Flow (FLOW) is a high-performance blockchain specifically for creating NFTs, massive crypto games, and apps. Unlike general-purpose blockchains such as Ethereum, Flow is built to efficiently scale for potentially billions of people interacting with NFTs like in-game items.
Created by Dapper Labs, the same team behind NBA Top Shots and the infamous CryptoKitties blockchain game, Flow is a project in the right place at the right time. The NFT market is booming, and enormously popular social media platforms like TikTok and Twitter are rolling out NFT features.
Teams across major sports leagues, ranging from the NBA and NFL to MotoGP and esports, have debuted NFT initiatives and collectibles for fans. So, with NFTs already reaching mainstream status, Flow seems bound to succeed.
This guide explains Flow blockchain, how it works, and why the FLOW token might deserve a place in your portfolio.
What is Flow Blockchain?
Beginning with Bitcoin in 2009, blockchains are decentralized networks that have forever changed how people organize capital, data, and assets. Whereas the early and current forms of the web were about distributing content from centralized stores to users, blockchains are enabling what’s called the Web3.
Web3 is kicking off a paradigm shift wherein user-generated content is distributed to other users via user-owned platforms. So, instead of Facebook, YouTube, and Instagram owning content distribution networks, users own the rails themselves across highly efficient composable peer-to-peer networks.
In the context of Web3, content is loosely defined as any transmissible form of data. Whether that data is money, in-game items, profile pictures, or supply chain information makes no difference to the neutral user-owned network.
Now, what does all this Web3 talk have to do with Flow blockchain? Flow is a blockchain built specifically for Web3 assets and apps like NFTs, crypto games, and DAOs. In short, Flow believes blockchains are the backbone of the digital economy and is providing the toolset for developers to build it.
Ethereum, Solana, Polkadot, and other popular blockchains fit a similar description. In fact, most of the burgeoning NFT scene is built on Ethereum. So, what makes Flow blockchain different from Ethereum?
Fast, proof of stake-powered consensus without sharding
Near-instant finality without compromising decentralization
Highly scalable for massive gaming yet inexpensive to use
Upgradable smart contracts written in robust Cadence code
Uses recoverable Smart Accounts instead of keys & seeds
The history of Flow blockchain coincidentally begins on Ethereum. Back in 2017, Dapper Labs created CryptoKitties, the world’s first widely adopted blockchain game.
CryptoKitties centers around collecting and breeding digital cats. At the time of its release on Ethereum, CryptoKitties became so popular that it essentially took the Ethereum network down. Because of the sheer volume of CryptoKitties-related activity, Ethereum transactions slowed to nearly a halt, taking days and exorbitant gas fees to resolve.
The debacle led Dapper Labs developers to dream up their own ideal blockchain for crypto games and collectibles. It would need to be scalable to avoid Ethereum-like network congestion, and transactions would also need to be cheap — even under heavy usage.
Dapper Labs introduced Flow blockchain during an $18 million public sale on CoinList. Since then, the Flow blockchain ecosystem has grown to include NBA Top Shot, UFC, NFL, Samsung, Google, MotoGP, and Ubisoft partnerships.
What do all of those big names want to do on Flow blockchain? Why, create NFTs, of course! Creating NFTs on Flow is a simple thing to do — but more on that later.
How Flow Blockchain Works
Flow is built for speed, scaling, and developer-friendliness. The last point is essential because of Flow’s aim to become the default platform for NFT creators, gaming apps, and decentralized autonomous organizations (DAOs).
Flow Skips Sharding in Favor of Multi-Node Architecture
Whereas you might expect Flow to skimp on decentralization to achieve fast low-latency scaling (as other projects have), it’s instead gone ahead and innovated a way to scale without sharding.
Sharding is the parallel processing of bits of blockchain data as opposed to the entire database. It’s been hailed as the perfect solution to blockchain scaling because it dramatically lowers the workload for nodes, thus improving transaction throughput for decentralized networks.
However, Flow developers believe sharded blockchains are poorly suited to creating composable environments for smart contracts. Composability for smart contracts essentially means the contracts will play nicely together, allowing developers to quickly build on each others’ work.
That’s why Flow has instead gone with a multi-node architecture that skips sharding altogether. Instead of requiring every node to do multiple tasks, i.e., Collection, Consensus, Execution, and Verification, Flow breaks those tasks up so that nodes only specialize in one of them.
By breaking up the tasks required of nodes, each node can quickly parse through its work, enabling greater efficiency throughout the transaction validation process. The result is what Flow calls ACID — Atomic, Consistent, Isolated, and Durable transactions that pipeline the workload.
Putting Developers First
Owing to the mixed experience Dapper Labs had developing CryptoKitties on Ethereum, they’ve decidedly designed Flow with developers front and center. In practice, that means making things as easy as possible for new developers to get their feet wet or experienced developers to create vivid experiments.
The first component in Flow’s focus on developers is the Cadence programming language. Designed for smart contract programming, the Flow team calls Cadence the “...first ergonomic, resource-oriented smart contract programming language.”
Inspired by Diem’s Move language, Cadence is easy to read, simple to learn, a breeze to audit, and helps smart contract developers stay productive. The Flow Playground GUI offers an in-browser environment for experimenting with Cadence to make transitioning to Cadence extra smooth.
Another nice touch is the move away from Ethereum’s complicated ERC-20/ERC-721 token standards. Flow replaces those with easy-to-remember Fungible Token (FT) and Non-Fungible Token (NFT) standards.
Smart Contracts you can Upgrade
One of the most sought-after blockchain characteristics is smart contract immutability. That refers to how once a smart contract is deployed to the blockchain, it can’t be modified and will simply run as programmed — like a snack vending machine that just dispenses snacks.
But what happens when a smart contract is buggy? What if you want to modify your smart contract to avoid potential losses? On Ethereum, you have to push a fix through that might take weeks to implement.
To get around the complexity of smart contract fixes, Flow smart contracts can be added to the mainnet in a beta state. That gives developers time to observe the smart contract and make sure everything works without the pressure of getting it 100% right the first time.
Once developers are sure of the smart contract’s soundness, they can relinquish control, thus turning the upgradeable smart contract into a final immutable version.
Explaining FLOW Token
When Flow blockchain developers created the FLOW token, they envisioned it as the standard digital currency for a new generation of crypto games, apps, and NFTs. FLOW has several characteristics making it a potential winner amongst countless cryptocurrencies, including:
Deflationary tokenomics as network usage increases
FLOW has a refreshingly broad array of uses, some of which, like paying for storage rental on the Flow blockchain, give the token its stickiness.
FLOW Tokens Fuel the Blockchain
Like Ethereum, Solana, and Polkadot, Flow uses its native cryptocurrency as fuel for the blockchain. To settle a transaction (e.g., trigger a smart contract), users are required to pay either processing fees (simple transactions) or computation fees (complex or layered transactions).
Stake FLOW to Earn Staking Rewards
Flow uses a proof of stake consensus algorithm along with multi-node architecture. In combination, those two characteristics give validators plenty to do. However, to become a flow validator, you have to stake a minimum amount of FLOW tokens. Only after staking FLOW tokens can you begin your validator role, earning FLOW staking rewards in the process.
Because Flow validators have several different roles to choose from, doing the one most needed is most important. So, Flow developers designed the staking reward mechanism to give higher incentives to the validator role most needed at any given moment
Finally, you don’t have to become a Flow validator to earn FLOW staking rewards. You can easily delegate your stake instead. By doing so, you’ll still earn FLOW staking rewards but will pay a small portion of them to the validator you delegate to.
Using FLOW as a Governance Token
Flow is designed to be governed on-chain by the community using the FLOW token as a stake in the governing process. However, at first, Flow governance is happening mostly off-chain, with on-chain voting coming at a later date.
Once fully live, FLOW token holders will push through protocol improvement proposals, ecosystem decisions, protocol parameters, and hard forks. Additionally, DAOs built on Flow will have voting power via FLOW-infused secondary assets.
FLOW Token Metrics
Market cap = $1,251,694,932
Fully diluted = $51,206,934,169
Max supply = 66,913,753 FLOW
Circulating supply = 1,378,211,739 FLOW
Distribution type = ICO
About The Author:
The Shrimpy Team
The Shrimpy Team is comprised of highly experienced content writers who analyze and research the latest market trends, delivering content suitable for both beginner and veteran crypto investors.