NEO is one of the popular blockchain networks that has come out of China. It is well-known for its community-driven approach. NEO is an open blockchain that is aimed at a smarter economy.
Are you wondering why I am talking about Neo in the beginning? It’s because Neo has come out with Flamingo Finance, a DeFi protocol. It was launched on September 20, 2020. We will tell you all about Flamingo Finance in this article. Let’s dive straight into it.
What is Flamingo Finance?
Neo blockchain-powered Flamingo is a full-featured DeFi protocol, and it’s also cross-compatible. There are five key components of Flamingo, and these are:
(i) Wrapper,
(ii) Swap Exchange
(iii) Flamingo Vault
(iv) Perp Exchange
(v) DAO
Flamingo Finance has been incubated by the executive arm of the Neo Foundation, Neo Global Development (NGD). The Neo team believes that Flamingo Finance will accelerate the adoption of DeFi. They say that Flamingo is like a missing piece that is required to increase the DeFi adoption.
Each of these components of Flamingo Finance will play an important role in the growth of DeFi space. It will fulfill the need for a cross-chain asset gateway, an on-chain liquidity provider that is based on an automatic market maker mechanism, and a collateralized stablecoin that is based on an algorithm.
There is also a governance token, known as the FLM NEP-5 governance token. The governance token of Flamingo Finance is based on Neo. The distribution of the FLM NEP-5 governance tokens is done through community-based participation.
The Role of Flamingo Finance’s Components
Wrapper
Wrapper is the cross-chain asset gateway for Bitcoin, Ethereum, Neo, Ontology Network, and Cosmos-SDK-based blockchain networks. What this essentially means is that users can wrap their tokens and value-pegged assets from Flamincome (nWBTC, nwETH, nUSDT on the Neo blockchain as NEP-5 tokens (nNEO, pONTd, pnWBTC, pnwETH, pnUSDT).
What this results in is Wrapped NEP-5 tokens, which can be redeemed back for native tokens. Furthermore, more tokens can be added to the list as the project develops. When it comes to the wallet requirements, the NEO asset holders will only need to download the NeoLine wallet; then, they can convert NEO to nNEO directly through this wrapper module and stake it in the Vault module.
Ethereum asset holders will need to download the MetaMask wallet and the NeoLine Wallet. ONT asset holders will need to download the Cyano plugin wallet and NeoLine wallet, and they can directly convert ONTd to pONT through the Wrapper module. The main goal of this wrapper is to essentially “wrap” tokens to be compatible with the network, which in turn leads to a much wider variety in terms of swaps that can be made on Flamingo and the overall network, providing users with a lot more choices.
Swap Exchange
Flamingo Swap is essentially the swap exchange that helps users convert tokens, become liquidity providers, and in turn, for doing so, earn yield. Through the process of providing liquidity, known as staking, each user can also earn yield through the collection of fees, where they can get minted FLM as a reward. Flamingo Finance also makes it easy for users to buy and sell crypto, invest and earn revenue directly on the blockchain and engage in other DeFi activities.
As such, Swap is Flamingo’s on-chain automated market maker (AMM), which makes it a possibility to trade between different wrapped assets. This includes FLMs as well as any other NEP-5 standard-based tokens. Swap follows the CPMM model, Constant Product Market Maker, which is popular in many other AMM-based protocols as well, the most notable one here being Uniswap.
CPPMs are essentially based on the function that establishes a range of prices between two pairs in accordance with the available quantities or liquidity of each token. Through conducting a simple swap, users will be able to exchange pairs of tokens and even provide liquidity to a liquidity pool that is specialized for that specific role, and these are the components that makeup Flamingo Swap.
Perpetual Exchange
Perp is a vAMM-based perpetual contract exchange protocol. Throughout this protocol, users are able to trade perpetual contracts of crypto assets. They can have up to 5x leverage without the requirement of liquidity provision. It is a perpetual contract exchange when it comes to underlying assets that have infinite liquidity. Similar to the Swap in some ways, traders are able to trade perpetual contracts through the usage of the same CPMM model in leverage, long or short.
Furthermore, traders can use FUSD as staked margins, where they can receive FLM. The introduction of the interest rate for the loans can also ensure that the contract price can converge with the actual price, and the pricing feed is provided through the utilization of Flamingo’s Oracle Contracts.
What this essentially means is that Perp is an option provided by Flamingo that enables users to trade perpetual contracts of cryptocurrencies, which overall leads to a heightened level of functionality, utility, and a solid offering within the broader Flamingo ecosystem of services, which makes it an appealing option to cryptocurrency traders and investors which aim to achieve a higher level of functionality through utilizing this service.
Flamingo Vault
The Flamingo Vault is essentially a module that provides an interface for managing, mining, and even staking assets. Furthermore, it is also responsible for the process of handling the issuance of collateralized stablecoins. What this means is that Vault stakers can earn rewards in the form of a platform’s native token, which in this case is FLM. The Vault was originally launched in three phases. Phase 1 and Phase 2 were known as the Mint Rush Stage, where 50,000,000 FLM were distributed to users for staking whitelisted wrapped tokens into Vault. Phase 3 enabled FLM tokens to be distributed to liquidity providers for the process of staking LP Tokens.
The Vault is Flamingo’s one-stop asset manager, which integrates asset staking, mining, and guaranteed stablecoins. The Vault has two specific functions. First, users can stake NEP-5 tokens and receive FLM after they have staked them in the Vault. Second is the minting of FUSD, where users that hold LP tokens are able to ming FUSD through the usage of staked LP tokens as collateral, where in turn, for doing so, they can receive FILM. FUST is a synthetic stablecoin that is backed by Flamingo, which is pegged to the value of the USD at $1.
DAO
The Flamingo Decentralized Autonomous Organization (DAO) is created as a means of supporting, purchasing, archiving, and collecting whilst also potentially tokenizing important pieces of the ecosystem. Flamingo is a non-fungible token (NFT) DAO that aims to explore the emerging investment opportunities when it comes to ownable, blockchain-based assets.
This DAO, throughout the long-term, enables Flamingo’s governance to be fully taken over by the community in the form of the Flamingo Improvement Proposal and Flamingo Configuration Change Proposal.
Through this DAO, FLM token holders can vote on critical topics, which can include tokenomics, configuration, and improvements to the decentralized finance (DeFi) protocol’s functionality, as well as any other development throughout the broader ecosystem. Additionally, and alongside this, users can receive FLM tokens as a reward for their participation in the governance procedure. Note that Flamingo is a protocol that integrates multiple modules as a means of providing a complete DeFi infrastructure, and as such, users are able to participate within the project at different levels, in the form of traders,stakers, or through the process of transferring assets to the liquidity pool.
Flamingo’s DAO can also make changes in numerous other aspects, such as interoperability and fair launches found within the network.
How Will Flamingo Finance Work?
Source: Flamingo Finance
There are multiple clusters within the Flamingo DeFi protocol. All these clusters have multiple modules integrated within it for providing a stable and comprehensive DeFi infrastructure to its users. The users can play different roles in the Flamingo Finance ecosystem – Liquidity Providers, stakers, and traders.
NEO 3.0 vs ETH 2.0
There is one interesting competition shaping up in the blockchain world. There have been rounds of discussion about which of the blockchain networks is best. One of the prominent competitions is between Neo blockchain and Ethereum blockchain.
With the launch of both the Neo 3.0 and Eth 2.0 on the horizon, the discussion is taking an intense shape. So, which of these upcoming advanced blockchain networks will have an upper hand over the other? We will find it out here.
Ethereum 2.0 will be a better version of Ethereum 1.0. It will help the Ethereum ecosystem to scale new heights and will consume a lot less energy. Ethereum 2.0 will improve the scalability and security problems of the Ethereum blockchain.
On the other hand, NEO blockchain has a reputation for being comparatively better than Ethereum in terms of scalability. So, would Neo 3.0 help maintain the same edge over Ethereum 2.0? Yes! Neo 3.0 will make Neo blockchain even more scalable. It will also add many new enterprise functionalities that will suit the larger projects. With Neo 3.0, we expect Neo blockchain to become even more user-friendly.
| NEO 3.0 will add new enterprise functionalities that will suit the larger projects. | ETH 2.0 will be a better version of Ethereum 1.0. |
| Native contracts, all assets created in smart contracts, internet resource access, improved dBFT consensus mechanism, and NeoFS. | ETH 2.0’s ecosystem will improve in terms of scalability due to its various implemented changes. |
| NEO 3.0 will introduce a higher level of user-friendliness. | ETH 2.0 will introduce the Proof-of-Stake (PoS) consensus mechanism. |
| NEO 3.0 will make Neo blockchain even more scalable with 10,000 transactions-per-second (TPS) and beyond. | Up to 100,000 transactions-per-second (TPS) which will lead to a higher level of scalability and speed. |
Neo has many advantages over Ethereum and Neo 3.0 is well-positioned to keep Neo blockchain ahead in the race. To buy NEO using debit or credit card use fiatom.io.
The Future Ahead
Neo believes that Flamingo will be a stepping stone for Neo’s DeFi ecosystem. It will accelerate its growth and adoption. The Flamingo project is still in infancy now, and many features are still to be rolled out. Its design is still being optimized.
In time, there will be an increase in the number of users in the Flamingo community. Regardless of it still being in an infancy stage, we believe in the potential of DeFi and interesting DeFi projects such as Flamingo Finance.
With an increase in participation from the Flamingo community, the Flamingo ecosystem will develop further. It will be interesting to see how Flamingo Finance will make a name for itself in the world of DeFi in the next few years.
