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 does not adopt the network mechanism of smart contracts, perhaps to focus on achieving high scalability in payment performance, or maybe at that time there were no conditions to allow the XRP network to support 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 became associated with @FlareNetworks around 2021, when Flare announced it would airdrop 15% of FLR, which is 1.5 billion tokens, to XRP holders. Why did FlareNetwork do this?

As mentioned in the background, the XRP network does not have smart contract functionality, while FlareNetwork has launched the FAssets protocol, which can provide a set of cross-chain asset interoperability services for the XRP network, helping XRP connect with other EVM environments through the Flare network.

This is similar to how @babylonlabs_io provides a POS staking yield network for the Bitcoin network through a set of cryptographic algorithm protocols, enabling a base asset that does not have staking mining capabilities to indirectly achieve staking functionality.

3) Specifically: users can deposit XRP into a specific address, and the Data Connector, which acts as a cross-chain 'node,' monitors and verifies the user's deposit transactions on the XRP chain, subsequently minting F-XRP on FlareNetwork at a 1:1 pegged relationship, requiring a certain amount of FLR tokens as collateral, with the collateral ratio dynamically adjusted and a liquidation mechanism in place to ensure security. Correspondingly, users can redeem the original XRP at any time to unlock the corresponding collateral.

Listening to this, it is similar to the concept adopted by many Bitcoin layer 2 solutions that provide network expansion services for the Bitcoin network, namely using a relatively native technical approach to enable an asset without smart contract constraints to circulate in another heterogeneous network.

However, it is curious that FlareNetwork had already committed to providing services for the XRP network three years ago, and it is no wonder that the recent surge in XRP has indirectly boosted market expectations for FLR.

4) However, Flare is not satisfied with merely providing 'FAssets cross-chain asset services.' According to its founder @HugoPhilion, Flare aims to provide a similar native service for the XRP network as Babylon does for Bitcoin's staking services, allowing 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 so is actually just continuing Flare's original vision of providing network expansion for the XRP network, but thinking deeper reveals that it is not simple.

Because Bitcoin is no longer limited to its original reserve asset attributes, a vast expansion ecosystem around Bitcoin has emerged with hundreds of chains. Babylon serves as a key position, providing 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 further strengthens, could there be a corresponding expanded ecosystem for the XRP network? Could it be the next XRPFi narrative wave after BTCFi?

If that is the case, it is easy to imagine how significant Flare's role would be in the Bitcoin ecosystem as Babylon.