Data is the backbone of the modern world and is driving innovation in various industries. When it comes to blockchains and decentralized finance (DeFi), data plays an even more crucial role. With a new solution called Flare Network, data can now be utilized in a more efficient and secure manner. During the second day of Token2049 in Singapore, we sat down with Hugo Phillion to discuss his thoughts on the current state of the blockchain industry and his project, Flare Network.
The Role of Artificial Intelligence For Blockchain
As the Co-Founder and CEO of Flare Network, Hugo Phillion has extensive knowledge and experience in both the blockchain and artificial intelligence (AI) industries. The conversation starts off with a brief overview about large language models' role in the blockchain space.
With the rise of AI and machine learning, large language models have become increasingly important for data processing and analysis but to fine tune and optimize them, layers of tailored blockchain embedding is needed. Hugo expresses that a Hackathon is planned in the near future to gather feedback and improve the current model.
AI can make blockchains better but the opposite is also true. As blockchain technology continues to evolve and scale, it provides a more robust and secure platform for AI applications. With the help of smart contracts, data can be shared between different parties securely and efficiently. Blockchain can give resistance to malicious actors and ensure the integrity of data, making it an ideal infrastructure for AI.
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The Flare Network's Approach To 'Connect Everything'
If someone in the street came to you and said, "Can I borrow a million dollars," you'd be unsure if you can trust them or not. In the loan industry, collateral is used to minimize risk and give assurance that the borrower will repay the amount borrowed. This is what's known as a security model. As an analogy, the problem with current oracle systems (which are used to supply data to smart contracts) is that they do not provide any collateral. Users essentially have to just trust the provider of the data, which can lead to potential vulnerabilities and manipulation.
"Flare is a layer one and it runs on the Ethereum virtual machine, its key differences is that it has enshrined oracles."
Hugo Phillion, Co-founder & CEO of Flare Network
To elaborate further, Hugo explains that traditionally there is a blockchain and there is an external oracle system and this system doesn't derive security from the blockchain. These oracles have to create their own security model and most of them do not excel at this. Therefore, Hugo and his team at Flare Network have built a system where the oracles are enshrined in the protocol itself, making it more secure and efficient.
"Oracles are securing $40 billion in value and their are losses that people can take from bad oracle prices," shared Hugo.
Creating New Models For Fairer Data Usage
By unifying the security model of the blockchain with the accurate data of Flare Network's oracles, the platform aims to reduce the risks and losses associated with inaccurate oracle prices. This is a major step in bridging the gap between blockchain technology and real-world use cases. Accuracy and trust are key factors in the success of any blockchain-based project and Flare Network's innovative approach addresses these crucial aspects.
Even the smallest deviation and corruption can lead to unfair liquidations and from that comes the potential for further crashes in the market. This means the game is skewed as some players might be favored over others. Flare Network aims to eliminate these disparities by introducing a more secure and reliable oracle system.
With a lack of diverse providers for the two main Oracle providers in the blockchain ecosystems, it doesn't take much to manipulate the prices to benefit individuals or groups. This can lead to market manipulation and unfair advantages for certain players.
"The entire point of crypto is that there shouldn't have to be any legal contracts."
Hugo Phillion, Co-founder & CEO of Flare Network
Hugo has a major issue with the perception that most people have about how there is something securing these prices and that they are accurate. The general public believes that there is some sort of legal contract but this is simply not true. Code should be enough to trust the data. Oracles need to be more secure and transparent with their data. This is where Flare Network's oracle system comes into play.
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The Tokenomics of Flare Network and How It Works
There are 100 validator nodes and 67% of their tokens are staked and their responsibility is to bring in prices. There are two types of oracles. One is known as the Flare Time Series Oracle which is for prices and other types of time series data as the name suggests. This can be data points such as weather, carbon emissions, things that are essentially "noise". The second oracle is The Flare Data Collector and this is for deterministic data where the answer is the same for every time.
Each validator is responsible for participating in both oracles and they get rewarded for it. Oracles have money at risk if they provide bad data. This incentivized model ensures that the data is accurate and reliable. This security model exists because most crypto networks rely on trust and transparency. By removing this reliance, Flare Network is able to provide a more secure and decentralized platform.
With a collateralized bridge for non-smart contract assets on their roadmap, Flare Network is poised to become a major player in the DeFi space. Bridging has a similar problem as Oracles as it requires trust in a centralized entity. Hugo and his team are building a new bridge that connects their oracles' data and price to hold and maintain collateral against a bridge position and gain data from other networks. This feature will allow for more collateral to be held in a bridge and increases the efficiency and security of cross-chain transactions.
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Final Thoughts
Developers can benefit from Flare Network because essentially all dApps requires some form of data from the outside world, and Flare Network's oracles provide an efficient and secure way to access this data. With its incentivized model, developers can have confidence in the accuracy and reliability of the data, allowing them to focus on building innovative dApps.
With the bridge launches expected for the end of this year going into 2025, Flare Network has the potential to become an integral part of the blockchain ecosystem. Its unique approach to integrating oracles and bridges sets it apart from other blockchain networks, making it a strong contender for future success.
