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Flare networks - Spark token to XRP holders


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Because so many people seem confused about this whole claim process I am going to write a short explanation of what happens and why.  It’s not a how to...  others are doing that.  It’s a ‘what happens

Can be massive.

apologies if this has already been posted on this thread - great read if you enjoy Galgitron's style http://galgitron.net/Post/DeFi-Defined   

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36 minutes ago, yxxyun said:

So, spark is the native token on flare network, distribute to XRP holders.

FXRP is a XRP pegged token on flare network,  just like WBTC on ethereum.

I have not read the paper entirely, but I think that's correct. 'Spark' is distributed to current XRP holders. Spark is the native coin of the chain.

Then coins from other chains (which are non-turing complete, like XRPL) can be represented on this chain, collaterized with 'Spark':

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Instead of being used for network safety, Flare’s native token, the Spark introduced in section 3, is used to trustlessly issue tokens from non-Turing complete networks, such as XRP, onto Flare so that they can be leveraged in Turing complete smart contracts. Crucially, this trustless issuance on Flare does not require the cooperation of the non-Turing complete networks, meaning that the other networks do not have to make any changes to their protocol to enable the issuance on Flare. The Flare Network can then cooperate with interoperability protocols that do require bilateral protocol cooperation for cross-network asset issuance, such as Cosmos [ICS20], meaning that Flare can act as a unified frictionless pipeline of non-Turing complete assets into these networks.

 

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Example 3.3. Flare XRP (FXRP) [Net20] is a representation of the XRP Ledger’s (XRPL) intrinsic token, XRP. FXRP is backed by the Spark token and exchangeable 1:1 with XRP. The user does not need to trust a centralized party at any step throughout the creation, usage and redemption of FXRP, hence FXRP is trustless. The Spark token provides the collateral to underpin FXRP, hence it is only natural that the Spark token holders have a high level of governance over the FXRP system parameters. Spark token holders exert governance over the FXRP system through voting on system parameters that are encoded in smart contracts. An example of one such parameter is the FXRP collateral ratio. This is the value of Spark tokens that must be locked against issued FXRP, which at the outset is set to 2.5. It is then alterable via the proposal and governance process of Spark token holders and requires a super majority as defined in the governance section (see section 5) (at least 50% of all token holders participate and the proposal wins a 2/3 majority). The FXRP system requires a feed of the XRP/Spark price so that the value of collateral posted against issued FXRP remains above the collateral ratio. The price feed is secured by making it a responsibility of the two stakeholders in the FXRP system: the Spark and FXRP holders.

 

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4 hours ago, Mpolnet said:

Does anyone know how the spark tokens will be distributed? Do exchanges have to list the native spark token then distribute the FXRP token to XRP holders?

I need to read through this more, it hasn't fully "clicked" but it reminded me of this video.

https://flare.ghost.io/theflarenetwork/

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The 2.5x collateral ratio must be maintained at all times. If the price of XRP increases against Spark, such that the value of Bob's collateral falls below 2.5 times the FXRP issued against it, then Bob has a limited time to either add more Spark tokens as collateral or buy and redeem FXRP tokens to bring his collateral ratio back in line. For example, say 200 FXRP tokens are issued against Bob’s 5000 Spark tokens and the price of XRP/Spark increases to 12. Bob now needs to either add 1000 Spark to the system or buy and redeem 33.34 FXRP to reduce his apportionment of issued FXRP to 166.66.

 

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@KarmaCoverage Thanks, I saw this video. My question was more oriented towards how FXRP would be distributed to XRP holders when the Spark network/token is launched. I'm assuming exchanges would need to serve as the middleman to distribute the FXRP tokens?

EDIT: Looks like they mention working with exchanges in order to distribute the FXRP per the link provided. Thanks for sharing that.

https://flare.ghost.io/theflarenetwork/amp/?__twitter_impression=true

Edited by Mpolnet
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21 minutes ago, Mpolnet said:

@KarmaCoverage Thanks, I saw this video. My question was more oriented towards how FXRP would be distributed to XRP holders when the Spark network/token is launched. I'm assuming exchanges would need to serve as the middleman to distribute the FXRP tokens?

EDIT: Looks like they mention working with exchanges in order to distribute the FXRP per the link provided. Thanks for sharing that.

https://flare.ghost.io/theflarenetwork/amp/?__twitter_impression=true

not FXRP distribute to XRP holders.  it's spark to be distributed  to XRP holders.

if you want use FXRP you need collateral Spark on flare network.

Edited by yxxyun
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17 hours ago, Mpolnet said:

I'm assuming exchanges would need to serve as the middleman to distribute the FXRP tokens?

These are the 3 paragraphs that follow the prior one, and at first glance looks like a combo of Rippled consensus, ILP, Smart Contracts platform; and again at first glance, a new (to me) economic design to a smart contract network/ledger's native digital asset.

I posted David's video because it the "exchange function" is also a smart contract, and the methods it uses sounded similar to what David outlined.

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The 2.5x collateral ratio must be maintained at all times. If the price of XRP increases against Spark, such that the value of Bob's collateral falls below 2.5 times the FXRP issued against it, then Bob has a limited time to either add more Spark tokens as collateral or buy and redeem FXRP tokens to bring his collateral ratio back in line. For example, say 200 FXRP tokens are issued against Bob’s 5000 Spark tokens and the price of XRP/Spark increases to 12. Bob now needs to either add 1000 Spark to the system or buy and redeem 33.34 FXRP to reduce his apportionment of issued FXRP to 166.66.

If Bob doesn’t have access to additional Spark tokens it is not financially onerous for him to reduce the balance of FXRP supported by his address. Bob's collateral enabled the FXRP system to issue 200 FXRP tokens, in the process of doing so Bob has received 200 XRP tokens on the XRP ledger. Thus if Bob doesn't have additional capital to purchase Spark tokens he can either sell sufficient XRP for FXRP on an exchange such that he can redeem at least 33.34 FXRP or remaining in a purely decentralized environment if there are other agents in the FXRP system with sufficient excess collateral in he can mint sufficient FXRP and immediately redeem it. The second scenario essentially shifts the obligation to the rest of the system. If Bob does nothing and remains in default against the collateral ratio, Bob's collateral will be automatically auctioned off for the amount of FXRP issued against it, which in this case is 200. Bob retains any remaining collateral after this operation.

Let’s say that Bob opted to add additional Spark as collateral. Now some time later Alice who owns all of the 200 issued FXRP wants to redeem the whole amount back to the XRP ledger. Alice simply makes a transaction with the FXRP system sending the FXRP to the system and telling it what address she wants credited. The system then issues a set of instructions to Bob telling him how much XRP to send and where along with two XRP ledger number deadlines by which the transaction must be completed. If Bob completes the transaction by the first deadline his collateral is entirely unlocked. If Bob fails by the first deadline but succeeds by the second he is charged a small penalty fee and the rest of his collateral is unlocked. The penalty fee is burned.

If Bob fails to complete the transaction by the second deadline it is termed a redemption failure. Alice is then compensated with Spark tokens to the value of her redeemed XRP plus a 1% increase to cover transaction costs of buying back the XRP, this is drawn from Bob’s collateral. Of Bob’s remaining collateral 50% is burned as a penalty and the other 50% returned to him. Alice may then buy replacement XRP on an exchange. Alternatively, assuming there are other agents on Flare with issued FXRP and people who wish to sell it, Alice can buy more FXRP on Flare and redeem it against those agents.

 

 

Edited by KarmaCoverage
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10 minutes ago, yxxyun said:

not FXRP distribute to XRP holders.  it's spark to be distributed  to XRP holders

"FXRP safely allows an XRP holder (an originator) to send their XRP to a set of addresses (called agents) on the XRP Ledger. The FXRP smart contracts on Flare then issue the originator FXRP on Flare which is 1:1 convertible with XRP and secured with Spark. When a holder of FXRP wishes to redeem it for XRP ( a redeemer) they send it back to the FXRP smart contracts on Flare. The agents then send the XRP to the redeemers address on the XRP ledger. If the agents don’t complete this redemption quickly enough the redeemer is compensated the value of their XRP plus an amount to compensate for transaction costs to rebuy the XRP."

The above is from the following link: https://flare.ghost.io/theflarenetwork/

Yes, the network is called FXRP, with spark as the native asset that represents a peg to XRP. FRXP is the spark token back by an XRP peg - at least that's my understanding. 

EDIT: Sounds like FXRP is a derivative of the underlying assets. Net positive for the XRP ecosystem either way you look at it.

Edited by Mpolnet
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20 minutes ago, Mpolnet said:

"FXRP safely allows an XRP holder (an originator) to send their XRP to a set of addresses (called agents) on the XRP Ledger. The FXRP smart contracts on Flare then issue the originator FXRP on Flare which is 1:1 convertible with XRP and secured with Spark. When a holder of FXRP wishes to redeem it for XRP ( a redeemer) they send it back to the FXRP smart contracts on Flare. The agents then send the XRP to the redeemers address on the XRP ledger. If the agents don’t complete this redemption quickly enough the redeemer is compensated the value of their XRP plus an amount to compensate for transaction costs to rebuy the XRP."

The above is from the following link: https://flare.ghost.io/theflarenetwork/

Yes, the network is called FXRP, with spark as the native asset that represents a peg to XRP. FRXP is the spark token back by an XRP peg - at least that's my understanding. 

Quote

FXRP safely allows an XRP holder (an originator) to send their XRP to a set of addresses (called agents) on the XRP Ledger. The FXRP smart contracts on Flare then issue the originator FXRP on Flare which is 1:1 convertible with XRP and secured with Spark.

If use this way, send XRP to agents, how this can be called trustless?

Edited by yxxyun
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1 minute ago, KarmaCoverage said:

Same thing as using an exchange and sending your XRP to their XRPL wallet. Except you are trusting a smart contract with the business logic execution, rather than a Coinbase or Uphold. 

but XRPL didn't support smart contract, so it's same as coinbase or uphold.

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FXRP safely allows an XRP holder (an originator) to send their XRP to a set of addresses (called agents) on the XRP Ledger. The FXRP smart contracts on Flare then issue the originator FXRP on Flare which is 1:1 convertible with XRP and secured with Spark.

Seems like when you send XRP, on flare network the smart contract will lock some Spark as collateral or secure then issue the FXRP?

Edited by yxxyun
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