What is FLOW (FLOW)?
FLOW emerged from Axiom Zen – the Canadian business incubator, founded by Roham Gharegozlou, that brought the world CryptoKitties – the most successful collectable feline NFTs ever. And, it was precisely this episode that planted the seed for FLOW. You see, the incredible popularity of CryptoKitties resulted in a gas fee crisis for the Ethereum network.
This caused the Axiom Zen team to meet with Vitalik Buterin and other Ethereum developers to try and find a better solution. But, the answers provided by Ethereum didn’t satisfy Axiom Zen, so they decided to make their own blockchain instead – one that would solve the scalability problems, and give the world a better way to enjoy NFTs.
So, in 2018, AxiomZen founded Dapper Labs. The new company took the progress Axiom Zen had already made on a new blockchain, and the CryptoKitties brand, and ran with it. Dapper quickly raised $12 million in funding from major VCs like Andreessen Horowitz and Union Square Ventures and went on to take that total to over $600 million – valuing the company at over $8 billion.
In 2019, Dapper Labs released the first preview of the FLOW blockchain, and in May 2020 it’s Beta Mainnet went live. In October of the same year, FLOW’s first major DApp went live in the form of NBA Top Shot – the official NFT trading card marketplace from the National Basketball Association.
FLOW (FLOW) Basics
FLOW Blockchain
FLOW is a proof-of-stake blockchain, using consensus mechanism derived from Hot Stuff – which was developed by a team at Cornell University. Unusually, the FLOW blockchain was built from the ground up using a brand new programming language called Cadence. The new language was specifically designed to be developer friendly and was specially tailored to NFTs.
Interestingly, Hot Stuff was also used by Facebook’s now-defunct Libra cryptocurrency project. In fact, Cadence was created with the help of developers at Libra and was based on another programming language called Move, which was created entirely by Libra’s development team.
A major difference between FLOW and other proof-of-stake blockchains is that it doesn’t have validators in the typical sense. Rather, it utilises a ‘multi-node’ architecture that has four different core node types:
- Collection nodes
- Consensus nodes
- Execution nodes
- Verification nodes.
There’s also a fifth type of node, Access nodes, but these do not require FLOW coins to be staked.
This approach helps FLOW, theoretically at least, tackle the blockchain trilemma – promoting decentralisation, scalability, and security. However, FLOW only seems able to process 100 transactions per second (TPS) – which might be more impressive than Ethereum’s 15 TPS, but still lags way behind others like Cosmos (ATOM) with its 10,000 TPS.
FLOW Staking
To operate one of the four core node types requires the staking of a set number of FLOW coins, as follows:
- Collection nodes: 250,000 FLOW
- Consensus nodes: 500,000 FLOW
- Execution nodes: 1,250,000 FLOW
- Verification nodes: 135,000 FLOW
Although Consensus and Verification node hardware requirements are relatively low, allowing for regular people using consumer grade equipment to run them, nodes must be approved by Dapper Labs before becoming part of the FLOW network.
Despite this, anyone holding FLOW can delegate their tokens to selected nodes via the FLOW Port wallet portal which is compatible with Ledger and Blockto wallets.
Node operators are rewarded with FLOW at around 9% per year, and those delegating FLOW can earn around 8% per year. It should be noted that staking rewards can be adjusted for different node types (i.e. Collection, Consensus, Execution, and Verification) on a supply and demand basis.
FLOW (FLOW) Adoption & Usability
When FLOW launched in early 2021, NFTs were booming. This, quite naturally, led to a surge in interest in the blockchain. However, by early 2022, the crypto winter had thoroughly set in, and the NFT mania was well and truly over. Of course, this doesn’t mean that FLOW, or NFTs, don’t have a future, but that it’s difficult to gauge how successful it really is.
As a cryptocurrency, FLOW is primarily a governance token of the FLOW blockchain and ecosystem, but at the time of writing in November 2022, it was the world’s 38th biggest crypto by market capitalization (CoinGecko data), at $1.16 billion. It is supported by many crypto exchanges, and so is easily tradable.
FLOW (FLOW) Fees & Speed
Transaction fees on the FLOW blockchain are so low as to be negligible – with average transactions costing a fraction of a cent. In terms of speed, transactions are processed in around 10 seconds.
FLOW Security and Safety
The FLOW blockchain has proved to be secure and reliable. Its highly decentralised and distributed network means it is highly resistant to manipulation and censorship, while optimising performance.
Security and safety tips:
- Don’t leave your FLOW on-exchange for longer than absolutely necessary. If you are not currently trading, transfer them to a local wallet for short-term storage or staking.
- For long-term storage or staking, keep your crypto in a hardware wallet.
- Always keep your wallet keys in multiple safe places – they cannot be recovered.
- Never tell anyone about your crypto holdings. No matter how secure your storage is, if you or your loved ones are physically threatened, you’ll probably hand over your personal keys.
FLOW Volatility
As previously mentioned, FLOW launched just as NFTs were starting to boom, so its price saw a very steep rise. From just under $7 at launch in late January 2021, FLOW surpassed $42 by 5 April of the same year. However, it then crashed, and although it spiked again in mid-2021, at the height of the crypto bull run, it subsequently collapsed. At the time of writing in late November 2022, with the NFT market decimated, FLOW was trading at just $1.12 (CoinGecko data).
Final Word on FLOW (FLOW)
When considering FLOW, context is everything. The blockchain and crypto are absolutely optimised for making NFTs accessible and economical, and the project has attracted some big name partners. But, there’s no denying that after an initial boom, the NFT market is now just a shadow of its former self.
So, is FLOW a good bet in the long term? Well, that depends on what you think of NFTs? Are they a short-lived gimmick, or will they fundamentally change the way people buy, sell, and store art, collectibles, music, domains, memberships and more? If NFTs have a future, then so does FLOW, but if they fade into obscurity, then FLOW sinks too.