Flare aims to provide a similar set of native services for the XRP network, just as Babylon provides staking services for Bitcoin.
Written by: Haotian
It’s interesting that @FlareNetworks proposed to provide a staking service for the XRP network, aiming to allow XRP holders to participate in other web3 application scenarios such as oracles and Layer2. Many people only saw the continuous surge of $XRP, unaware that $FLR also followed with a threefold increase. One can't help but ask, what is the relationship between Ripple and the Flare network? After BTCFi, will XRPFi become the new narrative? Next, let’s briefly sort it out:
1) XRP is a typical old coin, born in 2012 (much earlier than Ethereum), aiming to replace the traditional SWIFT payment and settlement system between banks, achieving fast and low-cost cross-border payment applications.
Perhaps because of this, the design of the XRP network did not adopt a network mechanism for smart contracts, possibly to focus on achieving high scalability in payment performance, or perhaps at that time there were no conditions for the XRP network to bear more additional functions.
In summary, XRP does not have a series of DeFi staking-related functions familiar to everyone in the web3 environment.
2) XRP and @FlareNetworks got together around 2021, when Flare announced it would airdrop 15% of FLR, which is 15 billion tokens, to XRP holders. Why is FlareNetwork doing this?
As mentioned earlier, 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 the Flare network and other EVM environments.
This is similar to how @babylonlabs_io provides a POS staking yield network for the Bitcoin network through a set of cryptographic algorithm protocols, allowing an underlying asset that does not have staking mining to indirectly achieve staking functions.
3) Specifically: Users can deposit XRP into a specific address, with the Data Connector acting as a cross-chain 'node' monitoring and verifying user deposit transactions on the XRP chain, and then minting F-XRP on FlareNetwork at a 1:1 pegged ratio, requiring a certain amount of FLR tokens as collateral. The collateralization ratio will also be dynamically adjusted, with a certain liquidation mechanism to ensure safety. Correspondingly, users can redeem the original XRP at any time to unlock the corresponding collateral.
Listening to this, it is similar in concept to many Bitcoin layer2 solutions that provide network expansion services for the Bitcoin network, using a relatively Native technical approach to allow an asset that does not have smart contract constraints to circulate in another heterogeneous network.
However, what’s curious is that FlareNetwork locked in to provide services for the XRP network three years ago. No wonder this wave of Ripple's surge has also indirectly boosted everyone's market expectations for FLR.
However, Flare is not satisfied with only providing 'FAssets cross-chain asset services'. According to its founder @HugoPhilion, Flare aims to provide a similar set of native services for the XRP network, just as Babylon provides staking services for Bitcoin. This approach allows XRP to flow into other public chain systems to expand the web3 application scenarios of XRP tokens, such as oracle services, Layer2, DID, etc.
Doing so is actually just continuing the vision that Flare initially had for providing network expansion for the XRP network, but if you think deeper, it’s not that simple.
Because Bitcoin is no longer limited to its original reserve asset attributes, a vast ecosystem of BTC expansion has emerged around Bitcoin. Babylon, as a key player, provides a set of native asset 'cross-chain' services for the Bitcoin ecosystem, aiming to support the entire Bitcoin layer2 ecosystem.
If the network effect of the XRP token further strengthens, could there also emerge a corresponding expanded ecosystem for the Ripple network? Will it be the next XRPFi narrative trend after BTCFi?
If that’s the case, one can imagine how significant Flare's role as Babylon in the Bitcoin ecosystem would be.
