Flare (FLR): what it is and how it works

What Flare (FLR) is? Flare is a blockchain that operates on Layer 1 Proof-of-Stake. It is compatible with Ethereum Virtual Machine (EVM) and aims to achieve interoperability. The platform has developed in-house native protocols: State Connector, Flare Time Series Oracle (FTSO), and Layer Cake. Flare (FLR) aims to offer seamless integration and enhanced functionality by leveraging these technologies. If you want to learn more about Flare (FLR) and how its technology works, feel free to explore the platform in detail.

What is Flare (FLR), and how did it come about?

The project started in 2020 with three computer science students from University College London, Hugo Philion, Sean Rowan and Dr. Nairi Usher. They were intensely interested in Distributed Ledger Technology (DLT) and its practical applications. The team’s innovative ideas made Flare a considerable success among investors from the beginning. They raised around USD 11 million from various investment funds in the sector. However, the team changed its path at some point, modifying the issuing strategy and the token’s name without changing the project’s mission. In the first whitepaper version, the protocol’s native token was supposed to be called Spark. After the update, the team decided to call it Flare (FLR).

How Flare works (FLR), focus on interoperability!

Let’s delve deeper and explore the technical aspects of Flare (FLR) to understand what it is and how it functions. As stated, Flare is a Layer 1 blockchain incorporating three advanced protocols: the State Connector, Flare Time Series Oracle (FTSO), and Layer Cake. Let’s take a closer look at each of them to gain a better understanding.

Flare Time Series Oracle (FTSO)

In order to understand the Oracle Flare Time Series and its functioning, one must first comprehend what an oracle is. An oracle is a service that provides external information to smart contracts from sources outside the blockchain. It is responsible for verifying and authenticating external data sources through trusted APIs and transmitting this information. This service provides information such as cryptocurrency, commodity and stock prices, accurate time and even sports game results. 

Usually, blockchains rely on providers to offer this service, with Chainlink being the most well-known centralised entity. However, the team behind the Oracle Flare Time Series project decided to create a decentralised smart contract, the FTCO, that extracts information from multiple sources, averages the most reliable ones, and brings the data on-chain.

This smart contract securely handles incoming data from outside the network. However, unlike other smart contracts, it only focuses on the state of other blockchains. It can read data and the amount of cryptocurrency in wallets of all blockchains except Flare. 

The main difference between these two protocols is the data type they process. The State Connector handles everything related to blockchain, including state, consensus, and transactions. On the other hand, the Flare Time Series Oracle (FTSO) mainly deals with real-time data updates that are not part of this category.

Flare’s mission is to increase the interoperability of the entire blockchain industry. They achieve this through the State Connector, which allows monitoring of all blockchain activities and facilitates the transportation of assets between different networks. 

Flare’s bridging system stands out for its security, which is ensured by an insurance mechanism for users. Users must lock their funds into a smart contract to transfer funds from one blockchain to another. The transfer can only occur if a bandwidth provider has blocked sufficient tokens to allow the transfer to occur. 

This process significantly increases security by limiting the amount of funds that can be stolen in case of an exploit by hackers. However, it also slows down the transfer process. Flare’s team has set a speed limit to make it even more secure. Therefore, it is recommended to use this blockchain for medium to large amounts of value movement.

The FLR token and its airdrop

Once we have a good understanding of the technical aspects of the Flare protocol and its functioning, we can dive into the FLR token, which is the native cryptocurrency of this system. To begin with, it’s important to note that this digital asset was given out to Ripple (XRP) holders in December 2020. To identify the wallets that were eligible for this free token distribution, the Flare team took a snapshot of the blockchain state, which is commonly known as a snapshot in technical terms.

The distribution of FLR tokens was done at a 1:1 ratio, meaning that holders of Ripple were given one FLR token for every XRP they held at that particular moment. However, this distribution process was not completed as planned, as the team decided to make some changes to limit inflation on the token and prevent excessive selling pressure. The airdrop started in January 2023, with 15% of the total tokens being credited to eligible users’ wallets, and this distribution will continue gradually over the next three years.

After analysing Flare’s (FLR) airdrop distribution, let’s take a closer look at its tokenomics:

FLR: use cases

To fully grasp the Flare (FLR) concept and its functioning, it is also essential to analyse its utility token’s various use cases. We have already discussed the primary use case, which involves bandwidth providers. These providers assure the security of cross-chain exchanges and receive rewards in FLR, which serves as an incentive to support the network.

In addition to this, Flare (FLR) also functions as a governance token, giving its holders the right to participate in blockchain improvement proposals. Furthermore, the token allows its holders to earn rewards by delegating FLRs to ensure the security of the FTSO.

In conclusion, Flare (FLR) is a Layer 1 blockchain that facilitates interoperability. Thanks to its high-security standards, it has the potential to revolutionise value transfers between different networks in the crypto world.