What is Songbird? (SGB)
Summary of Songbird
- Songbird is the test network for the Flare blockchain and allows developers to test decentralized applications before deploying them to the Flare network
- Songbird is capable of bridging blockchains to smart contracts that were previously incompatible
- SGB is the native token of the Songbird network and is used to pay transaction fees, vote on network governance decisions and interact with Songbird’s applications.
Both Songbird and Flare are blockchain projects that can make otherwise non-smart contract enabled tokens, like XRP, work with decentralized applications (dapps). Songbird makes it possible to bridge two blockchains together in a secure and decentralized way, thereby opening the door to improved liquidity and data sharing across decentralized finance (DeFi) applications.
SGB is the native cryptocurrency of the Songbird network and is used to pay transaction fees, vote on network governance decisions and interact with Songbird’s applications.
Who created Songbird?
Songbird was co-founded by Hugo Philion (CEO), Sean Rowan (CTO) and Nairi Usher (Chief Scientist). The three co-founders met while studying at University College London.
Philion earned a degree in Financial Risk Management from Cass Business School and went on to work for multiple investment firms before deciding to return to education. He studied Machine Learning alongside co-founder Sean Rowan.
Nairi Usher earned her PhD in Quantum Computing from University College London around the same time.
The team behind Songbird started building Flare in August 2017 and incorporated their company two years later in 2019. The Songbird test network launched two years later in September 2021.
Flare announced it received funding from Xpring, Ripple’s investment initiative, in November 2019. In June 2021, it raised another $11.3 million in funding from multiple venture capital firms and private investors.
In December 2020, a snapshot was taken of XRP holders on the XRP Ledger. 0.1511 SGB were distributed for every 1 XRP token each user held, along with an amount of FLR tokens. In September 2021, the entire supply of SGB was distributed via an airdrop to the same users who were eligible to receive Flare’s FLR tokens.
Although this distribution mechanism initially tied the value of SGB to two other cryptocurrencies, SGB’s utility within the Songbird network is expected to eventually decouple it from both FLR and XRP.
How does Songbird work?
Because Songbird is the canary network for the Flare blockchain, the two operate in mostly the same way. However, it’s worth noting both are independent blockchains with their own native cryptocurrencies.
Songbird’s main focus is to bridge blockchains to smart contracts that were previously incompatible.
Some developers accomplished this feat by using tools such as bridges and custodial smart contracts. A custodial smart contract, for example, involves “wrapping” an asset like Bitcoin into an Ethereum-compatible token called wBTC so it can be used in Ethereum-based applications. A wrapped cryptocurrency, however, usually requires a centralized reserve of the base currency (in this example, bitcoin) to work.
Songbird is able to bridge incompatible cryptocurrencies to smart contracts without a centralized pool of reserves, sidestepping some of the security risks that come with concentrating funds used to back a wrapped token under a single entity.
For example, a person holding Ripple’s cryptocurrency XRP would use Songbird to create a representation of XRP on the Songbird network, called an F-Asset. The XRP would be swapped for FXRP (the F-Asset) through a transaction between two parties: an agent and an originator.
Agents lock up their SGB as collateral for the purpose of issuing F-Assets. They are compensated for this service through fees paid by originators.
Originators are the ones in need of an F-Asset. Returning to the earlier example, an originator would use Songbird to send their XRP to agents on Ripple’s network in return for the equivalent amount of FXRP, minus a transaction fee. The swap is trustless — with no user sign-up required — and ensures that XRP can be redeemed at any time thanks to over-collateralization.
At no point do any cryptocurrencies cross from one blockchain to the other. Songbird achieves the swap by locking the XRP the originator gives up and supplying them with a representative currency (the F-Asset) on Songbird’s network. FXRP holders can use their newly-minted tokens on any smart contract on the Songbird platform.
The technology that powers this is called a Turing-complete federated byzantine agreement:
- Turing-complete: A Turing-complete machine is a computer capable of finding the solution to any solvable problem or equation. Songbird’s virtual machine, based on the Ethereum virtual machine, can support applications running on Songbird through the use of smart contracts. Incompatible tokens mentioned above are considered Turing-incomplete.
- Federated byzantine agreement (FBA): Songbird’s network reaches consensus by electing trusted nodes in the system to validate transactions. This method is used by other blockchains such as Ripple and Stellar, as it optimizes scalability and lowers transaction costs
Songbird uses the Flare Time Series Oracle (FTSO) to make sure that the F-Assets (e.g. FXRP) issued in a swap are of equal value to the originator’s assets (e.g. XRP). This decentralized tool uses off-chain information provided by holders of the native token (SGB, or FLR on Flare) and the holders of the relevant F-Asset for on-chain use. These holders are known as Signal Providers.
Why does SGB have value?
As a utility token, SGB can provide collateral for the issuance of F-Assets or can be staked to the FTSO. Holders who stake their SGB to either service also receive rewards paid in SGB.
SGB also acts as a governance token, giving holders a weighted-amount of voting power in decisions that steer the Songbird project.
Why buy SGB?
Songbird provides a service to crypto users that want to use their otherwise incompatible cryptocurrencies with DeFi services, such as those that allow users to earn interest through staking or providing liquidity. Songbird’s decentralized alternative to custodial services provides an alternative option for crypto users who prefer to support decentralized services instead.
Since Songbird is a test network, developers will build new features on Songbird’s blockchain before launching their projects on Flare. Users might decide to buy SGB so they can have early access to new applications on Songbird.
Songbird users may also choose to purchase SGB to pay for fees, participate in the chain’s governance or to stake on the network for SGB-denominated rewards.