Original author: Haotian (X: @tme l0 211 )
Interestingly, @FlareNetworks proposed to provide a set of staking services for the XRP network, aiming to allow XRP holders to participate in other web3 application scenarios such as oracles and L2. Many people only saw the continuous surge in $XRP, but they didn’t know that $FLR also followed the 3-fold increase. I can’t help but ask, what is the relationship between Ripple and the Flare network? After BTCFi, will XRPFi also become a new narrative? Next, a brief summary:
1) Ripple XRP is a typical old currency. It was born in 2012 (much earlier than Ethereum). Its goal is to replace the traditional inter-bank SWIFT payment and settlement system and realize high-speed and low-cost cross-border payment applications.
Perhaps because of this, the design of the XRP network did not adopt the network mechanism of smart contracts, perhaps in order to focus on highly scalable payment performance, or perhaps there were no conditions at the time for the XRP network to carry more additional functions.
In short, XRP does not have a series of DeFi staking-related functions that are well known in the web3 environment.
2) XRP and @FlareNetworks met around 2021, when Flare announced that it would airdrop 15% of FLR, or 15 billion, to XRP holders. Why did FlareNetwork do this?
As mentioned in the background above, the XRP network does not have smart contract functions. FlareNetwork has launched the FAssets protocol, which can provide a set of cross-chain asset interoperability services for the XRP network, helping XRP to connect through the Flare network and other EVM environments.
This is similar to how @babylonlabs_io provides a POS staking income network for the Bitcoin network through a set of encryption algorithm protocols, allowing a network whose underlying assets do not have staking mining to indirectly realize the staking function.
3) Specifically: Users can deposit XRP into a specific address, and the Data Connector, a cross-chain node role, monitors and verifies the users deposit transaction on the XRP chain, and then mints F-XRP on the FlareNetwork with a 1:1 anchor relationship, and requires a certain amount of FLR tokens as collateral. The collateral rate will also be adjusted dynamically, and there is a certain liquidation mechanism to ensure security. Correspondingly, users can redeem the original XRP at any time to unlock the corresponding collateral.
It sounds like this is similar to the concept adopted by many Bitcoin layer 2 solutions to provide network expansion services for the Bitcoin network, that is, using a relatively technology-native method to allow an asset that is not subject to smart contract constraints to circulate in another heterogeneous network.
It’s just that, curiously, three years ago, FlareNetwork had already locked in on providing services for the XRP network. No wonder, this wave of Ripple’s surge also indirectly boosted everyone’s market expectations for FLR.
4) However, Flare is not satisfied with only providing FAssets cross-chain asset services. According to the idea of its founder @HugoPhilion, Flare wants to provide a similar set of native services for the XRP network, just like Babylon provides staking services for Bitcoin. This will allow XRP to flow into other public chain systems to expand the web3 application scenarios of XRP tokens, such as: oracle services, Layer 2, DID, etc.
Doing this is actually just continuing Flares original vision of providing network expansion for the XRP network, but if you think about it more deeply, you will find that it is not simple.
Because Bitcoin is no longer limited to its original reserve asset attributes, a BTC large-scale expansion ecosystem with hundreds of chains has been formed around Bitcoin. Babylon, as a key position, provides a set of native asset cross-chain services for the Bitcoin ecosystem, intending to support the entire Bitcoin layer 2 ecosystem.
If the network effect of XRP tokens is further enhanced, will there be a corresponding Ripple network enhancement and expansion ecosystem? Will it be the next XRPFi narrative trend after BTCFi?
If that is the case, one can imagine how significant the role that Flare will play in the Bitcoin ecosystem will be like Babylon.
