🤔 What is Flow ?
Flow is a layer 1 blockchain specifically designed to host NFTs.
🤔 What is an NFT?
A non-fungible token(NFT) is a one-of-a-kind token that has a special meaning to its holder. For example, an artist can mint their paintings as an NFT and can sell them to willing investors.
Each NFT is unique and cannot be replicated. NFT represent holders’ claim to the underlying asset which can be a painting, music or an in-game item.
💡 What role does FLOW token play ?
FLOW is the native cryptocurrency of Flow blockchain. It is used for:
- Transaction fee: Users pay FLOW tokens as transactions fees to include their transactions on the Flow blockchain.
- Staking/Delegation: Users have to stake FLOW tokens to participate in the process of adding new blocks to the Flow blockchain. Users not having sufficient FLOW tokens can delegate their tokens to other stakers in return for a part of block rewards.
- Incentive mechanism: Stakers/delegators receive FLOW tokens as rewards for providing their services to keep the blockchain running. However, their stake is also slashed in case they behave maliciously. This carrot and stick approach keep them honest.
- Data storage: Users have to hold FLOW tokens in their account to store data on Flow blockchain. The amount of FLOW token balance required depends on the amount of data to be stored.
- Governance: Flow team is planning to decentralize the governance of Flow blockchain to FLOW token holders in the future.
📝 Origin story of Flow
Roham Gharegozlou founded Axiom Zen, a Canadian company that builds startups in 2012.
Axiom Zen launched popular NFT game, Crypto kitties on Etherium in 2017.
The game gained huge popularity in a short period of time which resulted in Etherium blockchain not being able to handle the load. As a result, the price of transactions sky rocketed, stopping users from playing crypto kitties.
Cryptokitties team was not satisfied with the current state and Etherium’s road map to achieve scalability. So they formed Dapper labs to work on building their own solution – Flow, a layer 1 blockchain specifically designed to host NFTs.
Flow beta mainnet was launched in May 2020. NBA Top Shot was the first application launched on Flow in Dec 2020.
👴🏻 Roham Gharegozlou - Founder
- BA Economics from Stanford University in 2004-2008.
- MS Biological Sciences from Stanford University in 2008-2009.
- Founding partner at Axiom Zen since 2013.
- Launched Crypto Kitties in 2017.
- Founder and CEO of Dapper Labs since 2018.
😌 What problems does it solve ?
- Deploy smart contracts in beta state:
- Developers cannot change smart contracts once deployed on blockchain. However, getting code correct the first time is very difficult.
- Flow blockchain allows developers to deploy their smart contracts in beta stage, which allows them to update smart contracts later. Once the developers are satisfied they can finalize the smart contracts making them immutable.
- Scalability: Flow blockchain is much more scalable and cheap as compared to Etherium 1.0.
- Other blockchains like Etherium need to accommodate all use cases. Hence it optimizes for the average use case. This results in developers having to make compromises on the design and efficiency of their application (for example, requiring use of the account model in a payments platform where a UTXO model may be preferred).
- Flow blockchain was tailor-made to launch NFTs and NFT apps.
🤖How does it work ?
In a traditional blockchain, every node stores the entire state (account balances, smart contract code, etc.) and performs all of the work associated with processing every transaction in the chain. This is analogous to having a single worker build an entire car.
From manufacturing to CPU design, pipelining is a common technique for dramatically scaling up productivity. Flow applies pipelining to blockchains by separating the jobs of a validator node into four different roles: Collection, Consensus, Execution, and Verification.
This separation of labor between nodes is vertical (across the different validation stages for each transaction) rather than horizontal (across different transactions, as with sharding).
Flow ecosystem consists of 5 types of nodes:
- Collection nodes: They collect transactions from users and send them to consensus nodes for inclusion in the block.
- Consensus nodes: They run Byzantine Fault Tolerant (BFT) consensus algorithm to reach an agreement over the set of transactions to be included in the next block.
- Execution nodes:
- They execute the finalized blocks generated by
the Consensus Nodes.
- They publish the resulting execution state as an Execution Receipt. The Execution Nodes also need to provide the required information to the Verification Nodes so they can check the execution result.
- They execute the finalized blocks generated by
- Verification nodes:
- They are responsible for collectively verifying the correctness of the Execution Nodes’ published results.
- With the chunking approach of Flow, each Verification Node only checks a small fraction of chunks.
Nodes have to stake FLOW tokens to participate in the process of adding new blocks to the blockchain:
- Collection nodes have to stake min 250K FLOW tokens.
- Consensus nodes have to stake min 500K FLOW tokens.
- Execution nodes have to stake min 1.25 million FLOW tokens.
- Verification nodes have to stake min 235K FLOW tokens.
Users who want to participate but do not have sufficient FLOW tokens can delegate their tokens to other node operators in return for block rewards.
The block reward to each type of node vary depending on the requirement of the type of node to grow the network at the time.
🏛️ Governance model
Flow team develops and holds Flow treasury. The project’s governance is presently centralized, however, the Flow team has declared their plans to decentralize the governance of Flow blockchain in the future.
🤑 How much money does the project have for future development ?
- Flow raised:
- $11.20M in Aug 2019 in a private sale.
- $13.40M in Aug 2020 in another private sale.
- $8.50M in Nov 2020 in a private crowd sale.
- The project holds around 55% of FLOW tokens to be used for future development.
😨 Risks and challenges
- Centralization: Dapper labs run majority of consensus and execution nodes. Average user can only run validator node that too after their application is accepted by Dapper labs.
- New programming language: Developers have to learn new programming language called Cadence to deploy smart contracts on Flow blockchain. Cadence is not used by any other blockchains. Why will a developer choose to learn Cadence when he can spend time learning popular programming languages like Solidity, which is widely used?
- Scalability: Flow blockchain has a maximum transaction rate of 100 transactions per second, which is not sufficient to accommodate all NFT use cases.
- Competition: There are numerous layer 1 smart contract blockchains, each of them supporting NFTs. It’s beneficial to launch NFT projects on popular blockchains like Ethereum, which has large ecosystem of dapps adding use-cases of the NFT.
- NFTs may be a bubble: It is also likely that the NFTs are just a passing craze and do not deserve to have such a high valuation. This image of a cat sold for $600,000.
- Although they are partnering with many many sports brands, however, Flow blockchain does not have any bridges to use their NFTs on any other blockchains.
20M FLOW tokens were minted initially and distributed as follows:
These tokens will be released as follows:
🧐 Indicators to watch out for
- Number of transactions:
- Twitter following: