Flow Blockchain and Cryptocurrency: An Overview of the L1 Platform for NFT and GameFi

Main

• Flow is a blockchain platform for issuing NFTs and implementing gaming applications. The project allows you to create dapps, digital collectibles and metaverses.
• The architecture of Flow is based on the principle of separation of concerns: each node performs a separate function. This principle allows you to increase network performance by an order of magnitude. Support for the Cadence programming language when writing smart contracts simplifies the issuance of non-fungible tokens (NFTs).
• The creator of the platform is Dapper Labs, the author of the first popular blockchain game CryptoKitties. An ecosystem is built on the Flow blockchain, supported by leading sports associations, including the NBA, UFC and NFL. Meta has integrated Flow-issued NFTs into Instagram and Facebook.

Who and when created Flow

Blockchain Flow is a project of Dapper Labs, which became famous thanks to the blockchain game CryptoKitties. Its gameplay involved “nurturing” and fights between characters tied to non-fungible tokens (NFTs) on the Ethereum network. CryptoKitties became the first popular blockchain game and at the end of 2017 led to strong Ethereum overloads and, as a result, an overall increase in fees on the network.

As a result, Dapper Labs decided to create their own, more scalable blockchain, “sharpened” for NFT operations. The main Flow network was launched in 2020. The founder of the project is Dieter Shirleyand the general director Roham Garegozlow. Shirley is known as the creator of the ERC-721 standard, and Garegoslow previously headed one of the first venture capital funds for crypto projects called Axiom Zen.

In September 2020, as a result of the public sale of FLOW coins developers received $19.5 million. In May 2022, Dapper Labs raised $725 million in an ecosystem development fund. Its members include Andreessen Horowitz, Coatue, Greenfield One, Liberty City Ventures and others. The Foundation provides grants and direct investments in the FLOW cryptocurrency. The organization develops gaming and infrastructure projects, and also helps content creators.

What problem does Flow solve?

Many projects issue NFTs on the Ethereum network, however, during periods of high load, transaction costs exceed tens of dollars. The Flow blockchain solves the problem of scaling and high fees without sharding.

The Flow blockchain is designed to work with NFTs, game projects and other applications. It is optimal for users who are not familiar with blockchain technologies: network addresses are short, and its participants can do without private keys.

The platform is focused on the operation of large decentralized applications that use NFTs – mainly projects in the GameFi field.

Flow Blockchain Features

Flow uses a specialized architecture that provides high performance without network fragmentation (sharding).

Nodes have different computing power, which is not taken into account by the developers of other blockchains – this leads to an inefficient use of resources. In order to optimize them, the architecture adopted the principle of task separation. Blockchain nodes are divided into groups with low and high performance, which solve two types of tasks. “Objective” tasks require high performance, while “subjective” tasks require minimal computing power.

Groups of nodes are responsible for different functions. Flow uses four types of nodes:

• Collection nodes process and “package” transactions. They pass only hashes to validators, and full information about transfers to other nodes.

• Consensus nodes (validators) form preliminary versions of blocks using the Proof-of-Stake algorithm and solve subjective tasks by voting. This type of node operates exclusively with transaction hashes and does not perform other calculations.

• Execution nodes process transactions and smart contracts. They determine the state of the network, and then create the final version of the blocks. In addition, these nodes perform objective calculations that have one solution. To process transactions, data is requested from the collection nodes.

• Verification nodes selectively verify transactions. The operation of this type of nodes eliminates the conflict of interest. The latter occurs if the consensus nodes check the blocks they have formed. The algorithm also eliminates verification nodes that are not doing any work or overloading the network.

Flow also forms blocks, dividing tasks into four types. Each type of node is activated at a certain stage. Consensus nodes only validate new blocks and add them to the general chain, while calculations and transaction processing are performed by other types of nodes. During the calculation of the results of operations, the consensus nodes form the next block.

This approach allows for a more rational use of resources and increases the bandwidth of the blockchain by more than 50 times compared to analogues, the authors say. white paper flow.

Flow provides the ability to run smart contracts. The environment allows you to test applications, keep logs, and use a network emulator. The platform uses the Cadence programming language, which simplifies the creation of NFTs.

Node Requirements and Flow Crypto Staking

Since Flow uses the PoS algorithm, all of its nodes need to stake a certain amount of FLOW in order to work. The minimum amount depends on the selected node type:

• execution – 1.25 million FLOW;
• consensus – 500,000 FLOW;
• collection – 250,000 FLOW;
• verification – 135,000 FLOW.

Such requirements are caused by the different performance of the nodes. The execution node needs to have high processing power, which requires a large investment. It is most profitable for the most productive nodes to act in this role. The division of functions between nodes is an alternative to sharding and distributed storage of information. The developers claim that the algorithm provides reliability and long-term data retention.

Cryptocurrency tokenomics FLOW

FLOW is the native cryptocurrency of the blockchain of the same name. Coins are required to pay fees, execute smart contracts, and operate the consensus algorithm. FLOW is also used as collateral for issued tokens.

Initially, the Flow cryptocurrency was distributed among investors by public token saleheld at the end of 2020 on the CoinList platform. In total, Dapper Labs sold 100 million FLOWs. Another 25 million were distributed on October 6, 2020. The realized coins were blocked for one year, which prevented their free sale.

At the time of writing, in circulation is over 1 billion FLOW, and the maximum emission is 1.39 billion. The largest holder of this cryptocurrency is the Flow Foundation. It has 250 million FLOW at its disposal, reserved for the long-term development of the project.

You can track transactions on the network using flow blockchain explorer. The resource provides analytical information, including the number of locked assets, the number of nodes of various types, and staking parameters. It also contains up-to-date data on awards. Staking yield as of September 22, according to Staking Rewards, is 8.3% per annum.

The largest projects on the Flow blockchain

Flow is one of the most successful and popular NFT networks. This was achieved thanks to the involvement of Dapper Labs in the project of major partners such as the National Basketball Association (NBA) and the Ultimate Fighting Championship (UFC).

After the launch of the network, the developers created the first NFT projects, in particular NBA Top Shot platformcreated in collaboration with the NBA. It allows you to release NFT collections related to the major basketball teams in the American League and the competitions taking place between them. The content of NBA Top Shot tokens is usually a picture of a player or an interesting video clip of a match.

The NBA Top Shot was a good publicity stunt for Dapper Labs, which brought attention to the Flow blockchain from other big brands. The platform has long topped the ranking of the most popular digital collectibles products from Dapp Radar. The success of the NBA Top Shot also allowed Dapper Labs to host a major investment round in the spring of 2021.

Started work in January 2022 UFC Strike NFT Platform – The official project of Dapper Strike and the famous mixed martial arts organization, which used many mechanics of the NBA Top Shot.

In August of the same year, on the Flow network earned NFL All Day app developed by Dapper Labs in partnership with the US National Football League (NFL). By the end of September, the sales volume on the platform exceeded NBA Top Shot indicator. According to the block explorer, as of September 25, 2022, over 15 million accounts have already been created in the Flow network and over 1,700 smart contracts have been deployed. Ecosystem includes several dozens of active NFT projects and exceeds the number of transactions with non-fungible Ethereum tokens.

Flow Management System and Ecosystem Development

Fall 2021 Flow integrated a solution for decentralized cloud storage of files from the Filecoin blockchain platform. At the same time, Dapper Labs entered into a long-term partnership with Google Cloud to help Flow scale.

One of the acquisitions of Dapper Labs became a startup Brud, whose solutions are designed to add tools to the Flow ecosystem for the rapid creation of decentralized autonomous organizations (DAOs). Flow operates bounty program for this direction. Now acceptance and implementation of proposals going off-chain.

Not only sports organizations pay attention to Flow: in the summer of 2022, Meta announced the imminent integration of the blockchain in Instagram. According to Mark Zuckerberg, support for non-fungible tokens is available in over 100 countries. Somewhat later, Meta implemented native Flow support for Facebook NFT avatars.

Back in 2020, Dapper Labs announced plans transfer CryptoKitties from Ethereum to Flow. This will allow to implement new game features and use tokens in other applications. However, the exact timing of the migration is not yet known.