Flow is a blockchain developed specifically for NFTs and gaming by Dapper Labs and is built to enable scalability to support millions, or even billions, of users.
General purpose blockchains such as Ethereum operate a “one-size-fits-all” approach, with a single monolithic chain supporting many different application types. However, as the blockchain ecosystem has grown, the shortcomings of such an approach, including a lack of scalability, congestion, and high fees, have become apparent.
NFT apps and decentralized games are particularly exposed to these issues. Gaming can involve high volumes of users and transactions requiring fast settlement for uninterrupted play, while NFTs, which are typically a feature of gaming dApps, involve more computing power and thus incur higher transaction fees to process.
As NFTs and on-chain gaming grew in popularity over the years between 2018 and 2021, these challenges led to demand for more scalable and accessible services, resulting in the development of the Flow blockchain.
Who created Flow?
Flow was developed and launched by Dapper Labs, the Web3 gaming company best known for NFT initiatives such as NBA Top Shot. Dapper Labs was launched in 2018 as a spinout following the success of Cryptokitties, an early viral NFT game.
Along with its virality, Cryptokitties achieved notoriety for becoming the first dApp with enough transaction volume to create congestion on Ethereum, thereby revealing the biggest weakness in the platform.
After going on to achieve further success with the launch of NBA Top Shot, Dapper Labs launched the Flow blockchain as a more flexible and scalable alternative to Ethereum that could meet its needs. The platform now hosts the entire Dapper Labs stable of NFTs, including NBA Top Shot and Cryptokitties. Flow is also an open development platform where NFT and game developers can launch their games and apps.
How does Flow work?
Solving the scalability challenge in blockchains invariably comes with trade-offs. Operating a small validator network can make it faster to confirm transactions but compromises decentralization, and thus, network security.
Some projects use sharding, or partitioning of the blockchain database, to enable parallel processing, increasing scalability. However, sharding may compromise the composability of blockchain applications, affecting the seamless flow of liquidity or data between apps operating on different shards.
To overcome these challenges, Flow uses a multi-node architecture that splits the various tasks involved in block validation into different groups within the network:
- Consensus Nodes are responsible for selecting and ordering transactions to be entered into the blockchain ledger.
- Execution Nodes carry out the computational work necessary to process each transaction.
- Verification Nodes oversee the Execution Nodes
- Collection Nodes enhance network connectivity and help to ensure data availability for apps.
This distribution of labor makes it faster for each node to complete its own individual workload, creating a scalable blockchain with fast finality without compromising on decentralization or network security.
Flow operates a Proof of Stake (PoS) consensus.
Developer and user features
The other standout feature of the Flow blockchain is its developer-friendliness. It uses the Cadence smart contract programming language, which is a resource-oriented language native to Flow. It’s designed to be easy to read and learn, making development on Flow accessible to developers who may not otherwise be attracted to blockchain.
Smart contracts can also be deployed in beta on Flow, allowing for testing and upgrades and reducing the risk that buggy code will be published immutably to the blockchain.
User features of Flow include walletless onboarding, enabling signup for Flow apps without a cryptocurrency wallet, and who may not be familiar with blockchain-based applications or cryptocurrencies.
FLOW token
FLOW is the native token of the Flow blockchain, serving several utilities within the ecosystem.
Transaction fees on Flow are paid in FLOW tokens, which also have additional utility for payment of storage deposits to reserve on-chain data storage.
FLOW is also the staking currency under Flow’s proof of stake consensus, with different minimum staking thresholds ranging from 135,000 FLOW for Verification Nodes to 1.25 million FLOW staked for Execution Nodes. The staking model also allows for delegation, so FLOW holders can delegate their tokens to a staking node to participate in a share of rewards.
FLOW is an inflationary token with an annual issuance of around three percent. All newly issued FLOW tokens, along with transaction fees, are allocated as network rewards. Nodes receive compensation in FLOW, and rewards may be adjusted within parameters according to the supply and demand for different network roles to ensure adequate network availability.
Finally, FLOW is also intended to be used as a governance token in the future; however, as of late 2024, on-chain governance is not yet live.
At genesis in June 2020, there were 1.25 billion FLOW tokens, with an allocation as follows:
- 32% for ecosystem development
- 20% for Dapper Labs as the corporate entity funding the development of the Flow blockchain
- 18% for the development team
- 10% to community sales
- 20% to large and small backers of the project.
Flow essentials
- Flow is a blockchain platform built to support the NFT and gaming projects of Dapper Labs, the blockchain development company behind NBA Top Shot and Cryptokitties.
- Flow is a proof-of-stake blockchain that uses a multi-node architecture to enable high scalability without sharding.
- FLOW is the native token of the Flow blockchain, used in the proof of stake consensus for staking, delegation, and rewards, as well as for the payment of transaction fees and on-chain services.