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flow blockcahin

Lite Report – Flow Blockchain

Overview

FLOW is a layer-one blockchain network, developed by Dapper Labs, the company behind the viral trading and collectibles game, CryptoKitties, which saw transactions for more than $40 million on its platform

Flow was built after the developers observed that the immense popularity of CryptoKitties was difficult to be satisfied on the Ethereum platform. Flow is created as a developer-friendly network to ease the conventional developers to build scaled decentralized applications for the broader audience.

The Flow blockchain is specifically aimed to enable developers to create and trade a particular variant of digital asset known as Non-Fungible Token (NFT). Flow secured funding from some notable investors like a16z, USV, Animoca Brands, Samsung. It has also made strategic partnerships with the likes of Warner Music Group, Ubisoft (as an advisor on the development of the platform).

As of March, global franchises like UFC, F1 Delta, MotoGP are setting up to launch on the Flow blockchain while NBA TopShots launched to the public in late 2020.

Flow differs from other layer-one networks like Cosmos, Polkadot are tackling the scalability issues by breaking the network into smaller networks, through sharding, sidechains, which can communicate with each other asynchronously.

Flow essentially solves this problem through an architecture that allows the nodes to specialize based on their capability for processing transactions.

Powerful nodes in the network do the major chunk of the transaction while functioning as the execution nodes. Comparatively less powerful nodes but large in number hold the network accountable for malicious behaviour or errors by incentivizing or penalizing them.

They act as verification nodes while working in consensus to keep the network secure and decentralized. This modification from the traditional architecture has enabled Flow to achieve a massive improvement in performance and scalability. 

Development on the Flow blockchain is done using a resource-oriented high-level programming language called Cadence. Cadence introduces developer-friendly features to smart contract programming that aids code safety and security.

Cadence stresses code clarity in order to make it easy to read, and auditing more efficiently. The safety and security of programs in Cadence are strengthened by Design By Contract and Ownership Primitives methodologies. 

About Team

tradedog team

The team has a good experience of building viral dapps like CryptoKitties as well as development platforms like Fuel. The team has a history of working together to bring in successful entities like CryptoKitties, AxiomZen.

There is also representation from the gaming industry with experience in some of the popular labels. FPS gaming has one of the highest user bases and if the team, with the help of the listed partners like Ubisoft, brings together a complete product like the ones of FarCry on the platform, it can boost the chances of mass adoption of the network.

The success of NBA TopShot brings in the possibility of similar collectibles franchises like NHL, UFC, MLB. The team can try to utilise the connections with ESPN, NHL NFL to onboard them on their platform.

More on Flow

Flow’s claim to be a developer-friendly platform seems to be supported by the growing number of developer teams on the network. As of 17th March, as per a tweet from the company’s official handle, the platform has more than 20% week-over-week growth in developers for successive weeks on the network.  

tradedog flow

As of 20th March, dappradar.com ranks NBA TopShot, the sensation fans collectibles trading Dapp has been ranked 2nd, behind UNISWAP in terms of their DTU(Daily Transacting Users) for the last 30 days at 321.39k.

Tokenomics

FLOW token is the native currency on the network required for the applications to function on the network. In order to curtail any early movers advantage to the pre-launch investors, dev team members, FLOW locked up the allocated FLOW tokens for 12 months and can only be used for staking in this period.

The company raised $18million through Initial Coin Offering with 13000 participants in this round. The current distribution of the tokens is as below:

tradedog

  • Dapper Labs has 250 million tokens allocated to them which is intended to be held as part of its long term treasury.
  • The development team has been allocated approx. 95 million tokens as part of incentives or compensation to the 90+ development team at the company. The awards are however vested over 3 years to ensure all the stakeholders are aligned.
  • A diverse and accessible community is essential in the long term for robust ecosystem development. For this purpose, the company has set aside 350 million tokens. The company has taken measures to avoid speculations through these rewards and therefore have enforced a 12 month lockup and transfer experiences in the first year.
  • To protect from the risks of centralisation, the company has limited individual ownership for the large and small backers. Currently, the shareholding pattern for investors with at least 10million tokens are as below:

tradedog flow genesis

These percentages showcase the stress of not allowing monopolistic control to any investor and thereby stays true to the crux of decentralisation.

Investments

In 2020, Dapper Labs announced investments of $12 million, in a late VC round for the Flow blockchain which was led by prominent investors like Samsung, Valor Capital Group, Andreessen Horowitz, Union Square Ventures, Venrock, Animoca Brands etc.

tradedog table

Dapper Labs is backed by a strong portfolio of investors as indicated by the notable investments made by the company. Investors like Warner Music Group and Animoca Brands bring together the opportunity to expand the offerings on the platform. Greg Wilson, the man behind USV, and a notable personality in the VC arena is also very vocal about NFTs and is seen at webinars along with the members at Flow. This is beneficial for the company as this can give them good connections, even outside cryptoverse, for future funding rounds.

Competitor Analysis

Over the last couple of weeks, we have seen monumental movement in the NFT space. Christie’s digital collage of images called “Everyday: The First 5000 Days” was auctioned for USD 69.3 million, causing tectonic shifts in the cryptoverse. The future of trade will surely be influenced by these unique digital assets on the blockchain. Though changing socio-economic desires and the chances of a bubble require that certain valuations may need corrections in the near future, the true potential of NFTs is yet to be uncovered. This makes this a lucrative opportunity for big and small industry players to venture into this competition. The Flow blockchain, too, is battling it out with other key players like Enjin and Wax.

tradedog

Market Opportunities

  • Non Fungible Token is the hot cake right now and they are representatives of the future of fan collectibles and the digital resource economy: a medium of proving ownership of goods. In 2020, the NFT market grew by 299% YoY.
  • The partnerships with Animoca Brands have created opportunities like the arrival of MotoGP Ignition, another collectibles game platform based on MotoGP. Subsequently, the firm also announced plans in October last year to bring F1 Delta Time and Star Girl franchises to the Flow platform. It is worthy to note that for the 2020 season, F1 garnered a cumulative TV audience of 1.5bn. Below is the YoY engagement growth of F1 vs the major sports league across the world.

tradedog

  • Dapper Labs also announced a licensing agreement with UFC which brings the MMA digital collectibles to crypto. The franchise which has over 300 million fans worldwide, is set to hit the market and this could bring a fresh wave of users to the network.
  • To date, payments for digital collectibles rely entirely on cryptocurrency payments. Dapper Labs along with Circle, a global fintech firm, are collaborating to enable traditional payment options. Once realised, this could appeal to a wider audience, and promote adoption.

Technical Analysis

Since the start of 2021, FLOW has appreciated by a massive ~7750% due to its strong fundamentals and on-chain activity. After its current rally, it is now in the correction phase and has dipped ~30% from its ATH level of $41.275. At the time of writing the report, the current market price is $29.50.

On a weekly TF, FLOW has been making bearish candles for the past two weeks and has dipped ~20% in these last couple of weeks. However, due to the huge rally in the past two months, the support levels are also shifting higher.

On the downside, the nearest support level is in the range of $24-$25. If it breaks this level as well, the next support is present at $20.

On the flip side, the immediate resistance is present in the range of $32-$33. If it gives a breakout from this range, the next resistance is placed at $37, followed by the next resistance at $45, as per the Fibonacci retracement.

tradedog

Conclusion

  • While Flow blockchain is developed to provide the developers with a faster alternative to Ethereum, the company through its partnerships and active applications on the network suggest a push towards game development, digital collectibles and running fan tokens for the game industry and music industry. This seems to be inspired by the massive success witnessed by CryptoKitties. However, the fad of CryptoKitties was short-lived. As of 18th March, the number of active users was down to 221. 

tradedog

  • While NBA Top Shot, an officially-licensed NFT product, based on FLOW platform has witnessed immense traction, since its launch in October 2020. It has rapidly grown to become the most popular non-fungible token (NFT) series by volume. As of March 2021, it has already processed transactions worth more than $250 million in sales in 1 month through 100K buyers.
  • Strategic partners Warner Music Group, are on track working with Dapper Labs for the creation of digital assets in the music domain. But in a thriving market of streaming services, which grew at a CAGR of 42%, it is uncertain if the digital auction of art can sustain any growth for long.

tradedog

  • Dapper Labs seem to be very focused on their belief that fun and games could lead the way to the adoption of blockchain amongst the masses. It is uniquely positioned to enable big brands like NBA, UFC to deliver rich and engaging user experience in the form of digital ownership. In the beginning, with the wave of NFTs going strong, it provides good trading opportunities in the short run due to the strong sentiments around NFTs. However, the NFT market is very new and we are still witnessing different cycles that are establishing what is the real value of something.
  • As of now, there have been no reported critical vulnerabilities, but then these are still early days for the protocol.

Overall, the FLOW blockchain looks aspiring. It’s still early days, but as the number of dapps on the platform increases and if the protocol succeeds to live up to its promises of scalability, this can be a game-changer. The company believes gamification could pave the way to wider adoption. Given the 160 billion USD worth gaming industry, which is further expected to grow by a CAGR of 10.56%, it looks potentially viable. However, it is essential to closely monitor the early-stage developments and observe how well the promising ideas are implemented.

Disclaimer

This report has been compiled by TradeDOG Research. TradeDOG Research is an independent provider of research on cryptocurrency project. We have not been paid, nor mandated for this analysis report. The views expressed within this report are TradeDOG’s in its entirety.The contents of this report and its attached documents have been prepared without taking account of your objectives, financial situation or needs. Because of that you just ought to, before taking any action to accumulate or deal in, or follow a recommendation (if any) in respect of any of the financial products or information mentioned in or downloaded from or through this website, consult your own adviser to contemplate whether or not it’s applicable having reference to your own objectives, financial situation and needs.Whilst TradeDOG believes the information contained in this report is based on data that is taken into account to be reliable, its accuracy and completeness are not guaranteed and no assurance of accuracy or dependability is given or implicit and no responsibility for any loss or injury arising in any way for any representation, act or omission is accepted by TradeDOG or by any officer, agent or employee of TradeDOG or its related entities.TradeDOG at all times reserves the right to at any time vary, without notice, the range of services offered by TradeDOG and its subsidiaries, and the terms under which such services are offered.

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