airdrop is slowly being rolled out, in order to make sure that users don't instantly sell all of their FLR tokens after receiving them (which would likely lead to a massive price drop).

While many XRP owners are interested in using Spark and Flare because of the utility created by these tokens, a small percentage of individuals are only looking to claim Spark because it’s essentially “free money.” Another step that’s been taken to mitigate the potential for negative effects from the airdrop involves limiting the amount of liquidity available on the market at any given time. The lengthy unlock process naturally reduces total liquidity.

While the main Flare Network launch is being planned, the team behind this network has reached several notable milestones. For instance, the decentralized consensus model was introduced, which allows for validation to be shifted to FTSO (Flare Time Series Oracle) providers. This milestone has made it possible to properly launch Flare.

To make sure that glitches and other technical issues are kept to a minimum during the Flare Network launch, the reputable firm known as Trail of Bits performed a comprehensive audit, which began on May 16, 2022 and ended after the first week of June. On June 16, the results of the audit were announced. The audit found no significant defects or flaws that could negatively impact the network, which means that the Flare Network launch is still set for July 4.

Not 2020’s Flare Network

Flare Network was first introduced in 2020 and was meant to launch that same year. The purpose of the first iteration of Flare Network was to create a chain that would accommodate a few tokens from L1 networks that could be used alongside smart contracts. However, Flare Network quickly decided to pivot away from their original direction. By expanding their scope and performing additional research and engineering before the Flare Network launch, the Flare Network team was able to build something much more promising.

The latest Flare model offers advancements in cross-chain functionality with decentralized systems. Before now, token bridging was only possible by using systems that were mostly centralized. As such, token bridging was effectively a digital version of the standard banking model. The options that were fully decentralized were considerably slower, which meant that investors were tasked with choosing between a slow system and an unsafe one.

Flare is designed to be an advanced network that features cross-chain interoperability. This system will facilitate a fully decentralized cross-chain future, which is considerably safer than the current alternative. The open protocols that Flare Network provides allow developers to create many different kinds of interoperability solutions. At the moment, Flare is developing three interoperability products, which extend to

F-Assets, LayerCake and Relay. Their goal is to connect everything, while still maintaining a decentralized system.

The rollout phase of the three interoperability products mentioned above is set to be coordinated directly by the team at Flare Network. To make sure that the Flare ecosystem has the level of connectivity that it requires to grow and thrive immediately after launch, they’re providing developers with a comprehensive incentive program.

Relays and bridges that use the Flare Network are going to be developed by third parties before being certified by the team at Flare. In the months following the Flare Network launch, a Flare Foundation Grants Program will be introduced to accommodate developers who want to scale the Flare ecosystem.

What Makes Flare Network Special?

The Flare Network and the FLR coin have already been met with optimism by the crypto community because of how the system works, and what it will do for cross-chain interoperability. Once Flare Network is introduced, interoperability without any amount of centralization becomes possible. This network is designed to integrate EVM (the Ethereum virtual machine), a system which is able to convert smart contracts into a list of instructions that computers can properly read. As such, the network can run smart contracts that are Turing-complete. This term means that nearly every type of computational task can be run as long as the system has enough memory for the process.

Once the network is up and running, it will create a well-realized ecosystem of decentralized apps, which ensures that smart contract networks are able to properly scale. Flare is based on Avalanche, a consensus protocol that works well with the Federated Byzantine Agreement, mentioned above,.  a consensus mechanism that networks like Stellar and XRPL use. Because of how this system is designed, it doesn't rely specifically on PoS to ensure that the network remains secure.

Relay

This feature of the Flare Network involves safely and properly relaying all types of information between any chains. The information that can be relayed includes off-chain data. These relays are secured via the

State Connector. One use case involves a relay being set up between Solana and FTSO prices.

F-Assets

F-Assets outfits chain tokens that don't have smart contracts with smart contract functionality. Some of the tokens that can gain smart contract functionality with Flare include XRP, DOGE, BTC and LTC.

LayerCake

LayerCake is a unique addition to the Flare Network that helps to create decentralized bridges that connect smart contract platforms. As mentioned previously, it's possible to make a bridge between Solana and Flare. Keep in mind that Flare doesn't even need to be part of the bridge. A third-party chain between Solana and Ethereum can be secured directly by Flare.

Spark vs. Ether (FLR vs. ETH)

To gain a more in-depth understanding of the Flare Network, it's important to compare the FLR coin with the ETH coin. Tokens like ETH are set to use the PoS consensus mechanism once Ethereum 2.0 launches. When this occurs, validators who are responsible for staking this token will essentially provide security for the Ethereum Network as a whole. As such, Ethereum's security largely depends on how much of the token is currently staked. However, this requirement isn't necessary with the FLR coin.

By eschewing a mechanism like PoS, the FLR coin can have many different uses. This would be challenging, and potentially dangerous, for systems like Ethereum, which use the token for security reasons to expand its use cases. Because of the way the FLR coin was designed, it has more versatility without needing to take security into account.

FLR Tokenomics

The FLR coin is considered to be an inflationary token. FTSO will pay out any newly minted FLR coins. The payout rate is set to 10% each year of all FLR tokens. However, the FTSO platform acts as though all 100 billion tokens have been completely unlocked and distributed. But because FLR tokens are set to unlock over an extended period of time, early FLR holders will likely earn a higher return percentage.

All FLR tokens that users don't claim during the first six months following the initial snapshot date will be burned. As mentioned previously, 15% of these tokens will be unlocked at launch, with an additional 3% being unlocked each month after the initial six-month period. The current FLR price is right around $0.31, with a total supply of 450,000 tokens. The price has remained relatively consistent over the past month, with a high of $0.456 on June 2, 2022.

Is FLR a Good Investment?

Flare has already created an extensive road map, which begins with the main launch of the network as well as distribution of the first 15% of FLR coins. The next phase of development involves a governance proposal in regard to token distribution. The purpose of this proposal is to increase incentives for users to engage with Flare Network, get rid of the risk associated with an exchange not passing on token distributions, and introduce positive tax benefits that allow token recipients to avoid taxation on their holdings until they withdraw them from the Flare Network.

Keep in mind that the vote on the governance proposal is only set to take place after 75% of the 15% distribution occurs. The next step that the FLR coin and network will take involves the Songbird bridge launch, which allows Songbird tokens to bridge directly with FLR coins. The final stage of the road map involves the launch of batch two of LayerCake bridges. These bridges will ensure that Flare is connected to every popular smart contract chain.

Flare’s system offers tangible cross-chain interoperability benefits that aren't available with any other network. Once Flare and the Flare Network Spark token are launched, all networks will be given the ability to create decentralized bridges with one another. Even if a bridge doesn't lead to or from Flare, the Flare Network will secure the bridge.

Since Flare Network’s Spark tokens already have strong connections to established cryptocurrencies, you can be confident in making an FLR investment. The many benefits of investing in Flare Network Spark tokens include:

  • Direct connection to XRP cryptocurrency

  • A strong team that's headed by Hugo Philion and Sean Rowan

  • Already listed on numerous exchanges

  • Predictable governance system

  • Many practical use cases

  • Compatibility with multiple wallets

FLR Price Prediction

In general, it's impossible to predict Flare Network’s Spark token price over the next few years. However, the structure that the Flare Network has taken means that the FLR coin should be relatively consistent. FLR is comparable to other Layer 1 coins like ETH.

Looking specifically at ETH, it had consistent growth in the first few years that it was on the market. The value of Ether would eventually increase rapidly at the beginning of 2021. FLR is likely to have a similar trajectory, which means that the coin's market gap should grow at a steady rate over the next few years.

The Bottom Line

We hope that our guide to Flare Network has helped you understand what it is — and how its native FLR tokens are further advancing the industry and providing other networks with the opportunity to achieve fully decentralized cross-chain interoperability. Once Flare Network launches on July 4, 2022, you should begin to see signs of the platform's effectiveness, as well as its potential for long-term growth.