There is so much happening with Ripple these days, and to think they are behind Flare (are they?) is bigger than that. I've learned that just focusing on this section of BTCTalk isn't always enough to keep my investing skills sharpened.
From
https://flare.xyz/Unlocking Value
~ 75% of The Value of Blockchain Tokens is Inaccessible to Decentralised Applications.
That changes now. Starting with XRP.
Introducing Flare
The world's first Turing complete FBA network
Scalable and doesn’t base safety on a native token.
No risk of safety degradation from competing uses of native token.
Integrates Ethereum Virtual Machine.
Deep pool of developer talent and easier integration of existing projects.
Low transaction costs.
Applications can scale without users incurring burdensome costs.
First, and of immediate importance to the building out of our industry is that 75% of the value that exists in public blockchain cannot currently be used in a trustless manner with smart contracts.
Second, and of both short term and long term consequence, there are potential issues with how scaling is being implemented for smart contract networks today. The majority of new networks use Proof of Stake or its variants. These protocols derive network safety from their native token.
The immediate issue inherent in Proof of Stake is that the consensus design doesn’t yet safely allow for alternate uses of the native token. If a token holder can obtain a higher yield (and with no possibility of slashing) by providing collateral to create a stablecoin than they can from staking, then as economic rationalists, they will likely do so. This diverts tokens away from staking and cannibalizes the safety of the network. (A highly insightful paper on this topic is here.) We suspect that this is perhaps the key reason why despite having comparatively higher transaction costs and far lower transaction throughput, Ethereum is still leading the way in DeFi.
A longer term issue is that as a Proof of Stake network gains usage and the value built on top of it increases, the value of the staking token must increase or the network will become unsafe. This is great for investors in the token but bad for people that want to see decentralization become part of the mainstream way of doing business. Why? Because in order for the token value that secures the network to rise, capital must be diverted from some other use to buy the token. Taken to the logical endpoint, if smart contract networks using proof of stake were to become the ubiquitous method of doing business, the scale of diversion of capital required from other endeavors, just to secure the value built on these networks, would make the cost of commerce unfeasibly high. For this reason it is extremely unlikely to happen. Proof of Stake and variants can scale transaction throughput but existing implementations can’t scale for value. In our opinion Proof of Stake is more of a stopgap than a solution.
How does Flare solve these issues?
Flare is at its core a new way of scaling smart contract platforms that does not link safety with the value of its token. Flare still requires a token for the operation of the network, principally to deter spam transactions. Flare’s token is called Spark. Because Spark doesn’t have network safety implications it is well suited to enable the trustless usage of non-Turing complete tokens with smart contracts.
Flare is the world’s first Turing complete Federated Byzantine Agreement (FBA) network. Nodes run the Avalanche consensus protocol with a key adaptation to the FBA consensus topology. FBA is unique as a consensus topology in that it achieves safety without relying on economic incentives that can interfere with high-value and high-risk use-cases. A criticism of pure FBA is that it leads to fragile structures of constituent nodes, permitting topology scenarios where a single node failure can cause a network-wide failure. For this reason, a specific setting of FBA called a Unique Node List (UNL) topology is prioritized that emphasizes clarity and ease-of-use while maintaining the open-membership property of FBA. The percentage overlap of the UNL is a governance defined parameter, with a lower overlap improving the open-membership property of the network. The Flare Network leverages the Ethereum Virtual Machine (EVM), enabling the network to run Turing complete smart contracts.
