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FLR / XRP


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19 hours ago, Swapex said:

1FLR = 2XRP

not quite yet......... although I'm extremely interested to see how the IOU price and real price play out once launched. Should be some wild candles

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21 minutes ago, XRPwinning said:

not quite yet......... although I'm extremely interested to see how the IOU price and real price play out once launched. Should be some wild candles

I was initially a lot more skeptical of the prices because I was worried about a tax liability situation forcing people to sell significant amounts of FLR as soon as they get them. I believe they figured out a way to do the airdrop without that problem, though.

Another hugely positive development is that they got exchanges to support trading as part of the airdrop support agreements. Again, I might be misremembering this, but this is what I vaguely recall seeing. @Seoulite might be able to confirm. If true, the benefit with such a large market on day 1 is that sellers will invariably find buyers and there might be price support. 

Using Flare is actually very easy. But the initial exposure to Flare for many retail investors was through very academic white papers, and Flare is a fairly complex system even by Blockchain standards.

  • The complex system is needed to help access massive liquidity across multiple blockchains.
  • The benefit is the ability to generate yield for holders across multiple blockchains.

But most users don't care about the inner workings, do they ? Most of them want to click a button and get money. So in the near-term, it'll come down to good quality user experience, wallets, and marketing. 

In the medium to long term, it'll have to prove itself against Ethereum. Flare team may say it's in a different market from Ethereum, but it's a superset of Ethereum. I don't see it taking away Ethereum market but comparisons are inevitable. 

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One other thing that I forgot to mention. I always wondered how they were going to create a market for Agents for the use-case where you simply pay a fee and mint all of your XRP as FXRP.

Flare Foundation recently confirmed (or at least it was news to me) that they will be an Agent from day 1. That clicked a few more things in place for me. 

  1. Tax liability from the airdrop - First airdrop is at 0 value. Subsequent airdrops are bought for a small amount of FLR rather than given for free. Technically it's not found treasure anymore.
  2. Liquidity for all XRP/LTC/DOGE/XLM users to mint F-Assets - By Flare Foundation acting as an agent. Here's the beauty though, Flare Foundation owns about 55 B FLR and all XRP holders own about 45 B. While it's wishful thinking, let's say a significant portion of LTC/DOGE/XLM users also decide to mint F-Assets apart from the XRP holders who already own close to 45B XRP. What's the minimum collateral ratios and price that FLR needs to support ? Again @Seoulite did some math on this, so check that out. 

I'm still a little unclear about tax implications of minting F-Assets. CoinTracker appears to default to "not taxable" for similar systems (see https://www.cointracker.io/blog/defi-yield-farming-crypto-tax-guide, search for "wrapping") but  some on this forum indicated that Flare's system was a bit more complex and may be considered taxable.

Once there's a bit more clarity on the F-Asset taxation question, things are going to move very fast as far as FLR price is concerned. I suspect this is literally the reason why Flare wanted to support DOGE specifically. The quality of the asset itself doesn't matter. What matters is the daily volume. The higher the daily volume captured in the Agent system, the higher the FLR price because that much FLR is getting locked. The more spread out the liquidity across blockchains, the more stable the price.

On paper at least, Flare has an absolutely brilliant strategy. It rewards staking without a Proof-of-Stake consensus. It has multiple levers for investors to pull and earn yield. It makes passive investment easy (FTSO) but active investment even more profitable (Flare Finance, TrustLine). Once it gets going, it provides access to massive liquidity, making it very attractive to other blockchains.

Edited by Ripley
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7 hours ago, Ripley said:

Another hugely positive development is that they got exchanges to support trading as part of the airdrop support agreements.

I am cautious about this. These agreements are almost certainly not legally binding. It's not a slam dunk by any means.

6 hours ago, Ripley said:

Flare Foundation recently confirmed (or at least it was news to me) that they will be an Agent from day 1. 

No, Hugo will represent Flare Networks Limited, a for-profit entity. The Flare Foundation is a separate entity that is non-profit, and can be dissolved under a governance vote.

Hugo confirmed that Flare Networks Ltd will act as an agent. They are receiving a certain amount of spark as 'founders'. I can't remember exactly how much but it's not 55B.

6 hours ago, Ripley said:

I always wondered how they were going to create a market for Agents for the use-case where you simply pay a fee and mint all of your XRP as FXRP.

Agents receive the fees in the native assets, so if you are an agent for the minting of FXRP, you will receive the fee in XRP. Same for DOGE, LTC, etc. This is the incentive to act as an agent.

6 hours ago, Ripley said:

While it's wishful thinking, let's say a significant portion of LTC/DOGE/XLM users also decide to mint F-Assets apart from the XRP holders who already own close to 45B XRP. What's the minimum collateral ratios and price that FLR needs to support ?

I did back of the napkin math for this, however I assumed only 1% of potential F-assets were minted. I think this is more reasonable than a very high percentage, especially in the beginning. It is all very speculative but I believe the F-asset price floor is AT LEAST 20-30 cents. That is with very modest amounts of minting and relatively high levels of collateralization.

6 hours ago, Ripley said:

I suspect this is literally the reason why Flare wanted to support DOGE specifically. The quality of the asset itself doesn't matter. What matters is the daily volume.

It also seems like Hugo is hoping that community building will begin on the various underlying chains - DOGE specific apps built by and for the Doge community, for example. 

6 hours ago, Ripley said:

On paper at least, Flare has an absolutely brilliant strategy.

I agree the tokenomics of Flare are revolutionary, which makes it a little unclear about how it will all shake out. But it's still exciting.

 

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14 minutes ago, Seoulite said:

No, Hugo will represent Flare Networks Limited, a for-profit entity. The Flare Foundation is a separate entity that is non-profit, and can be dissolved under a governance vote.

Hugo confirmed that Flare Networks Ltd will act as an agent. They are receiving a certain amount of spark as 'founders'. I can't remember exactly how much but it's not 55B.

Agents receive the fees in the native assets, so if you are an agent for the minting of FXRP, you will receive the fee in XRP. Same for DOGE, LTC, etc. This is the incentive to act as an agent.

Hmm, I didn’t know about either of those facts. Thanks !!

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14 minutes ago, Seoulite said:

Agents receive the fees in the native assets, so if you are an agent for the minting of FXRP, you will receive the fee in XRP.

This is an interesting point that I had missed…. If the fees are paid in native assets then that means someone (the “system”??) has o have a pile of that native asset to pay that fee with.

 

So at the very least that is a buy pressure (of unknown size) on the underlying asset.  Interesting.

But also…. Who manages that pool of asset for fee paying?  How big is it?  A number of things might flow from this…

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1 minute ago, Ripley said:

Hmm, I didn’t know about either of those facts. Thanks !!

No problem! It's complicated, and everything is called 'Flare' so it doesn't help. I checked again and it is:

45 billion to XRP holders

25 billion to Flare Networks, Ltd, the for-profit branch,

and 30 billion spark tokes will be allocated to Flare Foundation, non-profit.

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1 minute ago, BillyOckham said:

This is an interesting point that I had missed…. If the fees are paid in native assets then that means someone (the “system”??) has o have a pile of that native asset to pay that fee with.

 

So at the very least that is a buy pressure (of unknown size) on the underlying asset.  Interesting.

But also…. Who manages that pool of asset for fee paying?  How big is it?  A number of things might flow from this…

So when you mint you send your assets directly to the agent, you are basically trading with the agent.

Example:

I want to mint 1000 FXRP with my 1000 XRP. Let's say the fee is 0.5% (this will be dynamic). I then send 1000XRP to the agent and I will receive 1000 FXRP minus the fee, so 995 FXRP. The agent receives that XRP fee. 

When I want to go back to XRP from FXRP, I will tell the system and the agent will then have a very short amount of time to pay up the equivalent value in FLR, which I believe the system will automatically convert  from FLR to XRP for you. 

So no there won't be any additional buy pressure, unless you include the desire to buy XRP in order to mint FXRP, but I don't know how big that will be, especially in the beginning. 

Hugo confirmed that agent assets will not be pooled, because of the custodian issues etc. However, he did say that he expects services to pop-up that will allow you to give your FLR to an agent, who will do all the dirty work for you, and give you a cut of the fees in the underlying assets.

You can of course be your own agent, but this involves a fairly significant risk. The punishments are severe if you allow your collateral to slip below the required levels or if you don't redeem the F-asset in a short amount of time whenever it is demanded. Basically monitoring the whole thing is likely to be a full-time job. 

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8 minutes ago, Seoulite said:

So no there won't be any additional buy pressure

But who pays these fees?  They have to be above an beyond the XRP the agent receives at the minting.  Where do they come from?

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5 minutes ago, Seoulite said:

Hugo confirmed that agent assets will not be pooled, because of the custodian issues etc.

As in, different Agents are responsible for custody of their own assets (received from originators) and there isn’t a massive vault where all Agents’ assets on that blockchain are held together. Is that what you meant ? 

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5 minutes ago, Ripley said:

As in, different Agents are responsible for custody of their own assets (received from originators) and there isn’t a massive vault where all Agents’ assets on that blockchain are held together. Is that what you meant ? 

Yes I believe so. So you don't put you FLR into the system and randomly get small amounts of DOGE, XRP, LTC every now and then. Instead it is a direct transaction between minter and agent. 

However, as I said, given that a lot of services already exist for staking, I don't see that this is much different. For example if Bitrue was an agent, you just 'stake' your FLR with Bitrue and receive some of the fees that they make. They are already custodying your assets so there's not much difference there I don't think. 

That being said, it seems likely that you will be able to get greater rewards from other uses of FLR, for example in Flare Finance or in Trustline. This will also involve less management and fewer 'middle men', so likely that will be the route to go down. But when we get more details we can discuss it in detail. Also remember the F-asset thing doesn't go live until a month or two after the launch, so there will be time to see what kind of rewards are available and time for them to explain exactly how it will all work.

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