Flare: All for Data, One for Data

1. Data: The Achilles' Heel of Blockchain Technology

Blockchain creates a trustless system based on the principle of “Code Is Law.” This system provides security and trust by executing processes automatically through code. It removes the need for third-party intermediaries. However, there is a catch—the system relies entirely on the integrity of 'trusted data.'

Second-generation blockchains like Ethereum and Solana enable diverse functionality through smart contracts. These contracts, however, depend entirely on the accuracy and reliability of input data. Even a perfectly designed smart contract cannot function properly if the input data is incorrect or manipulated. In such cases, the execution's outcome becomes unpredictable, putting the entire system at risk.

To address this issue, the blockchain industry introduced decentralized data providers known as oracles. However, oracles operate outside the blockchain, which limits their ability to match the blockchain's security and integrity. Their external data provision structure creates risks, such as single points of failure. Additionally, some oracles lack sufficient decentralization as they could rely on a small number of nodes.

Data is both essential to blockchain and its Achilles' heel. Addressing this limitation requires a new approach to verify and manage the authenticity and integrity of external data directly on-chain. Flare offers a solution to this challenge.

2. Flare: All for Data, One for Data

Flare is a blockchain infrastructure focused on “data” (All for Data). Most blockchains rely on external oracles to access data. This setup still ensures the security of the blockchain. However, it does not guarantee the reliability of the data from the oracle.

Flare solves this issue by embedding oracles into the blockchain’s core protocols. This ensures the oracle benefits from the blockchain’s security. Hacking the oracle would require compromising the entire blockchain network. This structure guarantees reliable and secure data. Flare integrates the blockchain and oracle into a single system (One for Data). This approach removes the security risks of external oracles. The embedded oracle is free to use. Developers can build Web3 services with rich data without relying on external oracles.

Flare offers three core protocols built on its embedded oracles. 1) FTSO(Flare Time Series Oracle) provides decentralized price feeds.2) Flare Data Connector(FDC) integrates external chain and Web2 data into Flare. It validates and secures the data within the blockchain. 3) FAssets enable non-smart contract assets like Bitcoin, Ripple, and Dogecoin to be used in DeFi. This expands their functionality within the blockchain ecosystem.

2.1. FTSO: Providing Decentralized Price Feeds

Flare’s FTSO provides time-series price data in a decentralized way. This data includes asset prices updated at specific intervals and is crucial for many Web3 services, especially DeFi. However, most services still depend on centralized data providers. Manipulation or errors in this data can compromise the reliability and stability of the entire system.

The limitations of centralized data providers have already been evident in real-world cases. In March 2023, Berkshire Hathaway’s stock price dropped by about 99% due to a computer error. This incident highlighted the vulnerability of centralized data systems to single points of failure. Such errors can cause significant disruption and losses for investors, especially in an automated Web3 ecosystem.

To address this issue, Flare uses a decentralized price feed system through FTSOs with over 100+ independent validators. Validators collect time-series price data from various sources and submit it to the blockchain. A consensus mechanism determines the most accurate value from the submitted data. Validators providing inaccurate or manipulated data are flagged as outliers and excluded. They do not receive rewards and may face financial penalties. This system ensures the reliability and integrity of the data on Flare.

The key differentiator of FTSO is the participation of all 100+ validators in every price feed. Many oracles face inconsistent validator participation, where some feeds receive ample validation while others rely on only a few validators. Flare ensures uniform validator participation across all feeds. This minimizes data variation between feeds and enhances system-wide reliability. FTSO data aligns closely with prices on major exchanges and remains within a standard deviation, objectively proving its accuracy and reliability.

In May 2024, Flare released FTSO v2, enhancing the speed and scope of data processing. Previously limited to cryptocurrency prices, the price feeds can now support a wide range of Web2 data, such as stocks and commodity prices. The update cycle was reduced from 180 seconds to 90 seconds. The number of price feeds increased from 18 to over 50, with infrastructure capable of scaling up to 1,000 feeds.

2.2. Flare Data Connector(FDC): Bridging All Your Data

Blockchains are naturally isolated from the outside world, creating challenges when integrating real-world data. Flare Data Connector links external chain and off-chain data to the Flare ecosystem, enhancing scalability and usability.