Analysis of Flow: The Evolutionary Road from Popular App to Public Chain

Dapper Labs has a proud record in the crypto world: after developing CryptoKitties, an OG popular app, it turned to the development of the public chain Flow, and launched the out-of-the-box product NBA Top Shot on the public chain, occupying the limelight. Currently, Flow is still actively expanding its ecological resources, and it has just been announced that former Meta executives will join the company. This article will analyze Flow from the perspective of product technology and operation ecology, and understand its current development.

product technologies

There are two biggest features in Flow’s technology, one is “multi-node architecture”, and the other is “resource-oriented programming”, and these two points correspond to two current hot trends: modular blockchain and Move system public chain.
The first feature of Flow, “multi-node architecture”, refers to the process of dividing the entire chain from calculation execution to completion of consensus into different processes, and using four different types of nodes to complete the corresponding work. Compared with the parallel division of labor in ETH Sharding, this is a vertical division of labor [1]. The current hot modular blockchain is a similar idea, and Flow can be seen as an early example of modularization.
The four types of nodes include: computing nodes, consensus nodes, verification nodes and collection nodes. Among them, the computing nodes have high operating requirements and must be deployed in the data center and implement the access system. Currently, there are a total of 7 computing nodes; in addition, the cloud core requirements of other nodes are lower, with a total of 400+ nodes.

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain


Flow tries to achieve scaling in this way. However, the current TPS is not very good. According to the official website, a simple transfer can reach 100+TPS, but the actual usage scenarios are mostly more complicated than the transfer, and it is estimated that it cannot be done [2]. The vertical division of labor also lowers the threshold for some nodes, allowing more users to participate in the consensus process, but the operation of computing nodes is still centralized, and the problem of “impossible triangle” still exists.

The second feature “Resource-oriented Programming” is the feature of its self-developed programming language Cadence. “Resource-oriented” is also a feature of Move, the common language of the three Libra-based public chains, Aptos/Sui/Linera. The Flow team was inspired by Move in the early days and completed the development of the Cadence language.

As a new language trend, resource-oriented programming aims to better adapt to the application scenarios of on-chain assets. Solidity is a “ledger model”, an asset corresponds to an owner, and all assets are recorded in a contract; while resource-oriented programming represented by Cadence is a “resource model”, all assets are recorded in the owner’s address, only The owner can call the method to move the asset.

Take the following two pictures as an example, the scenario is CryptoKitties transfer, but the ledger model represented by the left picture is to change the owner field corresponding to the asset, and the resource model represented by the right picture is to move the assets in the owner address out, and then transfer to a new one under the owner address.

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain


The current Cadence is still relatively independent. Although the idea of ​​Move is borrowed, there are major changes to the syntax, and the workload of code migration is still not small. It is difficult to share developers with the Move ecosystem in the short term. However, Flow has plans to launch Move VM, which may be able to share the ecological dividend of the Move system.

It is generally believed that the resource-oriented language has two advantages over Solidity: first, because the asset is placed under the owner’s address, it naturally avoids the “backdoor” of the contract controller calling the asset, so it is more secure; second, Some business logic can be handled better, for example, it is easy to implement the logic that one asset owns another asset.

Operational ecology

The project categories on Flow are very rich, NFT, Defi, games, etc. all exist. The official website shows that there are 1,000+ projects, but the NFT projects of traditional sports IP that really support the market value of Flow are the NFT projects launched by Dapper Labs itself and the NBA. NBA Top Shot – A collection of NBA game video NFTs.

The figure below shows the historical transaction volume of the top projects. Among them, NBA Top Shot has accumulated a total transaction volume of 1.11 billion US dollars, accounting for 89% of the Top 10. The second-ranked NFL ALL DAY and the third-ranked UFC Strike are the Rugby League and the Ultimate Fighting Championship, respectively, also launched by Dapper Labs; the fourth Gaia is a FLOW-based mall, and the fifth BALLERZ is a basketball-themed generative NFT series. The transaction value of other projects is less than 10 million US dollars.

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain


It can be seen that the top projects are NFT projects based on sports IP, and such projects contribute the main transaction volume to Flow. Although the Matrix World and the game (Chainmonsters) are also listed, but the proportion is smaller. In addition, there is also a Defi project Increment Finance on Flow, but the TVL is only over $3 million.

NBA Top Shot brings consistent revenue to Flow. In June and July of this year, the monthly turnover was 7.7 million and 8.3 million US dollars respectively, which included the hairstyle of the new card package and the secondary transactions between users [3]. Assuming that the transaction volume of NBA Top Shot accounts for ~85% of the entire platform, the monthly transaction volume of the entire platform is about 9.5 million US dollars, which is similar to Immutable X’s monthly transaction volume of 9 million US dollars [4]. However, Flow’s income should be higher than Immutable. On the one hand, the newly issued income is owned by the project and should be shared between NBA and Flow. On the other hand, all NBA Top Shot cards are traded in the self-built mall. The mall will charge a 5% tax on all secondary transactions; relatively speaking, Immutable only charges a 2% agreement fee for NFT transactions.

Although the cash cow of NBA Top Shot is used as a strong pillar, after all, the source of revenue is relatively single, not as diverse as Immutable X, and it is urgent to develop new application scenarios. Recently, Flow announced a cooperation with Meta to display user NFTs on Instagram. This is more like soft marketing, and it is uncertain whether it can effectively improve business indicators.

Token Economy

The token of Flow is $FLOW, and its core function is to pay the operation fee on the chain and distribute it to the nodes as an incentive. Ordinary users can also delegate pledges to nodes to share node incentives.

$FLOW also has a relatively unique role: due to the characteristics of resource-oriented programming, if users want to own assets, they must have corresponding storage space. For this, they need to pay a certain fee, and the payment method is to lock $FLOW. The space can also release the corresponding $FLOW.

$FLOW is issued at the end of 2020, with an initial issuance of 1.25 billion. In order to minimize the selling pressure, $FLOW implements low inflation, and the operation fees on the chain will be distributed to nodes. At present, the total mintage of $FLOW is 1.39 billion, and the circulation is 1 billion (data source CMC), accounting for ~72%.

In the initial allocation, 38% belongs to Dapper Labs company and development team, 20% belongs to investors, 32% belongs to ecological development, and 10% belongs to community sale.

Analysis of Flow: The Evolutionary Road from Popular App to Public Chain


Team and Financing

Founded in 2018, Dapper Labs gained early fame thanks to Crypto Kitties and brought a lasting reputation to the team before switching to the development of the public chain Flow. At the same time, sports star cards such as NBA Top Shot launched by Dapper Labs based on Flow have also become popular and continue to bring revenue to the team.

Dapper Labs has completed multiple rounds of financing from 2018 to 2021, with a total of $600 million in financing. Major investors include a16z, Union Square Ventures, Venrock, and Coatue.

CEO and founder Roham Gharegozlou, who graduated from Stanford, worked in a fund company after graduation. In 2013, he founded the creative studio Axiom Zen to help startup companies raise funds and develop products. Roham Gharegozlou also developed CryptoKitties in Axiom Zen. Dapper Labs was established in 2018 to focus on the CryptoKitties business and derived the public chain Flow.

CTO Dieter Shirley graduated from the University of Waterloo in 1996. After that, he worked as a software engineer in many companies including Apple. In 2013, he joined Axiom Zen as the chief software architect. Joined Dapper Labs together in 2018. Dieter Shirley is also the creator of the ERC-721 standard.

Dapper Labs recently stated on Twitter that Nick Grudin, former vice president of content and community partnerships at Meta, will join Dapper Labs as chief commercial officer, responsible for partnerships, developer experience and marketing[5]. This may bring changes to the ecological development of Flow.

Advantages and Challenges

Chain Tea House believes that the core advantages of Flow are:
1) Dare to be innovative in technology, adopting the idea of ​​modular division of labor and resource-oriented programming language earlier, and it is a team willing to open up new fields;
2) From CryptoKitties to NBA Top Shot, Flow is a rare company that has experience in consecutive successful blockbusters, and has an almost unrepeatable trust endorsement;
3) NBA Top Shot is also bringing continuous considerable revenue to the Flow public chain, and its fundamentals are relatively stable.

At the same time, Flow also faces corresponding challenges:

The current ecology is relatively simple, and the transaction volume is concentrated in several NFT products launched by Dapper Labs. Although other types of projects such as games and Defi also exist, they are not prosperous. The core variables of future ecological development: First, whether the Move language ecology can rise, and whether Flow can share dividends through Move VM, and the second is whether Dapper Labs can continue BD to a project with considerable revenue.

Posted by:CoinYuppie,Reprinted with attribution to:
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