Flare Network: Explain it to me like I am 5 years old.

This article is the winner of the Flare Network’s No-Code Challenge at ETH London 2023 Hackathon.

Updated 30/04/2024

1. Intro

Blockchain technology is complex, and explaining its nuances to someone who is not familiar with it can be challenging. It is like trying to explain the concept of infinity to a toddler.

However, the blockchain industry is rapidly growing and evolving, and its potential is beginning to be more fully understood by the general public. This is due in part to the increasing availability of educational resources and the development of more user-friendly interfaces.

Widespread adoption of Web 3.0 will usher in an era of intuitive interaction, eliminating the need for deep technical understanding.

This shift to Web 3.0 is poised to transform our online experience, mirroring the impact of the World Wide Web’s adoption decades ago. Remember the screech of dial-up connecting you to the internet for the first time? It’s hard to believe that was nearly 30 years ago!

The rapid advancements in the blockchain industry suggest we’re on the cusp of widespread Web 3.0 adoption. This revolution won’t take another 30 years — it’s closer than we might think.

The Flare Network’s intricacies can pose a challenge for non-technical users, as is the case with many blockchain projects. Despite offering solutions to existing problems, my observations within the crypto community suggest its potential remains largely untapped. This could be due to the network’s relative newness.

In this blog post, I’ll delve into how Flare tackles today’s blockchain challengess in a fundamentally different way from the other existing competitive solutions and how it is directing the future path for the industry to follow.

2. The Fundamentals of Flare Network

Flare Network operates as a Layer 1 blockchain, but with a key advantage for developers: it leverages the Ethereum Virtual Machine (EVM). Think of the EVM as a powerful engine that can run any program written in a specific code. This opens doors for developers to create a vast array of decentralized applications (DApps) on Flare, such as marketplaces, games, and innovative financial tools.

The EVM also plays a critical role in maintaining the network’s state. It keeps track of account balances and the code running within smart contracts. By adopting the EVM, Flare Network allows developers to build DApps using Solidity, the most widely used smart contract language. This familiarity with Solidity makes Flare Network welcoming to a large pool of developers, potentially accelerating the creation of applications and boosting the network’s growth.

Similar to Ethereum, Flare Network utilizes a Proof-of-Stake (PoS) system. However, Flare takes this concept a step further with a more advanced consensus algorithm called Avalanche Snowman++.

This cutting-edge protocol is specifically designed to be both highly secure and scalable. It achieves this through a unique combination of directed acyclic graphs (DAGs) and consensus checkpoints. In simpler terms, this allows for faster transaction finalization (confirmation) and the ability to handle a high volume of transactions simultaneously.

Flare’s choice of Avalanche Snowman++ as its consensus mechanism brings several advantages:

  • High Scalability: Avalanche Snowman++ empowers Flare to process thousands of transactions per second, a critical capability for a network aiming to support a vast ecosystem of decentralized applications (DApps).
  • Enhanced Security: This protocol is built with robust security features, making it resistant to various attacks like Sybil attacks, denial-of-service attempts, and even 51% attacks. It achieves this by employing multiple techniques to prevent malicious actors from seizing control of the network.
  • Energy Efficiency: Compared to other Proof-of-Stake mechanisms, Avalanche Snowman++ is relatively energy-efficient, making it a more sustainable solution.

The Flare Network consists of three chains:

  • C-chain: on which the Ethereum Virtual Machine runs and with which the vast majority of the community currently interacts.
  • P-chain: on which staking takes place.
  • X-chain: which is intended for fast and simple monetary (micro) transactions and is currently not in use.

Avalanche Snowman++ stands out as a cutting-edge Proof-of-Stake (PoS) consensus protocol. Its exceptional scalability, robust security, and energy efficiency make it a perfect fit for the demands of a thriving blockchain ecosystem. With this powerful foundation, Flare Network is poised to empower the next generation of decentralized applications.

3. Flare Network’s core protocols

The Flare Time Series Oracle (FTSO) and State Connector protocols, integrated into the Flare Network base layer, are essential components that enable Flare smart contracts to access timely and accurate off-chain data and to interact with other blockchains without needing centralized intermediaries.

Source: https://flare.network/start-building/

a) Flare Time Series Oracle

Flare Time Series Oracle (FTSO) is a decentralized oracle that provides Flare smart contracts with timely and accurate off-chain data. It is a native oracle for time-series data, meaning that it is specifically designed to handle this type of data.

FTSO provides a unique kind of data called “probabilistic data.” This means the information has a certain likelihood of being accurate, rather than being a definitive truth. It’s like a weather forecast — there’s a chance of rain, but it might not happen.

This type of data is valuable for making predictions or educated guesses about future events. Examples include weather forecasts, stock market predictions, and even medical diagnoses based on symptoms.

FTSO works by using a network of Data Providers, who are independent entities that collect data from various sources, such as decentralized or centralized exchanges. The data from the Data Providers is then aggregated and verified by FTSO protocol, and then made available for the end user.

This protocol is an important part of the Flare Network because it allows smart contracts to interact with the real world data. By providing access to off-chain data, FTSO enables Flare developers to build applications that can solve a wide range of problems.

Flare Time Series Oracle — workflow , Source: https://docs.flare.network/tech/ftso/

Benefits of FTSO:

  • Decentralization: The FTSO protocol is not controlled by any single entity, but rather by a network of independent Data Providers. This structure makes it more resistant to censorship and manipulation. Ideally, these Data Providers would operate entirely independently of one another. In addition to improving the price forecasting algorithm (which generates income for both Data Providers and network users), they would also actively participate in building the Flare Network ecosystem by providing valuable tools, solutions, or supporting infrastructure. This decentralized approach eliminates single points of failure within the FTSO protocol and the Flare Network’s data delivery system, making the entire solution highly resistant to attacks.
  • Accuracy: To ensure accurate and reliable data, FTSO aggregates and verifies information from multiple Data Providers. A report by the Flare team revealed high consistency between FTSO prices and those on the Kraken exchange, suggesting FTSO’s reliability as a secure and accurate source of price information. Link to the report: https://flare.network/wp-content/uploads/FTSO_Kraken.pdf
  • Timeliness: FTSO provides data to Flare smart contracts in a timely manner, which is essential for applications that need to make decisions based on real-time data.
  • Versatility: FTSO can provide Flare smart contracts with a wide variety of data, from asset prices to weather data to sports data.

Potential applications of FTSO

  • Decentralized exchanges (DEXes): FTSO can be used to provide DEXes with real-time asset prices, which is essential for DEXes to function properly.
  • Lending and borrowing protocols: FTSO can be used to provide lending and borrowing protocols with data on interest rates and asset prices. This data is used by the protocols to calculate interest rates and to assess the risk of loans.
  • Insurance protocols: FTSO can be used to provide insurance protocols with data on weather events, flight delays, and other events that may trigger insurance claims. This data is used by the protocols to assess the risk of claims and to set premiums.
  • Stock market: FTSO can be used to provide real-time data on stock prices, which can be used by traders to make more informed decisions.
  • Real estate prices: FTSO can be used to provide real-time data on real estate prices, which can be used by homeowners, renters, and real estate agents. This can help to stabilize the real estate market and make it more accessible to people of all income levels. Accurate real estate prices are essential for tokenizing this market segment.
  • Weather forecasting: FTSO can be used to provide real-time data on weather conditions, which can then be used by farmers, businesses, and individuals. This can help to reduce the risk of damage from natural disasters and improve agricultural productivity. For example, a farmer could use FTSO data to determine when to plant and harvest crops. They could also use the data to predict the likelihood of a drought or flood. Data from FTSO can help them to protect their crops and avoid financial losses.
  • Sports betting: FTSO can be used by bookmakers to provide real-time data on sports results and odds. This can help to make the sports betting industry more transparent.
  • DAO voting: FTSO can be used to provide real-time data on voting results in Decentralized Autonomous Organizations (DAOs). This can help to improve the accountability and transparency of DAOs. For example, a DAO participant could use FTSO data to determine whether to vote for or against a specific proposal. They could also use the data to see how other DAO participants are voting. This will help them to make an informed decision and ensure that their vote is counted.

These are just some of the potential applications of the data provided by FTSO. As FTSO matures and its capabilities improve, it is likely to be used in even more innovative ways.

Currently, the FTSO protocol delivers data to the blockchain at three-minute intervals. The upcoming FTSO protocol update will support up to thousand of prices, but not all will be updated simultaneously at the block level. These prices will have regular update periods. However, dApps (decentralized applications) will have the ability to request a batch update for specific prices, which will then be reflected on the blockchain at block speed.

Source: Filip Koprivec, Senior Solidity Engineer at Flare Network — on stage during the ETH London 2023 Hackathon.

The Flare team considers the data provided by the FTSO system a “public good” because it’s freely available to end users. The network of decentralized signal providers is incentivized through inflation built into the protocol. This reliance on a native token fosters high scalability and security within the FTSO system, likely contributing to wider adoption. After all, data readily available on the blockchain is poised to play a major role in the future.

b) State Connector

Unlike FTSO, which provides probabilistic data, the State Connector protocol provides deterministic data from other blockchains and off-chain data sources. Deterministic data is data that is known to be true or accurate, and that is not subject to change. This means that the data can be precisely predicted and calculated. Examples of deterministic data include mathematical equations, physical laws, and computer algorithms. When we ask a binary question of “yes” or “no”, or “1” or “0”, deterministic data allows for a precise answer.

The State Connector offers improved security, flexibility, and faster processing than other oracle systems on the market. It is a key element of the Flare network because it enables integration with other platforms and the creation of new applications. The State Connector, together with the Flare Time Series Oracle (FTSO) protocol, provides reliable and decentralized data. The State Connector provides a consistent state of the other blockchains.

The key strength of the State Connector is its ability to verify the validity and history of transactions, while reducing the risk of reorg attacks on connected blockchains.

This level of interoperability is achieved without needing a central authority, resulting in a highly secure and decentralized protocol.

The State Connector , Source: https://docs.flare.network/tech/state-connector/

State Connector uses data obtained from independent providers called Attestation Providers. It essentially performs consensus over data that relates to a single source of truth. This mechanism allows it to determine whether a transaction has been executed on another blockchain.

Developers can use this potential to create dApps on the Flare network that will have access to value from multiple connected blockchains.

Due to the State Connector protocol, the Flare Network has a number of advantages, including:

  • Increased interoperability: State Connector enables the Flare network to integrate with other platforms.
  • Increased consistency: State Connector provides a consistent state between different blockchains, preventing errors and conflicts.
  • Increased security: State Connector integrates with FTSO, which provides reliable and decentralized data. As a result, State Connector offers a higher level of security than other protocols.

State Connector is a powerful tool that can revolutionize the way we build and use blockchain. With State Connector, blockchain networks can easily and securely interact with each other, enabling the creation of new utilities and applications.

Here are some specific examples of State Connector applications:

  • Decentralized exchanges that connect different blockchains.
  • Decentralized financial applications that offer services on multiple platforms.
  • Decentralized gaming applications that connect different platforms.
  • Decentralized government applications that provide services to citizens on multiple platforms.

4. Wrap-up

While smart contracts revolutionized cryptocurrencies, their functionality ultimately hinges on access to real-world data. Oracles bridge this gap by connecting the blockchain to external data sources. Reliable and accurate data, particularly price information, is crucial for DeFi applications to function effectively and provide user value.

However, the DeFi market currently relies heavily on solutions that lack complete decentralization and robust security. Building new solutions on top of existing architectures simply creates another slow and cumbersome layer of infrastructure. This approach fails to address the core issues with oracles.

The Flare team took a divergent approach, building their solution from the ground up. They incorporated dedicated protocols directly into the base layer of their blockchain. One of the key challenges for oracles is establishing economic incentives for data providers. This ensures accurate and precise data, discouraging manipulation. When billions of dollars flow through DeFi, “bad actors” may emerge, seeking to exploit vulnerabilities. However, financially incentivized data providers have a vested interest in accurate data, as manipulation offers no financial gain.

Web3 prioritizes decentralization, minimizing reliance on intermediaries and central authorities. This paradigm shift empowers users with greater control over data, privacy, and security. The Flare Network’s solution perfectly aligns with this vision.

By introducing complete decentralization and eliminating the need for trust in other parties, the Flare Network sets new standards for both current oracle systems and interoperability between blockchains. This is achieved in a secure, fast, and cost-effective manner.

Solutions like the Flare Network pave the way for faster Web3 adoption in a world where data ownership, security, and trustlessness are paramount.

Flare Network’s unique and revolutionary approach to oracle technology signifies a significant breakthrough in the blockchain space. They provide a more secure, reliable, and efficient platform for smart contract execution and data processing, with the potential to significantly improve user experiences and drive DeFi adoption.

The Flare Network team demonstrates a forward-thinking approach, continuously innovating and fostering new use cases. Their blockchain’s ease of use, flexibility, comprehensive documentation, and the features outlined above make it a compelling choice for developers.

With their mission to “Connect Everything” through a dedicated blockchain for data and trustless interoperability, Flare’s careful, step-by-step approach positions them for success.



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