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What Is Fantom (FTM)?
Fantom is a directed acyclic graph (DAG) smart contract platform providing decentralized finance (DeFi) services to developers using its own bespoke consensus algorithm.
Together with its in-house token FTM, Fantom aims to solve problems associated with smart-contract platforms, specifically transaction speed, which developers say they have reduced to under two seconds.
The Fantom Foundation, which oversees the Fantom product offering, was originally created in 2018, with the launch of OPERA, Fantom’s mainnet, coming in December 2019.
Fantom is an open-source decentralized smart contract platform for DApps and digital assets that was created as an alternative to Ethereum. Fantom has the goal of overcoming the limitations of previous generation blockchains and balancing three components: scalability, security and decentralization. The project offers a set of tools to simplify the process of integrating existing DApps, as well as a detailed staking reward system and built-in DeFi instruments.
Fantom is a Layer-1 blockchain that uses a scratch-built consensus mechanism and independent consensus layer, Lachesis, to facilitate DeFi and related services on the basis of smart contracts. Lachesis provides security for other layers as well, including Opera, Fantom’s EVM-compatible smart contract chain. The long-playing mission of the project is to “grant compatibility between all transaction bodies around the world.”
One of Fantom’s key strengths is its performance and efficient transaction processing, namely thousands of transactions per second, where transactions are settled in 1-2 seconds, and the cost is fractions of a cent per transaction. As a result, Fantom provides higher scalability but at a lower cost.
The ecosystem is based on two main technologies: Lachesis protocol and Opera.
The Lachesis protocol is the core consensus layer that secures the Fantom network by providing both transaction speed and security.
Lachesis is an aBFT consensus engine that uses a directed acyclic graph (DAG) algorithm. How it works: network data can be processed at different times, and the network filters the participants, allowing only one third, which are allocated due to erroneous or malicious behavior, without compromising network processes.
Fantom’s Asynchronous Byzantine Fault Tolerant (aBFT) Proof-of-Stake (PoS) consensus mechanism maintains the efficiency of the entire network, its design provides security at maximum speed. Fantom developers emphasize that the PoS mechanism is a leaderless phenomenon — there are no leaders of blocks and participants, and anyone can join (or leave) the network of nodes at a convenient moment.
The key qualities of Lachesis are: asynchronous, leaderless, Byzantine fault-tolerant, and near-instant finality.
As for Opera, it’s an application development layer or Fantom’s mainnet deployment platform, permissionless and open-source hosting DApps. Thanks to EVM integration and support for the Solidity programming language, Fantom has a full set of smart contract capabilities, which allows users to seamlessly interact with Ethereum platforms while maintaining the advantage of Fantom’s transaction efficiency.
The Fantom Foundation concluded that removing block leaders improves network security, so Opera uses a PoS model and leaderless validators (validators do not determine which blocks are valid).
In addition to being a fast, secure and cheap payment platform that enables to make fast and secure payments at minimal cost, Fantom also features on-chain governance where users vote with FTM tokens (one token equals one vote). Of the features: users have the right to express the degree of agreement / disagreement on a scale from 0 to 4.
FTM is the native utility in-house PoS token of Fantom that powers the ecosystem and is applied for payments, network fees, staking, and governance. FTM forms the backbone of transactions, and allows fee collection and staking activities, along with the user rewards the latter represents.
How Does Fantom Work?
Fantom is modular
Lachesis represents one layer, the consensus, of the blockchain technology stack and can be plugged into any distributed ledger.
Lachesis powers Fantom’s Opera mainnet deployment, that uses the Ethereum Virtual Machine (EVM) and it’s compatible with Ethereum.
The modularity makes Fantom exceptionally flexible. Developers can port their existing Ethereum-based dApps on Fantom Opera mainnet in a matter of minutes, substantially upgrading the performance and lowering the costs.
Fantom is secure and environmentally friendly
Fantom is secured by Proof-of-Stake. Unlike Proof-of-Work, used by Bitcoin and Ethereum, Proof-of-Stake prevents centralization and saves electricity.
Lachesis can provide institutional-grade security to distributed networks. Fantom offers absolute finality, which means that transactions can never be reverted like in networks with probabilistic finality.
The consensus mechanism can also scale to hundred of nodes, increasing decentralization and therefore security.
Lastly, Lachesis is leaderless. By removing leaders, security doesn’t rely on a small set of actors.
Fantom is open-source
Our teams are committed to creating building blocks for anyone to use and customize to their needs. We relentlessly aim for high transparency regarding our work. Based on these principles, our code is open-source and available on Github.
Fantom is open-participation
Fantom is permissionless. Anyone can run a node.
On Fantom’s Opera Chain, a virtually unlimited number of validator nodes can participate in securing the network, as long as they keep a minimum of 1,000,000 FTM at stake.
If you own lower amounts of the token or you’re not an expert in running distributed systems, you can still participate in securing the network.
You can delegate a minimum of 1 FTM to a validator node, and get rewarded.
The Fantom Supply
Upon its founding, the Fantom organization issued 3.175 billion tokens. This supply is fixed, so there can never be more Fantom. However, not all of the tokens authorized are yet in circulation. When the system was launched, 40% of the supply was set aside for investors. An additional 25% was allocated for advisors and the team of founders.
A little over 31% of Fantom tokens will be awarded for staking, or holding a supply of the tokens in the blockchain system to validate its transactions. This process will continue until 2024 when all available Fantom tokens will be distributed or rewarded.
The Fantom Blockchains
Each Fantom application has its own blockchain network. This DeFi, or decentralized finance platform, makes possible faster execution of “smart contracts,” which are simply transactions executed automatically through a series of conditions and commands on the network.
The system relies on open source programming code so developers can easily build trading exchanges, lending apps, marketplaces for non-fungible tokens or other digital assets. Because Fantom uses Solana — the same programming language as Ethereum — an app developer can easily port in apps developed on the Ethereum blockchain.
And as they speak the same language, the Fantom blockchains can communicate with and interact with each other.
Is Fantom Legitimate?
With many cryptocurrencies available, the question is often: Why does the world need another cryptocurrency?
The Fantom system generates its own digital coin, abbreviated to FTM. The purpose is to lend users of these speedier blockchain networks a native medium of exchange. Further, each blockchain on the Fantom system can have its own tokens and rules on how these tokens are generated and traded.
5 Things To Know Before You Buy Fantom (FTM)
Fantom’s recent gains have gotten the attention of crypto investors. Here’s what you should know before you buy it.
While the entire crypto market was on a hot streak to end the summer, Fantom (FTM) stood out as one of the big winners. Its price shot up for the entire month of August, and it reached an all-time high of $1.93 on Sept. 9, 2021. It has cooled off since then, but for those who believe in Fantom, this dip could be a good buying opportunity.
The excitement around Fantom comes largely from its potential to be a better version of Ethereum (ETH), the second-largest cryptocurrency. If Fantom is a crypto you’re thinking of adding to your portfolio, this primer will cover what you need to know about it.
1. It’s available on several large cryptocurrency exchanges
Many types of cryptocurrency, especially smaller cryptos, are difficult to buy. Fortunately, that isn’t the case with Fantom. You can buy it on several of the biggest cryptocurrency exchanges, including:
- Binance (only the international platform, not Binance.US)
In addition, Fantom is available on many decentralized crypto exchanges. This type of exchange offers peer-to-peer crypto trading without a middleman facilitating transactions. Decentralized exchanges that offer Fantom include Uniswap and Sushiswap.
2. Transactions on Fantom are inexpensive and nearly instant
One of the main draws of Fantom is its efficient transaction processing. It can handle thousands of transactions per second, and transactions are settled within one to two seconds. Transaction fees are typically a fraction of a cent. In May, it was reported that Fantom had crossed 3 million transactions and was the fastest blockchain platform.
Fantom isn’t the only cryptocurrency offering these kinds of speeds, and it may not be the fastest blockchain platform anymore. Solana (SOL) can reportedly handle at least 50,000 transactions per second and also charges a fraction of a cent in fees. Even so, Fantom’s performance is very impressive.
3. Uses for the Fantom token include staking, governance, network fees, and payments
The Fantom token is the platform’s native cryptocurrency. Here’s what it’s used for:
- Staking: Fantom uses a proof-of-stake model. Transactions are verified by nodes made up of people’s Fantom tokens. By staking crypto this way, you help secure the network and earn rewards.
- Governance: Since Fantom is decentralized, token holders make decisions regarding its future. By holding and staking Fantom, you can propose and vote on changes.
- Network fees: Fees on the Fantom network are paid using its cryptocurrency. These fees are charged on transactions, deploying smart contracts, and creating new networks.
- Payments: With its fast transaction speeds and low fees, Fantom is a convenient way to transfer funds to other parties.
4. It’s a blockchain platform with smart contract capabilities
To start, it’s important to have a grasp of what Fantom does. Fantom is a blockchain platform capable of running smart contracts. These programs allow blockchains to run more advanced transactions than simply sending cryptocurrency from one person to another.
There are a couple very popular uses for smart contracts right now:
- They’re instrumental in decentralized finance (DeFi), which are financial services that don’t require a central governing body. Through smart contracts, developers can create decentralized apps (dApps) that power DeFi platforms.
- They’re used for establishing the ownership of non-fungible tokens (NFTs). These are digital collectibles that can be traded, bought, and sold.
Ethereum was the first cryptocurrency to offer smart contracts, and it’s the platform where most dApps are built. However, it has been having congestion issues, resulting in outages and high transaction fees. Because of that, several alternatives have been developed offering faster transaction processing at a lower cost.
5. It has strong competition in Ethereum and other smart contract platforms
Perhaps the hardest challenge for Fantom going forward is stiff competition. There are plenty of alternatives to Ethereum. Cardano (ADA) is the biggest and has seen major growth of its own this year. The aforementioned Solana is another growing platform offering lightning-fast transactions.
There’s also Ethereum itself, which is going through a series of upgrades to Ethereum 2.0. During these upgrades, it will transition to a proof-of-stake model like Fantom has. These upgrades should improve transaction speeds and lower fees.
Given its transaction speeds and the advanced smart contracts platform it offers, Fantom could be a solid cryptocurrency investment. The price has dipped since its all-time high, and it still has a much smaller market cap than some of its main competitors. There could still conceivably be plenty of room for it to keep growing.
On the other hand, it’s hard to say which, if any, of these platforms will have the most long-term success. Make sure you carefully consider Fantom and the alternatives before deciding where to put your money.
Fantom Staking, FTM Token, And DeFi Suite
Fantom’s native utility token — FTM — powers the entire Fantom blockchain ecosystem. FTM tokens are used for staking, governance, payments, and fees on the network. There is a total supply of 3.175 billion FTM coins, with 2.5 billion in circulation as of March 2021. The remainder will be distributed as Fantom staking rewards. FTM is available as a native mainnet coin, an ERC-20 token in the Ethereum ecosystem, and a BEP-2 token in the Binance ecosystem.
Anyone can participate in Fantom staking with a minimum stake of 1 FTM by moving their FTM to a Fantom wallet address. When doing so, ERC-20 FTM tokens and BEP-2 FTM tokens will automatically be swapped for Opera FTM coins. Also, to operate a validator node on Fantom’s permissionless network at least 3,125,000 FTM must be staked (valued at more than $1 million USD as of March 2021).
Fantom provides a fairly dynamic and lucrative staking structure for users. Users can stake their FTM at-will with a validator node for a 4% annual percentage yield (APY) staking reward, which is a common staking model. However, users can also take advantage of Fantom’s Fluid Rewards by choosing to lock up FTM for a predetermined time — ranging from two weeks to a year — to secure higher reward rates of as much as 12% APY.
Fantom also employs a feature called Liquid Staking, whereby stakers can mint FTM at a 1:1 ratio to their staked FTM to be used as collateral in Fantom Finance — a suite of DeFi apps provided by Fantom — thus allowing users to get more use out of their staked FTM. Some of the DeFi offerings that Fantom provides include:
• fUSD: a Fantom-based stablecoin that’s pegged to the U.S. dollar
• fSwap: a synthetic asset decentralized trading platform
• fLend: a liquidity pool from which users can lend or borrow
Fantom’s approach to the DeFi and dApp landscape is innovative — as is the structure of its staking reward program. Further proposed use cases for Fantom’s highly scalable smart contract platform are dApps related to supply chain management, payments, and smart city programs, although its permissionless nature means its actual use cases will likely far exceed these prescribed categories.
With its first-of-kind complex and unique infrastructure, Fantom’s approach to fast, scalable dApp development is still establishing its place in the wider blockchain ecosystem. As of February 2022, the Fantom blockchain has a total value locked (TVL) of over $10 billion and 150 independent blockchains operating on its network. Although there is already significant competition in the blockchain sector, the speed and interoperability benefits that Fantom offers developers are notable and the platform is poised to gain further traction.
What Makes Fantom Special? Solving the Trilemma!
Fantom uses a completely new consensus mechanism developed from scratch: Lachesis. This is supposed to be significantly faster and more secure than conventional proof-of-stake blockchains (PoS). In this way, Fantom is trying to solve the blockchain trilemma. This refers to the dilemma with distributed ledger technologies of having to balance speed, security, and decentralization.
According to the trilemma, it is not possible to optimize all three aspects simultaneously without making compromises. Bitcoin, for example, is very secure due to its decentralization — but it loses speed. According to the developers, Fantom attempts to solve this problem by achieving asynchronous Byzantine fault tolerance (“aBFT”). Fantom’s aBFT consensus enables asynchronous processing of transactions. This is intended to increase the speed and throughput of transactions compared to Bitcoin or Ethereum.
In addition, Fantom is customizable. Multiple blockchains can be connected to the coin’s consensus protocol (Lachesis) and communicate with each other. Each blockchain works independently, and each of them should be able to have its tokens, tokenomics, and governance rules. Lachesis is also fully compatible with the Ethereum Virtual Machine (EVM).
Pros And Cons
Should You Buy Fantom?
Even though Fantom is not the first project to use DAG technology to pave the way towards scalability, it promises to add more value through the addition of infrastructure supporting smart contracts as well as decentralised applications, giving it a boost past competitors such as Nano and IOTA.
Given the links that Fantom has with smart cities in South Korea, there is mass speculation that the platform will be able to control the market for these cities. Even though this cannot be guaranteed, Fantom will need to ensure that there is timely progress and that they deliver on promises, allowing them to maintain the partnerships that they have forged.
By ensuring that there is consistent high transaction speeds and low transaction fees, Fantom is increasing acceptance across various industries, pushing it closer to mass enterprise adoption, which is something that investors are banking on.
The future of Fantom rests on its ability to deliver a sustainable, Ethereum-like, application-based ecosystem.