NFT Series: The Flow Blockchain and FLOW Token Explained

The flow blockchain and its ecosystem explained

When CryptoKitties took off in late 2017 as one of the world’s first NFT projects, it broke the Ethereum blockchain due to immense network congestion. Develop Dapper Labs found out the hard way that current generation blockchains weren’t ready to handle demand on such an immense scale. But rather than waiting for an Ethereum update, Dapper Labs decided to build their own blockchain. One that developers could rely on for large-scale projects.

The result is Flow, a new blockchain built for the next generation of apps such as NFT collectibles and large-scale crypto games. The future looks bright for Flow as CryptoKitties will soon migrate, Dapper’s NBA Top Shot (NFTs for NBA highlight clips) has been very successful, and many other developers have signed up to build with the new blockchain. Flow could prove to be the leading protocol for such creative projects.

Flow Explained

Flow was created with NFT marketplaces and crypto games in mind, enabling extensive scaling without the use of sharding to keep transactions fast and low-cost. Unique in the world of crypto networks, the Flow blockchain has been able to dramatically improve throughput speeds by separating the tasks of a standard crypto miner or validator node into four distinct roles:

  1. Collector Nodes to increase efficiency;
  2. Execution Nodes to enable speed and scale;
  3. Verifier Nodes to guarantee correctness;
  4. Consensus Nodes to ensure decentralization.

All four node types participate in the validation of each transaction. Anyone with a reliable internet connection should be able to participate as a validator for the Flow blockchain, at a variety of computational and financial tiers.

Splitting up the tasks makes processing transactions more efficient than on rival blockchains according to Dapper Labs. By using an alternative to sharding, which means spreading out storage and computational needs of a blockchain across multiple nodes, Dapper says that the Flow blockchain keeps transactions atomic, consistent, isolated, and durable (ACID), allowing developers to build on each others’ work.

Blockchain beyond finance

Solving the problem of expensive transactions on the congested Ethereum blockchain, Flow is primed for crypto beyond financial applications. And it a space that is seeing rapid growth in the crypto industry.

Crypto games like Battle Wave,  plus the collectible and interactive experiences offered by NFT marketplaces are quickly growing in prominence and could find much larger audiences in the near future. NBA Top Shot has already demonstrated the potential for a blockchain-driven collectibles experience to generate huge mainstream interest and large amounts of money to with it. That’s just one experience built on top of the Flow blockchain, with many more to come.

Next to the NBA, Dapper Labs has other high-profile partners on its roster. They have signed deals with Ultimate Fighting Championship (UFC) and Dr. Suess to develop crypto collectibles experiences along the same lines. In addition, Dapper also counts Warner Music Group, Samsung, Ubisoft, T-Mobile Systems, MotoGP as Flow community members.

The Flow Token

If Flow is the new digital infrastructure, then the FLOW token is the next-generation fuel that powers it. The token is required for the network and all the applications on top of it to function. FLOW is designed as a payment method as well as a long-term reserve asset for the entire economy built on the Flow blockchain. The proof-of-stake model used by the protocol requires all validators to stake FLOW in order to participate in the network. It is also used for fees and future protocol governance.

Flow’s native FLOW token was initially offered to the public in October 2020 but was unavailable within the United States and Canada. Tokens sold through the offering were locked up for at least a year thereafter, which means they can’t be circulated until they’re unlocked.

However, the FLOW earned by validators for example can be freely transferred and sold, so there is some amount circulating the markets through various exchanges. CoinMarketCap reports the current circulating supply is just under 34 million, with a market cap ranking #109 at $872 million.

All in all, the Flow blockchain has already benefited from the NFT boom we’ve seen in the last few months, and the protocol is set to capture even more of the surging interest in interactive and collectible experiences.

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