Decentralized Applications (DApps) and smart contracts have become one of the most exciting and far-reaching developments in the blockchain network. The Ethereum blockchain has been pushed into being the most versatile in the crypto space as the pioneer of this evolution. It is also the second-largest in terms of market capitalization.
Other blockchain systems have been eager to investigate this evolution, owing to Ethereum's ever-increasing popularity. Cardano is a prime example, having risen to the third-largest cryptocurrency by market capitalization as a consequence. In the crypto world, the XRP ecosystem is a major player. With the introduction of Flare Network, it examines the smart contract environment from a fresh and exciting perspective.
The Flare Network
The Flare network is a decentralised network that seeks to bring the entire spectrum of smart contracts onto the Ripple blockchain, which is powered by XRP. It can do so because of a new feature it has: it can build a bridge between blockchain ecosystems. As a result, a connection between Ethereum and XRP's ledgers can be established, allowing the XRP digital asset to be used with smart contracts.
Smart contracts are transaction protocols or computer applications that manage and execute events automatically. They are often intended to record certain legally significant activities in accordance with the contract's terms. Smart contracts remove the need for a trusted third party, lowering the risk of fraud and malicious activity. They provide a stable, trustless, and decentralised ecosystem.
The federated byzantine agreement (FBA) consensus protocol is used by the flare network in an enhanced form. The flare consensus protocol FCP is the abbreviation for their version.
Flare Consensus Protocol
Flare's FCP variant of the FBA consensus protocol is distinguished by its complete order and lack of a representative. It serves as a strong deterrent to would-be assailants. An attacker is unable to determine which of two transactions would be ordered first in a transaction sequence. Flare's FBA is much easier than previous FBA consensuses because it uses a federated virtual voting (FVV) process.
The FBA consensus protocol has a significant advantage in terms of security. It does not rely on revenue-generating models like proof of stake (PoS) to verify the validity of a transaction. The security of the entire system is always tied to crypto staking validators in PoS-based protocols. Because of this reliance on validators, cryptography may only be used in ways that do not jeopardise the protection of the entire network. As a result, the digital asset's effective usability is limited, as is its flexibility.
One of the most difficult aspects of FBA is its susceptibility to cascading failure. The failure of a single node could result in the system as a whole failing. Flare uses a special node list, or UNL, to solve this problem. It helps to emphasise node clarity while retaining FBA's open membership aspect and allowing for user simplicity.
How Flare Network Works
The flare network's ability to onboard smart contracts into the ripple blockchain is a good question. In the world of DApps and smart contracts, interoperability has been a major concern.
The integration of the flare network with the Ethereum Virtual Machine is the first step (EVM). The Ethereum Virtual Machine (EVM) is a powerful code stack environment for executing smart contracts on the Ethereum blockchain. EVM's aim is to translate smart contracts written in higher languages into instructions that a machine can execute.
Flare can operate what are known as Turing complete smart contracts by connecting to the EVM. That is, if given instructions, enough time, and the necessary memory, smart contracts can be executed by a computer.
Flare Network Digital Asset
Two essential digital assets are hosted on the Flare network. The first is the Spark token (FLR), which is its native token, and the second is the FXRP, which is a flare network representation of the XRP token.
Spark Token
The flare network's primary native digital asset is Spark. Spark performs the following specialised functions in addition to having a similar base use case as other native cryptos in other systems:
As blockchain oracles, they are used. A blockchain oracle is a third-party data provider that acts as a link between smart contracts and external software systems.
When trading inside DApps, this is used as leverage. To be more specific, it can hold it in a margin or arbitrage trading account to cover any possible losses incurred by a trader while trading with leverage.
Participate in the protocol governance process. The network has its own FLR token for governance purposes. It uses the token's general property to serve as a link between Ripple and Ethereum's EVM, defining how the two systems' nodes communicate. It also has an effect on the data flow between the two blockchain ecosystems. These are two important steps in protocol governance.
The network's three functions are intended to encourage the development of Spark-dependent applications (SDA). The SDAs allow tokens to be represented on other networks in a trustless manner, usually on smart contracts supporting ecosystems. These networks, however, are not limited to those who accept smart contracts. As a result, they make it possible for smart contract spectrums to be onboarded on XRP ecosystems.
FXRP Token
FXRP is an example of a trustless representation of an SDA-enabled token, as described in the last section of the Spark token. It's also on a native non-smart contract network. As a result, FXRP becomes the Flare network's first DApp. FXRP is the flare network's trustless representation of the XRP digital asset.
Creating the FXRP Token
The Spark FLR token must be kept in order to generate the FXRP token. FLR holders then submit it to flare's smart contracts, where it is used as leverage in an arbitrage trading scheme to generate FXRP. Originators are the people who start these transactions.
The huddle crossed by this mechanism is resolving the problem of blockchain interoperability. Interoperability, especially in the context of smart contracts, takes place in the following ways.
Since they are unable to protect the privacy of private keys, a public blockchain smart contract cannot manage an XRP address on its own.
Using coding to integrate XRP into the smart contracts ecosystem will also be ineffective. Using a multi-signature address, a central body of individuals will be required to monitor and approve transactions. It means the token would not be decentralised or trustless, two main characteristics of smart contracts. Arbitrage trading enables arbitrage to retain a 1:1 token peg of XRP to FXRP. It also creates a creation fee from the creators at the same time. A fee of 0.1 percent of the transaction value is charged.
The disparity between the system's FLR: FXPR collateral exchange conditions and the FLR: XRP exchange rate produces revenue for the originator. To monitor the XRP/FLR prices, the FXRP uses a Flare Time Series Oracle. The FLR token, on the other hand, is used for governance to oversee things like the collateral exchange requirement and the development fee—the two, along with the Spark FLR token, make up the flare network's three components.
Conclusion
Smart contracts and decentralised applications (DApps) were once reserved for blockchain ecosystems that had them from the start. Flare Network's brilliant strategy of using Spark-dependent software has fundamentally altered this.
Smart contracts are now available to XRP holders via FXRP tokens, thanks to the use of FLR tokens as collateral. Developers now have a field day trying to expand the future uses of the flare network thanks to the SDA model. The Spark FLR token isn't the only thing that can be done about it. Flare Time Series Oracle can also sell new unique DApps creations, and the Flare token is used for governance.
