The Alphabet Soup of TokensMaking sense of XRP, Flare, and Flare Finance Token Names
what a confusing word to me!
Until I get a picture in my head, and until I can find language for new terms, I fumble a lot. I’m making this page for myself, and to share with you my quest to understand how you can start with xrp and then start minting coin after coin after coin. So confusing.
A Hardware Store Picture
I’m trying out this picture: Minting tokens is like buying stuff from a hardware store. You go to the store and you convert one asset (dollars) into another asset (a shovel). That’s like minting, turning one thing into another, one token into another token. And you can return the shovel and get a refund back in dollars. And there might be a small fee for returning the shovel and minting it back into dollars.
Why would you want to mint? Because you can’t dig a hole with dollar bills – and you can’t buy groceries with shovels.
Hardware Store Departments
Why so many coins? Same reason a hardware store has so many departments. You use your dollars to mint shovels when you want to dig a hole. You use your dollars when you want to mint nails to build a fence. You use your dollars to mint a faucet when you need to fix your plumbing.
So…what are coins we can mint in the xrp, flare, flare finance ecosystem? And how do we exchange these tokens for each other? In the hardware example, how do we trade shovels for nails?
XRP is the base token of the xrp ecosystem. It’s the bedrock token of the whole system. In the hardware store example it compares most closely to coming into the store with dollars to buy some item from the store.
What can you mint directly from XRP?
- In Flare, you can mint FXRP, also called trustless XRP. Why would you do this? See the next column describing Flare minting.
- You can also mint stablecoins, including Central Bank Digital Currencies (CBDC’s) directly from the XRP ledger. So, this could end up being a huge hardware store, with central banks and other banks and other institutions able to mint specific tokens for specific uses (like the electrical section in the hardware store, wiring, switches, lighting, etc) Each of those items in the store, could be compared to minting a stablecoin for a specific use. And they can all interact (buying and returning) through XRP, which compares to the dollar you bring to the hardware store.
The Flare Network is where you can mint F Assets. The first example of this is FXRP. What function does FXRP provide? Why is it worth minting another coin like this?
In the hardware store example, its because you want the utility of a shovel to perform a certain task – hole digging. When you mint FXRP at the hardware store you get the utility of smart contracts, backed by the Flare token SPARK (FLR) at 2.5 times the value of the XRP.
Flare has also announced that they will be bringing Litecoin onto the Flare Network so that a Litecoin F asset can be minted, FLTC. Why is this useful? Why stock these items in the hardware store?
- Litecoin gets smart contract capability
- Flare gets more value on its system.
- F assets can interoperate and settle on the xrp ledger.
I’m betatesting the Flare Finance system and over there you can swap any one token for any other token. I imagine the same functionality will exist on Flare, so you can swap between all the F assets, and you can always mint your F asset back to its original blockchain, whether XRP, Litecoin, or whatever future chains are added. If this happened at the hardware store you could use your shovel to buy plumbing faucets, or lumber, or whatever.
Flare Finance is where the minting goes CRAZY! This is where the hardware store picture really helps me. I understand when I go into the store, each of those items has a different purpose. That’s the case on Flare Finance too.
YFLR is the native token for Flare Finance
YFIN is the reward token
XUSD is the stablecoin
What’s different from our hardware store is that on Flare Finance you can swap all these minted tokens for each other. Its like paying for a shovel with a two-by-four, exchanging that for an electrical switch and finally walking out the store with a bag of lawn fertilizer. Every item has value relative to every other item, and on Flare Finance you can swap directly without needing to convert back and forth to dollars like we do in a real hardware store. Mind-BLOWING! 10 years from now??? Beyond my imagination!!!
And there’s more – on Flare Finance Beta you can mint liquidity pool tokens. When you add liquidity to a pool with two sides to it (two assets added in equal value) you mint a liquidity pool token, and LP token. For example, if you’re adding FXRP and YFLR to the pool, this action mints an FXRP/YFLR LP token. Another item in the hardware store, it represents the value ratio between the two tokens in the pool.
SWAPPING – MINTING – POOLING
So…I started out wanting to get more familiar with the different tokens. But what’s really blown me away today is swapping and minting. My mind, right now, is the size of a hot air balloon – without the crew!
Tokens: Different tokens have different purposes. You study the token, and you find out what it can do.
- XRP – the native token on the XRP ledger.
- FLR – Spark – the native token on the Flare Network
- collateralizes the minting of FAssets, FXRP and FLTC
- Carries one vote that can generate yield by delegating to Signal Providers
- Carries a second governance vote for making decisions, like which FAssets to add to the Network.
- FXRP –
- minted from XRP, back 2.5 to 1 with the value of Spark (FLR).
- gives smart contract capability to XRP. FXRP converts one to one back and forth with XRP. You need the smart contract and collateralization of FXRP to operate on Flare and Flare Finance. Minting takes XRP and adds functionality to creates a new use and new token, FXRP.
- YFLR – the native token on Flare Finance
- XUSD – the stable coin of Flare Finance
- YMIN – the reward token given for staking liquidity
- LP tokens – these are tokens that are minted by pairing any two assets. That’s the mind blower – infinity and beyond.
SWAPPING – MINTING – POOLING
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