According to the white paper published a few days ago, Flare Networks solves two fundamental problems of the blockchain industry. Firstly, 75% of the value stored in a public blockchain cannot currently be “used in a trusted manner with smart contracts”. The second problem is the provision of a secure ecosystem that provides sufficient scale for the execution of smart contracts. Flare Networks wants to address these challenges.
Flare Networks enables the execution of smart contracts on the XRP Ledger
Flare Network has already partnered with Ripple‘s Xpring development arm in late 2019 to bring smart contracts to the XRP Ledger. In May of this year the Ripple partner launched the first Coston test network to test the use of Smart Contracts on the XRP Ledger (XRPL). Coston still serves as a test environment for developers to evaluate applications and the potential of the project.
Flare Networks is the first Turing full Federated Byzantine Agreement (FBA) protocol, and a new use case for XRP, the execution of Smart Contracts on XRPL, will be created from its use. The Flare Network will integrate the Ethereum Virtual Machine, enabling public and private networks to use and execute Smart Contracts.
The white paper explains in detail how XRP will be integrated into Flare Network’s ecosystem and how this will create new incentives for network users:
FXRP is a trustless representation of the XRP token on the Flare Network, which enables XRP holders to use smart-contracts with the XRP token. The ensuing ecosystem provides incentives for agents to participate via the earning of fees, as well as the capacity to arbitrage.
In the Flare Network the Spark Token (FXRP) is used to represent XRP tokens as security in the network:
The FXRP system is a set of financial mechanisms encoded in smart contracts that enables XRP holders to create andredeem a 1:1 representation of the XRP token on the Flare Network, called FXRP. In order to achieve this, the systemrelies on agents participating in the system, putting up Spark as collateral and earning fees in return
By providing this interface, the XRP ledger (also Ledger Nano)can be used in any decentralized application, thus greatly extending the range of applications for XRP. Scalability is also ensured, as the XRPL offers a significantly higher transaction throughput compared to Bitcoin or other cryptocurrencies. Josh Edwards, VP Eng at Flare Networks, describes his project as having a transformative power to revolutionize the entire industry:
Ripple works on further adaptation progress for XRP
Most recently, Xpring announced financial support for projects to increase interoperability between the XRP Ledger and Ethereum. By using the Interledger Protocol (ILP), a bridge will be built between XRP and ETH, giving Ripple access to the rapidly growing DeFi market. According to data from defipulse.com, the capital tied up in the DeFi market has risen to a record $4.71 billion.