You may have noticed a lot of chatter lately about the SPARK (FLR) airdrop for XRP holders, but what is it exactly?
As most of you will already know, an airdrop is a method of distributing a cryptocurrency token in the early stages of launch as a way to get users on board. Unlike most traditional proof-of-work (PoW) projects that rely on mining for distribution, most modern proof-of-stake (PoS) projects rely on airdrops. Airdrops are heavily marketed in the run-up to the event so that users have time to download the appropriate wallet required to receive the airdropped tokens.
In some cases, a project will get existing crypto exchanges and wallets onboard to facilitate the airdrop, while others will require the download of a proprietary wallet.
So, what is Spark (FLR)?
Spark is the native token of the Flare Network and XRP’s answer to the recent explosion of interest in decentralized finance (DeFi). Decentralized finance, for those that have been living under a rock, is a term used to describe financial tools that are built on decentralized blockchain networks as a means to eradicate the need for third-party intermediaries like banks.
The Flare Network aims to use the Ethereum Virtual Machine to make XRP tokens compatible with the DeFi sector, enabling XRP users to interact with existing Ethereum DeFi apps. FLR tokens will facilitate the collateralization of XRP on the Flare network in the form of a new decentralized token, FXRP. Implementations like Wrapped Bitcoin (WBTC) achieve similar goals.
So if you’re an XRP user and want to get involved in the new DeFi craze, you’ll need to buy some XRP before the end of today, December 12 2020. At midnight GMT, a snapshot of all XRP wallets will be taken and all holders will receive the equivalent amount of Spark (FLR) that they hold in XRP. Exactly how much each FLR token will be worth is yet to be determined but based on the success of other DeFi, it could be quite a lot… or nothing at all.
To be involved, you’ll need to hold XRP on one of the many participating wallets, including Binance, Coinbase, OKEx, Kraken, KuCoin, Bitfinex, Probit, Bittrex, Bithumb, Poloniex, Uphold, CEX.io plus many, many more. Check the full list here.
The Growing DeFi Market
In November 2020, the amount of U.S dollar value of cryptocurrency invested in the budding DeFi market hit a record $13.6 billion, as projects like Yearn.finance (YFI) and Compound (COMP) have rapidly accumulated thousands of users and achieved multi-million dollar valuations.
Most of these projects focus on peer-to-peer lending, decentralized exchanges (DEX), or prediction markets but the nascent sector still has much room to grow. In the future, we will likely see the emergence of new decentralized platforms for a range of financial products like insurance, real estate, and pensions.