It's quite interesting that @FlareNetworks has proposed to provide a staking service for the XRP network, with the goal of allowing XRP holders to participate in other web3 applications such as oracles and L2. Many people only see the continuous surge of $XRP, unaware that $FLR has also risen by 3 times. Inevitably, one wonders, what is the relationship between XRP and the Flare network? After BTCFi, will XRPFi also become a new narrative?
1) XRP is a typical old cryptocurrency, born in 2012 (much earlier than Ethereum), aiming to replace the traditional SWIFT payment and settlement system between banks, and achieve high-speed, low-cost cross-border payment applications.
Perhaps because of this, the XRP network's design did not adopt the smart contract network mechanism, maybe to focus on high-scalability payment performance, or maybe the conditions were not yet in place for the XRP network to carry more additional functions.
In any case, XRP does not have the series of DeFi staking-related functions that are familiar in the web3 environment.
2) XRP and @FlareNetworks became acquainted around 2021, when Flare announced an airdrop of 15% of FLR, or 1.5 billion tokens, to XRP holders. Why did FlareNetwork do this?
As mentioned earlier, the XRP network lacks smart contract functionality, while FlareNetwork has launched the FAssets protocol, which can provide a cross-chain asset interoperability service for the XRP network, helping XRP to connect with other EVM environments through the Flare network.
This is similar to how @babylonlabs_io, through a cryptographic algorithm protocol, provides a POS staking revenue network for the Bitcoin network, indirectly enabling staking functionality for a base-layer asset that does not have native staking/mining.
3) Specifically, users can deposit XRP into a specific address, and the Data Connector, as a cross-chain "node" role, will monitor and verify the user's deposit transactions on the XRP chain, and then mint F-XRP on the FlareNetwork at a 1:1 anchored ratio, requiring a certain amount of FLR tokens as collateral, with the collateralization ratio dynamically adjusted and a certain liquidation mechanism to ensure safety. Correspondingly, users can redeem the original XRP at any time to unlock the corresponding collateral.
Hearing this, it seems similar to the concept used by many Bitcoin layer2 solutions to provide network expansion services for the Bitcoin network, using a relatively technically native way to enable the circulation of an asset without smart contract constraints on another heterogeneous network.
The only curious thing is that three years ago, FlareNetwork had already locked in to provide services for the XRP network, no wonder the recent XRP surge has also indirectly driven market expectations for FLR.
4) However, Flare is not satisfied with just providing "FAssets cross-chain asset services", according to its founder @HugoPhilion, Flare wants to provide a similar native service for the XRP network, just as Babylon does for Bitcoin, so that XRP can flow into other public chain systems to expand the web3 application scenarios of XRP tokens, such as oracle services, Layer2, DID, and so on.
This is actually just a continuation of Flare's original vision of providing network expansion for the XRP network, but when you think about it deeper, it's not that simple.
Because Bitcoin is no longer limited to its original reserve asset attribute, a multi-chain BTC expansion ecosystem has emerged around it. Babylon, as a key position holder, provides a native asset "cross-chain" service for the Bitcoin ecosystem, intending to support the entire Bitcoin layer2 ecosystem.
If the network effect of XRP tokens is further strengthened, will there also be a corresponding XRP network enhancement and expansion ecosystem? Will it be the next XRPFi narrative after BTCFi?
If that's the case, the significance of Flare playing the role of Babylon in the Bitcoin ecosystem can be imagined.
