What Is Fantom? All You Need to Know About FTM

What Is Fantom (FTM)?

Blockchain technology has the potential to become an ideal network for developing global solutions. Numerous sectors will be involved: from finance to healthcare, and through art to education, and they will find a layer ready and oriented towards future development. In order to achieve this, there is a need for a scalable and efficient blockchain. Fantom could be a good solution here, as it was created to respond to the trilemma of scalability: balancing scalability, security, and decentralization. This trilemma represents an insurmountable obstacle for many Layer 1 blockchains.

The Fantom project was founded in 2018 by Ahn Byung Ik, a computer scientist and creator of the SikSin app (widely used in Korea to rate restaurants). Initially, he was the CEO of the Fantom Foundation, but then he stepped down in 2019, leaving the company in the hands of Michael Kong, a skilled developer of smart contract Ethereum. In addition, Andre Cronje, founder of Yearn Finance and one of the most notorious and prolific developers in the decentralized finance (DeFi) industry, was a long-time technical adviser to Fantom. Cronje contributed a lot to the development of the project, especially in promoting Fantom’s multi-chain efforts, until he decided to leave the DeFi space in March 2022. Moments after Andre Cronje and Anton Nell, another collaborator, left the scene, news spread that the two would finish around 25 apps and services, including Fantom. This news was potentially damaging both the Fantom Foundation and the developers of the project (as well as the price of the token), until the Foundation itself released a statement, explaining the groundlessness of that news. In short, the Foundation stated that Andre Cronje and Anton Nell did not ‘terminate’ those 25 projects but, instead, any involvement in these projects was to be handed over to the existing teams, many of whom had been developing and running independently. In addition, it stated that Fantom’s technology development is continuing as normal.

Fantom (FTM) is a Distributed Ledger Technology (DLT) project, so it is slightly different from a typical blockchain. DLTs embrace all those technologies that allow the construction of decentralized databases. Fantom has taken a step forward, since it was built to become a permissionless, decentralized, and open-source smart contract platform. In addition, it introduces an innovative consensus mechanism, which allows the asynchronous existence of different blockchains, without slowing down the main network. This consensus mechanism is called Lachesis, which is technically an aBFT (Asynchronous Byzantine Fault Tolerance). Lachesis allows transactions to be finalized almost instantly and consents the network to tolerate malicious behavior from up to one-third of the participants. In a nutshell, this mechanism allows Fantom to be faster and cheaper than previous technologies, without compromising safety.
Furthermore, its modular architecture allows the complete customization of blockchains for digital assets, with different features that are tailored to specific use cases.

Fantom is considered a valid ‘Ethereum killer’, as, due to the problems encountered by Ethereum in terms of scalability and transaction cost, it aims to become a much more efficient and economical solution. The two protocols under comparison are very different from each other. Even though Ethereum has proven to be a fairly solid and reliable blockchain over time, Fantom has taken the speed and cost-effectiveness to the next level.

How Does Fantom Work? OPERA Mainnet and Network Components

As already mentioned, Fantom is supported by the Lachesis consensus mechanism, which is a combination of Proof of Stake (PoS) and Directed Acyclic Graph (DAG). A Dag is a particular structure for sorting computer data. It does not involve consecutive data blocks like a proper blockchain, but a network of connected transactions in a tree structure. Generally, transactions are verified according to the ’Gossip’ method, which is the transmission of consent between one node and another through the network.

Lachesis, which is basically a system that represents the basic consensus layer of Fantom, can be integrated into any distributed register. Lachesis is the key factor thanks to which the Fantom OPERA mainnet can operate.

Opera uses three components to make this network function:

1. Clotho, a special kind of event block;
2. Lachesis, the consensus mechanism;
3. Atropos, a special event block chosen by the Clotho.

The transaction verifications within the network take place through a complicated confirmation mechanism, in which nodes keep notifying each other. Subsequently, the nodes transmit to the network both the blocks received from others and their own ones, thereby disseminating the information they have validated. When a block achieves an additional level of notoriety, it becomes a Clotho. The Clothos communicate with each other in order to reach consensus on the election of an Atropos. Eventually, the series of Atropos that forms along the DAG, constitutes the main chain, which is the one that all the nodes have preserved. The main chain also acts as a temporal reference.

Due to its extreme scalability, Fantom is particularly suited to developing Dapps (Decentralized applications). Each dapp can use a customizable Opera sidechain, the number of which is unlimited. In addition, Fantom’s smart contracts are completely based on Ethereum’s EVM, which is the infrastructure that allows developers to program smart contracts with Solidity. This means that the two ecosystems are fully compatible with their respective tokens.

What Is the FTM Token?

FTM, the primary token of the Fantom network, is used for governance, payments, fees, and to secure the network through staking. The main utility of the token is maintaining the network safety through the Proof-of-Stake. Validator nodes and Fantom delegating stakers will receive both block rewards and transaction fees as a reward. The Fantom Foundation requires the minimum of 500,000 FTM to be staked in order to become a validator, which constitutes an important entry barrier for anyone who wants to contribute to securing the network.

To date, the validators of the Fantom network are just 72 individuals, and there is zero tolerance for any malicious node that wants to attack the network. For such attacks, there is immediate slashing, which involves the confiscation of the validator’s stake. On the other hand, simple staking is much more accessible: any user can stake a minimum of 1 FTM and choose a validator to delegate their funds to.

By locking FTM tokens using the locked staking function, users get the equivalent in sFTM, which can be used as collateral in Fantom’s native DeFi. This process is called liquid staking, and is offered by just a few other protocols.

By using the DeFi on Fantom directly from the wallet, users can access three products:

• fMint: Users can mint the stablecoin pegged to the US dollar, fUSD, by locking FTM with a 5:1 ratio;

• fSwap: With the fUSD obtained, users can then buy up to 174 synthetic assets. These are collateralized by FTM and pegged to something outside the Fantom ecosystem, such as other cryptocurrencies or commodities;
• fLend: This works like a classic money market. Users can lend their FTM and fUSD to the liquidity pool and earn interest on their capital. In addition, they can use fUSD as collateral to borrow synthetic assets and trade.

Fantom’s second DeFi ecosystem is based on the interoperability between Ethereum protocols, including Sushiswap, Curve, and Cream finance. For this purpose, Fantom provides the Fantom Bridge to transfer ERC-20 tokens on Opera.

Fantom Ecosystem

The Fantom ecosystem has evolved very rapidly, proposing itself as a leader in Defi innovation and attracting large amounts of capital, thus enhancing the entire network.

Source: Fantom Ecosystem

Below are some of the most popular projects currently being built on Fantom.

• SpookySwap: An automated market-making (AMM) decentralized exchange (DEX) for the Fantom Opera network. Users can swap between tokens on the Fantom network at very low fees, collect swap fees by contributing to the liquidity pools used for swaps, or stake proof of liquidity at farms to start earning BOO, which is the project’s governance token.
• SpiritSwap: Another decentralized exchange (DEX) on the Fantom Opera network, which is based on the Uniswap constant-product automated market maker (AMM). Users can swap between tokens easily at guaranteed rates, use services such as lending/borrowing, purchase bonds, and acquire LP (Liquidity Provider) tokens. The main token is SPIRIT, the protocol’s governance token which is also used to pay out farming rewards.
• Scream: A highly-scalable decentralized lending protocol powered by Fantom. Users can borrow and lend tokens directly on the platform with cheap fees. Recently, the platform introduced additional money markets, including stablecoins such as USDC and DAI. SCREAM is the protocol’s native token, which is used to incentivize lending activities and for future development opportunities in the SCREAM ecosystem.
• Tomb Finance: The first ecosystem on Fantom running around an algorithmic token pegged to the FTM token, instead of a stable coin. The peg system is based on a seigniorage mechanism, which uses an algorithm that issues more coins when the price increases, and buys them off the market when the price falls. The project aims to make TOMB the main medium of exchange on the Fantom network by providing a liquid asset to participants in Fantom’s ever-expanding DeFi ecosystem.

Any protocol on Fantom that meets certain requirements can participate in an incentive program, directly promoted by the Fantom Foundation. The purpose is to allow a linear development of the ecosystem and to improve the safety and quality of the projects.

Is FTM a Good Investment?

Fantom is considered by many to be a highly innovative project. The ecosystem that is developing around Fantom is interesting to observe and study, because of the promising innovation capacity that the Fantom Foundation has shown so far. The large number of projects that revolve around Fantom, its ability to execute transactions quickly and with extremely low costs, and its compatibility with the EVM are essential to attract the new capital of decentralized finance.

However, there are some concerns, which mainly relate to the fact that since the Fantom network has very few validators, it may be too centralized. Finally, the requirements to become a validator are very high, firstly because of the large number of tokens required to be staked, and secondly, because of the high hardware power required to manage a node. In fact, to date, the number of validator nodes is quite low, and this subjects Fantom to some potential structural risks.

This problem can be fixed, perhaps by giving some other incentive to stakers in order to attract new ones. Nevertheless, everything must be followed by a healthy development of the project because, as we know, the more a protocol demonstrates solidity and use cases, the greater the participation of users and/or investors.

How to Own FTM?

One way to own FTM is to go through a crypto centralized exchange, so the first step is to create a Gate.io account and complete the KYC process. Once you have added funds to your account, check out the steps to buy FTM on the spot or derivatives market.

News on Fantom

According to an article released on October 7, 2022, by the official Fantom Foundation blog, Unstoppable Domains has integrated Fantom into its services. Users can now purchase a domain name that can serve as a universal Web3 address, instead of having a 42-character wallet address.

Unstoppable Domains is a San Francisco-based company that allows users to create a blockchain-connected web address similar to a URL. In a nutshell, this translates a cryptocurrency wallet’s addresses into a far simpler human-readable name that connects with decentralized apps (dApps) and exchanges.

Thanks to this integration, Fantom users will also be able to buy a domain and use it as a username, a crypto address for FTM or Fantom tokens, and much more.

Useful References

For the latest updates about Fantom, you can visit:

• The official website
• Twitter
• GitHub
• Telegram
• Reddit

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