Flow is transitioning from an NFT public chain to consumer-grade DeFi, launching financial applications like Flow Credit Market and Peak Money, and upgrading to a deflationary token model through the FLIP-351 proposal. Despite having 41 million total accounts and $107 million TVL (a year-on-year increase of 187.1%), Flow still faces challenges such as cold-start liquidity, user conversion, and developer attraction. This article is sourced from Nancy, authored by PANews, and compiled and edited by Foresight News. (Background summary: Flow: From OG blockbuster application to NFT public chain, understand its evolution in one article) (Background supplement: In-depth analysis | Notboring Capital founder: Dissecting Flow, a blockchain aimed at the mainstream) Flow blockchain is undergoing a significant transformation, evolving from an NFT-centric platform to a consumer-grade DeFi ecosystem. Recently, Flow launched Flow Credit Market (FCM) – an automated lending protocol – and Peak Money, a financial application that offers returns on cryptocurrency assets and cash deposits, with annualized rates up to 25% and 10%, no minimum deposit requirements, and no liquidation risks. This transformation is not just product innovation; it represents a strategic adjustment for Flow. Through the FLIP-351 proposal, Flow upgraded its token to a deflationary model, burning tokens with each transaction. The network achieves net deflation at a transaction speed of approximately 250 TPS while maintaining lower transaction costs than Solana and Base. From NFT king to DeFi pioneer, Flow's success stems from its first-mover advantage as an NFT platform. CryptoKitties creator Dapper Labs developed Flow and launched NBA Top Shot, which became a watershed in the NFT market. During the NFT bull market in 2021, Flow's monthly transaction volume exceeded $20 billion. However, market cycles are unpredictable. After the NFT hype subsided, Flow faced severe challenges: liquidity depletion in NFT applications, developer attrition, and a significant drop in user numbers. By mid-2023, Flow's monthly active users had plummeted to tens of thousands. In this context, the shift to DeFi has become a strategic adjustment that Flow must make. Flow currently has 41 million total accounts, but only 1.1 million monthly active users, with total locked value (TVL) reaching $107 million, showing a year-on-year growth of 187.1%. These numbers reflect Flow's initial success in restoring ecosystem vitality. The ambition of new products and reality The design of Flow Credit Market breaks through traditional lending protocol thinking. Compared to platforms like Aave and Compound, which focus on yield farming, FCM aims to provide a simplified lending experience for mainstream users. Peak Money further advances this concept by integrating cryptocurrencies and traditional financial products (like cash deposits) on a single platform. The launch of these products reflects Flow's understanding of consumer-grade DeFi: not complex trading mechanisms, but simple and intuitive yield mechanisms. The design of no minimum deposit requirements and no liquidation risks targets new users who are concerned about the risks of traditional DeFi. 【Image 1: Comparison of FCM and Peak Money product features】 The logic of deflationary token economics The passage of the FLIP-351 proposal marks an important shift for Flow in terms of token economics. The burn mechanism for each transaction creates a scarcity narrative, similar to Ethereum's EIP-1559 design. At a transaction speed of 250 TPS, this burn mechanism generates continuous supply pressure. The purpose of deflation is to stabilize token value and provide incentives for long-term holders. At the same time, Flow maintains lower transaction fees than other high-speed blockchains, which is crucial for attracting mainstream users. Confidence: Accumulation of ecosystem infrastructure Flow's ambition is not unfounded. According to available data, Flow has the following advantages: Account base: 41 million total accounts, a result of years of accumulation, mainly from users during the NBA Top Shot period. Monthly active users: 1.1 million, sufficient to support a medium-sized ecosystem. Ecosystem funds: Flow launched a $725 million ecosystem fund, attracting top investment firms like a16z and HashKey. Transaction speed and cost: 250 TPS and low transaction fees are Flow's competitive advantages relative to Ethereum and Solana. 【Image 2: Flow ecosystem data statistics】 Dilemma: Shadows of the conversion path However, Flow's transformation is not a smooth path. Several key challenges have emerged: Cold-start liquidity issues: The core of DeFi is liquidity, and new lending protocols require substantial initial liquidity to attract users. Whether Flow can accumulate enough liquidity for FCM and Peak Money in a short time directly determines the success or failure of these products. Difficulty in user conversion: The vast majority of the 41 million accounts in Flow are users who have been dormant or have left the ecosystem during the NFT period. Converting NFT users to DeFi users requires new incentive mechanisms and educational efforts. Insufficient developer appeal: Although Flow has a $725 million ecosystem fund, developer attraction often depends on network effects and market opportunities. Compared to competitors like Solana and Arbitrum, Flow's developer appeal remains limited. The label of "NFT chain": Even if Flow successfully transitions to DeFi, market perception of its identity remains stuck in the "NFT public chain" phase. Changing this perception takes time and sustained results. Outlook: The decisive factor in transformation Flow's transformation is a gamble, with the stakes being whether it can re-establish its position in the DeFi space. Key success indicators include: Actual user growth and transaction volume for Flow Credit Market and Peak Money. Whether the deflationary token mechanism can effectively support the long-term value of FLOW. The quality and quantity of emerging applications in the ecosystem. Progress in collaborations with mainstream financial institutions. Flow is not the first blockchain to transition from NFT to DeFi, but it has unique advantages: a large user base and ample ecosystem funds. The question is whether these advantages can translate into actual competitiveness, which depends on the quality of execution and market timing. At this moment of transformation, Flow has both confidence and challenges. Success is not guaranteed, but failure is not predetermined. Everything depends on the next critical decisions and market responses.

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