Flow

What is Flow (FLOW)?

Flow, which describes itself as the blockchain for open worlds, is a fast and decentralized developer-friendly blockchain. It was designed as a foundation for games, applications, and the digital assets that power them.

The architecture of Flow is unique and designed to scale without sharding. It maximizes speed and throughput while retaining ease-of-use for developers.

Flow is built very much with its stakeholders in mind. Its applications ensure that consumers keep control of their own data, can access, create, and trade digital assets from anywhere in the world, as well as build economies that are owned by the users.

Flow is a smart contract-enabled platform which is backed by Dapper Labs, a team with significant experience in taking cryptoasset projects mainstream.

When Was Flow Launched?

Flow was launched in 2020 with the aim of solving technical challenges experienced by a major dApp developer on Ethereum.

Having previously been in internal development, Flow was unveiled to the public in 2019. At this announcement, it was revealed that Flow had raised $11 million in funding led by A16z.

Who are the Founders of Flow?

Flow was founded by Dapper Labs, the creators of CryptoKitties. CryptoKitties was integral to the development of Flow because when the digital cat trading game went viral, it made the Ethereum network very difficult to use, exposing flaws in scaling.

The team behind CryptoKitties, Dapper Labs, then went to work to solve the problems they had encountered. The end result was Flow, a blockchain specialized in handling applications like CryptoKitties.

Interestingly, Dapper Labs were previously known as Axiom Zen. Current CTO of Dapper Labs Dieter “Dete” Shirley, during his work on CryptoKitties with Axiom Zen, co-authored the ERC-721 standard of tokens on Ethereum. These tokens gave rise to non-fungible tokens (NFTs).

Axiom Zen was founded in 2012 by Stanford graduate Roham Gharegozlou. At the time, it was described as a venture studio specializing in mainstream applications of new platforms and emerging technologies, including blockchain and AI.

In 2014, Axiom Zen won the grand prize at the Money 20/20 Hackathon in Las Vegas, with two of its three submissions being Bitcoin apps.

How Does Flow Work?

Flow applies an upscaling technology used in various industries called pipelining to blockchain. The tasks of a validator are separated into four elements—Collection, Consensus, Execution, and Verification. Here’s how these work:

• Consensus nodes decide the presence and order of transactions on the network
• Verification nodes keep Execution nodes in check
• Execution nodes perform computations associated with transactions
• Collection nodes improve network connectivity and data availability for decentralized applications

This separation is made across the different validation stages for each transaction. This allows validating nodes to specialize and increase efficiency with regard to their particular function.

Sharding is a similar principle, but it is applied across different transactions, making it a horizontal separation of validators rather than a vertical one.

This multi-node architecture allows Flow to scale to significantly higher throughput and lower cost while maintaining a shared execution environment for all network operations. All contracts and accounts on the network can always interact with each other in a single transaction.

This ability, referred to as an ACID transaction, has the properties of being Atomic, Consistent, Isolated, and Durable. For the user, these ACID transactions cost less, are faster, and are more resistant to attack than transactions on a sharded blockchain.

What Makes Flow Unique?

Flow’s multi-node architecture is one of the major things that makes it unique.

One of the founding principles of Flow is that non-deterministic processes can be separated from deterministic ones, and each could be assigned to nodes based on their technical capabilities.

The design of Flow is such that a single honest node of any role can punish and trigger recovery from invalid data introduced by dishonest Collection and Execution nodes.

The Flow team also created their own new programming language called Cadence, as well as a new interface between dApps and wallets.

Flow positions itself as a developer-friendly blockchain, even going so far as to refer to itself as “Developer Ergonomics.” One significant but not unique example of this is open source tooling, where Flow has open sourced a series of developer tools.

Included among these are the Flow Go SDK, a tool for developers looking for backend integration, and the Flow Javascript SDK for frontend devs. Flow also has equivalent standards to Ethereum’s ERC-20 (fungible tokens) and ERC-721 (non-fungible tokens, or NFTs).

Additionally, Flow also looks at smart contracts differently than most other blockchains. While immutability, or the inability to modify a smart contract once deployed, is a key feature for most smart contracts, Flow has implemented upgradeable smart contracts.

What are Upgradeable Smart Contracts?

Smart contracts are pieces of code that execute predefined actions when certain conditions are met. Once deployed on the blockchain, these smart contracts usually can’t be changed, allowing the code to be audited by anyone.

Thus, users know what a smart contract will do and can trust it. Smart contracts can replace trusted intermediaries in various interactions between two parties, such as banks, escrows, lawyers, and so on.

However, Flow brings its developer focus to this realm as well. It isn’t easy for developers to get code right the first time, and history has shown that many smart contracts have been exploited in one way or another.

Flow allows smart contracts to be deployed to the mainnet in something akin to a beta state, where the code can be updated by their authors. Users receive alerts about the status and can choose whether or not to trust the code.

Once authors are satisfied that the smart contract is safe and in a finished state, they can release control over it and it becomes immutable from then on.

How is the Flow Network Secured?

Flow uses a proof-of-stake (PoS) based consensus process for security, including its unique multi-role architecture that allows nodes to specialize in one of four different parts of the process.

Consensus, or the selection and ordering of transactions, is separated from compute, where each transaction is executed and outputs are recorded. According to the Flow whitepaper on this part of the process, the result of this separation is a throughput increase of a factor of 56.

Flow adapts a variant of the HotStuff consensus algorithm for security. HotStuff is a leader-based Byzantine Fault Tolerant protocol which is highly resilient even to the failure or misbehaviour of a significant proportion of network nodes.

You can view all of Flow’s technical whitepapers, including those on block production and execution/verification, on Flow’s website.

What is the Use of FLOW?

FLOW is the native token of the Flow network, and its primary function is to fuel the use of the network itself. It is required for network usage and all on-chain applications to function.

Developers can build Flow directly into apps for payments, service charges, or to allow consumers to earn rewards for the value they create. The latter is a key principle of Web3, which puts power in the hands of individuals rather than the corporations currently monetizing the internet.

Token holders can also stake FLOW and run a validator node, or delegate their stake to those that do so to receive staking rewards and transaction fees.

FLOW is also required for the creation and usage of all other fungible or non-fungible tokens on the network. It is the currency that underpins the entire Flow ecosystem.

Who Controls FLOW?

Dapper Labs, the for-profit founders of Flow as well as CryptoKitties, Dapper, and NBA Top Shot, remain in control of Flow.

A company specializing in blockchain-based digital engagement, Dapper Labs has major partnerships across the entertainment industry. Some of these include the NBA and NBPA, Warner Music Group, and UFC.

Investors in Dapper Labs, meanwhile, include Andreessen Horowitz, Union Square Ventures, Venrock, Google, and Samsung.

How Much FLOW Is In Circulation?

At its genesis in June 2020, Flow minted 1.25 billion FLOW. 32% of this figure was set aside for ecosystem development. 20% went to Dapper Labs, 18% went to the developer team, 11.1% went to large backers, and 8.9% went to small backers. Moreover, 10% was sold to the community.

FLOW is an inflationary cryptocurrency, meaning that, like fiat, more will be created as time goes on. Unlike fiat currencies, however, the rate of FLOW creation is controlled. Furthermore, 100% of FLOW inflation is distributed to stakers.

The 400 million FLOW set aside for ecosystem development are subjected to lockups and are earmarked to bootstrap network effects. Notably, some of the first recipients of FLOW under this included major North American academic institutions such as Berkeley, Purdue, UC Davis, and Rochester Institute of Technology.

Meanwhile, the tokens held by the development team are subject to a 3 year lockup period. Dapper Labs has also stated its intention to hold its 250 million tokens as part of its long-term treasury.

How Do You Buy FLOW?

You can buy FLOW on many of the top cryptocurrency exchanges, where the greatest liquidity tends to be found when paired with the stablecoin Tether. However, other stablecoin pairs do exist, and FLOW is also often paired with Bitcoin as well.

Flow can also be purchased within the Flow network itself in peer-to-peer transactions.

Is It Possible to Buy FLOW Instantly?

It is indeed possible to buy FLOW on an exchange instantly, but this isn’t unique. Most, if not all, centralized exchanges (CEX) simply change user account balances to reflect trades, and settlement happens only when the asset is withdrawn.

This can make bigger cryptocurrencies like Bitcoin faster to purchase, as there is more liquidity, or buyers and sellers, of it at any given time. This is despite Bitcoin taking far longer to settle transactions than Flow does.

In fact, Bitcoin reaches finality, which is commonly defined as six block confirmations, in an hour, while Ethereum manages this in six minutes. FLOW, however, manages finality in no more than ten seconds thanks to its multi-node structure.

This means that not only are CEX transactions instant, but peer-to-peer and on-chain FLOW transactions are, too.

How Do You Store FLOW?

Like many, if not all cryptocurrencies, FLOW can be stored in a cryptocurrency wallet. Wallets can come in several types, the main ones being cold wallets and hot wallets.

Cold wallets store your tokens offline, keeping them safe from hacks or other forms of online attacks.

Hot wallets, on the other hand, connect to the internet for greater convenience. Some hot wallets come in the form of desktop clients, others could be lighter pieces of software like browser extensions.

Exchange accounts can also count as a form of hot wallet, but they are custodial, meaning that your coins are being held by a third party.

With its focus on users, Flow delivers a robust user experience by improving account recovery, adding multiple signature support, and ensuring that wallet interactions are human-readable.

Flow Energy Consumption

Since Flow uses a proof-of-stake (PoS) consensus mechanism for security, its energy consumption comes nowhere near matching that of major proof-of-work blockchains. This is important because it is PoW chains like Bitcoin that get criticized for their footprint by mainstream media.

PoS relies on economic incentivization and punishment rather than raw computing power. In turn, validating nodes do not really benefit in any way if they are more powerful in terms of hardware.

Is FLOW a Good Investment?

Flow is an exciting project built by a team that has real experience in taking a product to market and gaining massive traction with the community. The project itself accomplishes what it aims to, and provides developers with a novel and highly effective platform to build on.

Nonetheless, Flow is often criticized by the crypto community for being too centralized and too corporate. However, Flow’s focus isn’t really on the crypto community—it’s on developers on the one hand, and onboarding mainstream consumers on the other.

Flow focuses on mainstream consumers, those who aren’t experienced with wallets, keys, and validation, among a smorgasbord of other cryptocurrency widgets. This may well be a key factor in mass adoption and resulting demand for the FLOW token.

Mass adoption is Flow’s objective, but the approach is one of patience and decentralization over time. By making new technology tangible for normal people, Dapper Labs strives to grant consumers the Web3 trinity of ownership, rights, and freedom.