Flare: Blockchain Infrastructure Dedicated to "Data"

Flare is a blockchain infrastructure dedicated to "data" that aims to solve the problem of relying on external oracles. Although existing blockchains usually rely on external oracles to access data to ensure security, such a setup cannot guarantee the reliability of the data obtained.

Key Points (TL;DR)

- Flare embeds oracles into its core protocol, ensuring the reliability and integrity of data.

- Flare builds a data-driven blockchain ecosystem using three core protocols: FTSO for decentralized price feeds, data connectors connecting Web2 and Web3, and FAssets for leveraging non-smart contract assets.

- Flare started as a data infrastructure. With the launch of FAssets, it aims to become a liquidity hub that will connect the ecosystem, including assets such as Bitcoin, Ripple, and Dogecoin.

Weaknesses of blockchain technology

- Blockchain technology follows the principle of "code is law" and creates a trustless system that provides security and trust by automatically executing processes through code, eliminating the need for third-party intermediaries. However, the security of this system is entirely dependent on the integrity of the input data. If there is a problem with the input data, even a perfectly designed smart contract may go wrong, causing the operation of the entire system to become unpredictable, thereby causing potential risks.

- To address this challenge, the blockchain industry has introduced oracles, which are distributed data providers. However, oracles usually operate outside the blockchain, limiting their ability to maintain the security and integrity of the blockchain. In addition, the use of external data sources also introduces the risk of single point failure, and some oracles lack decentralization due to their reliance on a small number of nodes. Therefore, the reliability of data becomes a weakness of blockchain technology.

All for data

- Source: Flare

- Flare is a blockchain infrastructure dedicated to "data" that aims to solve the problem of relying on external oracles. Although existing blockchains usually rely on external oracles to access data to ensure security, such a setup cannot guarantee the reliability of the data obtained.

- Flare ensures that oracles enjoy the security of the blockchain by embedding them into its core protocol. A successful hack of an oracle requires compromising the entire blockchain network, a structure that ensures data reliability and security. Flare's approach is to integrate blockchain and oracles into one system, eliminating the security risks posed by external oracles. Developers can use embedded oracles to seamlessly build data-rich Web3 services without relying on external solutions.

- Flare offers three core protocols built on its embedded oracles. 1 ) FTSO (Flare Time Series Oracle) provides decentralized price information. 2) Flare Data Connector (FDC) integrates external chain and Web2 data into Flare. It verifies and protects the data within the blockchain. 3 ) FAssets makes non-smart contract assets such as Bitcoin, Ripple and Dogecoin available for DeFi, expanding their functionality in the blockchain ecosystem.

2.1. FTSO: Providing decentralized price information

- Flare's FTSO provides time series price data in a decentralized manner. This data includes asset prices updated at specific intervals and is critical to many Web3 services, especially DeFi. However, most services still rely on centralized data providers. Manipulation or errors in this data could compromise the reliability and stability of the entire system.

- The implementation of FTSO is particularly important because the limitations of centralized data providers have been demonstrated in historical cases. In March 2023, Berkshire Hathaway's stock price plummeted by about 99% due to a computer error, illustrating the risk of single-point failure in centralized data systems. If such errors occur in the automated environment of Web3, it may result in serious investment losses. Therefore, the decentralized and reliable data solutions provided by Flare are particularly important to help enhance the stability and reliability of the system in the blockchain ecosystem.

- FTSO, source: Flare Systems Explorers

- To address this, Flare uses a decentralized price feed system through FTSO, which has more than 100 independent validators . Validators collect time series price data from various sources and submit it to the blockchain. The consensus mechanism determines the most accurate value from the submitted data. Validators who provide inaccurate or manipulated data will be marked as outliers and excluded. They will not receive rewards and may face financial penalties. This system ensures the reliability and integrity of the data on Flare.

- Source: Flare

- The key differentiator of FTSO is that all 100+ validators participate in every price feed. Many oracles suffer from inconsistent validator participation, where some feeds are fully validated while others rely on only a few validators. Flare ensures consistent validator participation across all feeds. This minimizes data discrepancies between feeds and improves the reliability of the entire system. FTSO data is closely correlated with prices on major exchanges and stays within standard deviation, objectively demonstrating its accuracy and reliability.

- In May 2024, Flare released FTSO v2 , which increased the speed and scope of data processing. Previously, price information was limited to cryptocurrency prices, but now it can support a wide range of Web2 data, such as stock and commodity prices. The update cycle was shortened from 180 seconds to 90 seconds. The number of price information