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What is Chainflip (FLIP)?
All about the Chainflip protocol. For more information, check out the full Chainflip documentation at: docs.chainflip.io/concepts/
Chainflip is a decentralized exchange (DEX) protocol that powers a cross-chain Automated Market Maker (AMM).
This enables users to swap native assets across different blockchain networks without the need for wrapped tokens or specialized wallets.
The protocol also eliminates the need for bridges, providing native support for a wide range of crypto assets, including Bitcoin and new application-specific chains.
The protocol's native token, FLIP, is used as collateral for the validator network auctions to secure the protocol and liquidity. It also serves as a value capture mechanism, with network fees used to buy and burn FLIP for the benefit of all token holders.
Chainflip also has it's own official DEX that facilitates cross-chain swapping.
We at Thunderhead have also created the Chainswap bot to facilitate transfers on the Chainflip network from the ease of your Telegram chat without having to connect a wallet.
Please note, swaps are not currently live on the Chainflip network.
Staking, in general, is the holding of funds in a cryptocurrency account to support the security and operations of a blockchain network.
The functionality of this differs between blockchains. In the case of the Chainflip network, FLIP tokens are staked on the state chain, onto validator nodes which allow them to participate in relaying requests and validating new blocks. Chainflip protocol uses a rolling auction system where validators bid their FLIP tokens for a slot in the validator set. These auctions determine the validator set for the next epoch and who will be staking their FLIP tokens. Validators who bid higher than, or equal to, the Minimum Active Bid (MAB) are selected for the primary selection group for KeyGen. If a validator's bid is successful, they are bonded to the value of the MAB for that auction. Any amount staked in excess of the bond can be withdrawn between auctions.
Rewards are distributed to each validator in the set each time they author a block on the State Chain. Backup validators, who are the next best bidders, also receive a fixed reward split among them each epoch. The staked balance of validators, including any rewards earned, is considered an implicit bid in the next auction.
For FLIP holders who want to support the network, staking native FLIP usually involves a complex process of either being technically competent enough to run your own validator nodes, or manually finding a provider that will stake for you.
This, apart from being time consuming, means users are left without a liquid asset. Hence why liquid staking solutions like stFLIP have become so popular.