Flare aims to provide a set of native services for the XRP network similar to the staking services offered by Babylon for Bitcoin.

Written by: Haotian

It's interesting that @FlareNetworks proposes to provide a staking service for the XRP network, aiming to allow XRP holders to participate in other web3 application scenarios such as oracles and L2. Many people only see the continuous surge of $XRP, unaware that $FLR has also seen a remarkable threefold increase. One can't help but ask, what is the relationship between Ripple and the Flare network? After BTCFi, will XRPFi become the new narrative? Let's briefly outline:

1) Ripple's XRP is a typical old coin, born in 2012 (much earlier than Ethereum), with the goal of replacing the traditional interbank SWIFT payment and settlement system to achieve high-speed, low-cost cross-border payment applications.

Perhaps because of this, the design of the XRP network does not adopt a smart contract network mechanism, possibly to focus on high scalability in payment performance, or perhaps at that time there were no conditions for the XRP network to support more additional functions.

In short, XRP lacks a series of DeFi staking-related functions familiar in the web3 environment.

2) XRP and @FlareNetworks became connected around 2021 when Flare announced it would airdrop 15% of FLR, which is 1.5 billion tokens, to XRP holders. Why is FlareNetwork doing this?

As mentioned earlier, the XRP network lacks smart contract functionality, while FlareNetwork has launched the FAssets protocol, which can provide a set of cross-chain asset interoperability services for the XRP network, helping XRP connect with other EVM environments through the Flare network.

This is similar to how @babylonlabs_io provides a POS staking yield network for the Bitcoin network through a set of cryptographic algorithm protocols, allowing an underlying asset that does not have staking mining capabilities to indirectly achieve staking functionality.

3) Specifically: Users can deposit XRP into a specific address, and the Data Connector, acting as a cross-chain "node," monitors and verifies the user's deposit transactions on the XRP chain, subsequently minting F-XRP on FlareNetwork with a 1:1 pegged relationship, requiring a certain amount of FLR tokens as collateral. The collateral ratio will also be dynamically adjusted, with a certain liquidation mechanism in place to ensure safety. Correspondingly, users can redeem their original XRP at any time to unlock the corresponding collateral.

Listening to this, it resembles the concept used by many Bitcoin layer2 solutions to provide network expansion services for the Bitcoin network, using a relatively native technical approach to allow an asset without smart contract constraints to circulate in another heterogeneous network.

However, what is curious is that FlareNetwork locked in providing services for the XRP network three years ago, and it's no wonder that this wave of Ripple's surge has indirectly boosted market expectations for FLR.

4) However, Flare is not satisfied with just providing "FAssets cross-chain asset services." According to its founder @HugoPhilion, Flare aims to provide a similar set of native services for the XRP network as Babylon does for Bitcoin, allowing XRP to flow into other public chain systems to expand the web3 application scenarios of the XRP token, such as oracle services, Layer2, DID, etc.

This approach is essentially a continuation of Flare's initial vision to provide network expansion for the XRP network, but thinking deeper reveals that it is not simple.

Because Bitcoin is no longer limited to its original reserve asset attribute, a vast ecosystem of BTC expansion has emerged around Bitcoin. Babylon serves as a key player, providing a set of native asset "cross-chain" services for the Bitcoin ecosystem, intending to support the entire Bitcoin layer2 ecosystem.

If the network effect of the XRP token further strengthens, could there be a corresponding Ripple network expansion ecosystem? Will it be the next XRPFi narrative after BTCFi?

If that is the case, the significance of Flare playing the role of Babylon in the Bitcoin ecosystem is evident.

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