Holding your crypto in hopes of it appreciating in value is no longer your only option to earn yield. Up until recently, this has been the only means for many crypto holders to earn value, however with the rise of DeFi and smart contracts, crypto holders can now put their tokens to work to unlock more value, while transforming the way we transfer value as people. Many new business models, applications, and ways to invest will come from The Flare Network.
The Flare Network rewards active participants in the network. We will cover some of the ways you can earn rewards via the Flare Network. Note that this is not an exhaustive list, as more applications are built on the network, more ways to earn yield will present itself. I think you will quickly realize that by actively participating in the network you can easily earn passive income and compound your earnings. This would be analogous to reinvesting dividends from a stock.
Every spark holder gets a chance to delegate their Spark (FLR) vote to Signal Providers for the chance to earn more Spark (FLR). Each Spark (FLR) token you hold gets you one vote that can be delegated. Vote Delegation is risk-free, meaning you never lose custody of your Spark (FLR). The more accurate the Signal Providers you delegate your vote to are, the more frequently you get rewards.
Minting is the process of bringing your crypto onto the Flare Network. This is done via an Agent and you can find more information about it in our F-Asset arcticle. Once you have crypto on the Flare Network it is considered an F-Asset, i.e. XRP = FXRP. Without even using your F-Asset in network applications you earn Spark (FLR), again risk-free, from the FTSO rewards pool. You can in turn take that Spark (FLR) you earned and delegate it to a Signal Provider and earn more Spark, round and round we go.
Probably the most involved (technically) and riskiest way to earn on the Flare Network is to become an Agent. As stated above, an Agent is responsible for putting up collateral in order for the creation an F-Asset to occur. The vast majority of the network participants will not be an agent so we won’t focus too much on them. However, Agents earn a fee for minting F-Assets for users, managing their collateral position for the F-Asset, and ultimately taking on the risk of handling redemption requests. A redemption request is when a user wants to convert their F-Asset back to its originating blockchain, in turn the agent will have to send the originating crypto back to the user’s account.
Network applications is the broader range of ways to earn yield on the Flare Network. You will be able to use your Spark (FLR) and your F-Assets in smart contract applications to earn more Spark (FLR), F-Assets, or application specific tokens. As the network grows, the more ways you can earn yield will surface. If you check out our article on Network Applications we highlight some of the applications in which you can use to earn yield.