Flare provides stake services for XRP, will XRPFi become a new narrative?

Flare wants to provide a trap-like native service for the XRP network, just as Babylon provides stake services for BTC.

Author: Haotian

Interesting. @FlareNetworks proposes a trapstake service for the XRP network, aiming to allow XRP holders to participate in other web3 applications such as Oracle Machine and L2. Many people only see the continuous big pump of $XRP, unaware that $FLR has also risen threefold. It begs the question, what is the relationship between Ripple and Flare Network? Following BTCFi, will XRPFi become a new narrative? Next, let’s briefly summarize:

1. Ripple XRP is a typical old currency, born in 2012 (much earlier than Ethereum), aiming to replace the SWIFT payment and settlement system between traditional banks, and achieve 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 high scalability of payment performance, or perhaps there were no conditions at that time to allow the XRP network to support more additional functions.

In short, XRP does not have a series of Decentralized Finance related functions known to everyone in the web3 environment stake.

2. XRP and @FlareNetworks came together around 2021, Flare announced to Airdrop 15% proportion of FLR, which is 15 billion coins, to XRP holders. Why does FlareNetworks do this?

As mentioned above, the XRP network does not have the Smart Contract functionality. FlareNetwork has introduced the FAssets protocol, which can provide a trap Cross-Chain Interaction asset interoperability service for the XRP network, helping XRP to connect through the Flare network and other EVM environments.

This is similar to @babylonlabs_io providing a trap Encryption Algorithm protocol for the BTC network, which indirectly realizes the stake function of a underlying asset without stakeMining in the network.

3. Specifically: Users can deposit XRP into a specific Address. The Data Connector, acting as a Cross-Chain Interaction ‘Node’, monitors and verifies the user’s deposit transaction on the XRP on-chain. Subsequently, in a 1:1 anchoring relationship, F-XRP is minted on the FlareNetwork, requiring a certain amount of FLR Token as collateral. The collateral ratio will also be dynamically adjusted, and there is a certain liquidation mechanism to ensure security. Correspondingly, users can redeem the original XRP to unlock the corresponding Collateral at any time.

Listening to this, it is similar to many BTC layer2 solutions providing network expansion services for the BTC network, using a concept that allows an asset without Smart Contract constraints to circulate in another heterogeneous network in a relatively native technical way.

However, it is curious that three years ago FlareNetwork had already locked in to provide services for the XRP network, which is not surprising, this big pump of Ripple has also indirectly spurred everyone’s market expectations for FLR.

4. However, Flare is not satisfied with just providing the ‘Cross-Chain Interaction service for FAssets’. According to its founder @HugoPhilion’s idea, Flare wants to provide a native service similar to Babylon’s stake service for BTC, to create a trap-like service for the XRP network. This can allow XRP to flow into other public chain systems to expand the web3 application scenarios of XRP Token, such as Oracle Machine service, Layer2, DID, and so on.

Doing this is actually just continuing Flare’s original vision of providing network expansion for the XRP network, but thinking deeper, it’s not that simple.

Because BTC is no longer limited to its original reserve asset properties, a BTC large-scale expansion ecosystem has emerged with hundreds of chains. Babylon, as a key position, provides a native asset ‘Cross-Chain Interaction’ service for the BTC ecosystem, intending to support the entire BTC layer2 ecosystem trap.

If the network effect of XRP Token is further enhanced, will there be a corresponding expansion of the Ripple network ecology? Will it be the next XRPFi narrative wave after BTCFi?

If that’s the case, it’s easy to imagine the significance of Flare playing the role of Babylon in the BTC ecosystem.