Source: TechFlow

(Note: This content contains HTML tags and English characters, which should not be translated and should be returned as is.)

Chainflip , a decentralized and trustless protocol that allows seamless value transfer between any blockchain (including BTC, EVM, and underlying networks). According to TechFlow, on November 23, Chainflip announced the official launch of its token $FLIP.

Chainflip's JIT (Just In Time) AMM design solves cross-chain challenges by minimizing slippage and providing precise pricing. With it, users can exchange assets between chains without wrapping tokens, using traditional cross-chain bridges, or relying on centralized exchanges.

Listening to the description above about Chainflip, does it remind you of another cross-chain trading platform - THORChain?

Yes, Chainflip is a direct competitor of THORChain in the encryption industry, both of which focus on heterogeneous aggregation chains. However, there are many differences in their designs:

1) THORChain is built on Cosmos SDK, while Chainflip is built on Substrate.

2) THORChain requires a separate multi-chain wallet, while Chainflip does not. Users do not need to backup their key files, download new browser wallets, or install any special software. They only need a network, browser, and target address to send tokens and provide a compatible address to perform trustless cross-chain swaps.

3) Each liquidity pool on THORChain requires RUNE to be built, while Chainflip does not.

However, it seems that THORChain does not see Chainflip as a competitor, but more like a "brother" in the common trench. In a tweet released by THORChain on November 24th, THORChain + Maya + Chainflip will jointly challenge today's centralized portals.

This friendly attitude is not common in the Crypto/Web3 community, as one community member put it: "It's like a street with only one restaurant. If a new restaurant opens across the street, more people will come to these two restaurants."

Token Economics

The token economics plays a crucial role in DeFi projects. In terms of market performance this year, THORChain's token Rune has performed well. Despite THORChain's friendly attitude towards Chainflip, investors still unconsciously compare the token performance of the two.

Rune has been designed to capture value to the extreme, with almost all operations requiring the use of Rune. Adding liquidity requires Rune, staking Rune is necessary for node operation, and synthesizing assets also requires the use of Rune. The more Rune is traded, the more fees are captured, and the demand for Rune increases. This is why everyone believes that Rune is the original reason for small Luna.

What about Chainflip?

FLIP is the ERC-20 native token of Chainflip. The initial supply of the token is 90 million, with an annual inflation rate of 8%. The token follows a model of inflation (token issuance) and deflation (token burning) to control the token supply. This means that the protocol does not have a fixed or final token supply, and the project may change its token model in the future.

The current known initial allocation plan is as follows:

(1) A total of 4.75 million FLIP tokens will be airdropped to the community, distributed to service node operators who participated in the Service Node airdrop program in 2020 and 2021.

(2) 6.9 million FLIP tokens are used for token sales.

(3) 13 million FLIP tokens are allocated to contributors;

(4) Approximately 34 million FLIP tokens are allocated to strategic investors;

(5) 420 million FLIP tokens allocated to the Oxen Foundation.

(6) 4968503 FLIP tokens as circulating funds;

(7) 22 million FLIP as reserve funds.

Chainflip also connects chains by deploying wallets on each chain. Unlike centralized databases in CEX, in Chainflips, the State Chain serves this role, recording, executing, or triggering all protocol events.

In order to ensure the security of each wallet, there is an insurance pool for each supported blockchain, which is operated by validators. Therefore, the validator network constitutes a key infrastructure of Chainflip. The number of validators at the time of Chainflip's release will be 150.

Obviously, honesty is crucial for validators in this system. Validators must lock a large amount of $FLIP tokens as collateral, and the keys they hold cannot be used to transfer protocol funds. If validators engage in malicious behavior or fail to effectively fulfill their duties, their collateral will be at risk.

How to effectively motivate and punish validators is a challenge for the system. Chainflip also indicates that the punishment rules will soon undergo significant updates to ensure the long-term stability of the system.

The number of tokens offered as a reward to validators does not depend on the amount of staked tokens, and the actual earnings received by validators will be determined by competition in the auction market. In order to have the right to validate transactions and earn rewards, validators need to continuously bid using their $FLIP tokens.

For each transaction processed through the Chainflip system, a small fee (in the form of USDC) is charged to the user. This fee is used to purchase $FLIP tokens in the built-in USD/FLIP pool. The purchased $FLIP tokens are automatically burned and removed from the supply.

The Gas generated by the state chain will also be automatically burned, and any interaction with the state chain will incur these fees, including liquidity provider updates, deposit channel requests, validator external fees, etc.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia