Flare's cross-chain solution FAssets: Achieving secure cross-chain transfer of Bitcoin

With the overall development of the Bitcoin ecosystem welcoming new opportunities, innovative applications such as cross-chain Bitcoin are also attracting attention. Flare, as a unique Layer 1 solution, fundamentally enhances the security of key infrastructure by providing official cross-chain bridges and oracle services.

On November 30, 2023, Flare began testing its key feature FAssets. This feature allows non-smart contract assets such as BTC and DOGE to be utilized on the Flare platform and can be transferred to other blockchains via a cross-chain bridge. In a market where centralized Bitcoin cross-chain assets dominate, Flare's decentralized solution may bring new application prospects.

FAssets: Trustless cross-chain bridge

In the blockchain ecosystem, security is crucial. The market value of public chain native tokens is usually higher than that of on-chain dApps because dApps rely on the security of the public chain. However, most assets are currently concentrated on Ethereum, and other public chains need to rely on cross-chain bridges to introduce these assets, which effectively places the security of public chain assets on the cross-chain bridges.

Many public chains that develop their own cross-chain bridges often rely on multi-signature systems to ensure security, which carries a certain degree of centralization risk. In contrast, public chains that choose to cooperate with third-party cross-chain bridges have their asset security completely dependent on these external bridges.

FAssets is a dedicated cross-chain solution developed by Flare Labs that allows tokens on non-smart contract chains to be used securely on Flare without relying on trust. The minting process of FAssets involves a strict collateral mechanism: minters need to provide a 1:1 collateral, and agents must also perform over-collateralization. Agents can use a mix of assets as collateral, such as stablecoins, BTC, ETH, and FLR. When the value of the collateral is insufficient, agents will face liquidation risks.

Flare's innovation relies on two core components within its network: the State Connector and the Flare Time Series Oracle (FTSO). The State Connector ensures that underlying assets are securely delivered to a specific address, while the FTSO provides real-time price feeds to ensure that the collateral value is sufficient.

Coin Minting Process and Participating Roles

The minting process of FAssets involves transferring assets from non-smart contract chains to the Flare network. The basic steps include:

1. Users select an agent and pay the fee
2. The user sends the underlying assets to the agent
3. Proxy use status connector validates asset deposit
4. Mint FAssets on Flare after verification

The entire system involves four roles: minting/redeeming parties, agents, liquidators, and challengers, working together to ensure the safety of collateral, timely liquidation, and monitoring of agent behavior.

Cross-chain BTC Comparison

Currently, the mainstream cross-chain BTC solutions include BitGo's wBTC, Threshold's tBTC, and Ren Protocol's RenBTC, among others. wBTC is the most widely used, but it is centrally issued. tBTC is more commonly used in DeFi applications, but it has faced scrutiny regarding transaction censorship. The development of RenBTC has been suspended due to funding issues.

In contrast, the FAssets solution is more complex, offering a trustless way to mint cross-chain Bitcoin. The official claim states that the collateral in the agent and community pool exceeds 200% of the issued FAssets. However, the system is quite complicated and may require more time to launch on the mainnet.

FAssets Development Progress and Recent Flare Updates

FAssets is currently running on the Coston testnet and plans to launch on the Songbird canary network after multiple rounds of testing, ultimately integrating into the Flare mainnet. The testing is divided into 7 phases, and it is currently in the second phase. After the official launch, rewards will be distributed to users through a cross-chain incentive pool.

Recently, Flare has made progress in project development, including the launch of FAssets testing, the initiation of the second phase of staking, and the destruction of 2.1 billion FLR coins. At the same time, it has established partnerships with multiple projects and participated in hosting hackathon events.

Summary

Flare's FAssets provide a trustless solution for transferring assets from non-smart contract chains to Flare for further cross-chain use on other networks. As a type of synthetic asset, the mechanism of FAssets is theoretically trustless and decentralized, but relatively complex, requiring close cooperation among all parties to ensure reliability.