Fantom cryptocurrency (FTM): the most secretive "Ethereum killer"
What is Fantom?
Fantom is a permission-free, open blockchain platform based on smart contracts for creating decentralized applications (DApps) and digital assets (tokens). This blockchain not only provides high network bandwidth but also provides enhanced functionality compared to old-generation decentralized protocols.
The Fantom protocol was created in 2018 by the Fantom Foundation team, founded by engineers An Buing Ik and Michael Kong in South Korea. Fantom was initially conceived as a scalable platform for releasing DeFi applications.
In 2018, Fantom raised over 40 million dollars to develop its project in four funding rounds. In June of the same year, the project team successfully conducted an initial token offering (ICO) and raised $39.4 million.
How does Fantom work?
The distinctive feature of the Fantom blockchain lies in the presence of two consensus mechanisms at once:
- directed acyclic graph (DAG),
- Lachesis.
DAG consensus ensures fast transaction execution, while Lachesis secures the blockchain networks that make up the Fantom ecosystem. Lachesis is based on the Byzantine Fault Tolerance (BFT) consensus algorithm, which blockchains such as Cosmos, TON, Zilliqa and Algorand use in their development.
However, Fantom has modernized the consensus into an asynchronous aBFT to achieve higher network throughput. The network remains compatible with the Ethereum Virtual Machine (EVM).
Lachesis is a modular consensus layer which can be integrated into any decentralized network. In other words, DApps developers can seamlessly migrate their decentralized applications from Ethereum to the Fantom network.
The team has also developed its own Fantom Virtual Machine, allowing developers to build applications on this network from scratch.
The Fantom protocol is based on 4 design principles:
- security,
- scalability,
- modularity,
- openness.
According to the team, this approach provides a high level of security while maintaining performance and decentralization. It is also one of the solutions to the blockchain trilemma, which has been a major problem since the beginning of the cryptocurrency industry.
Fantom ecosystem
The Fantom blockchain has a developed ecosystem with over 300 DeFi protocols. Among them are such well-known ones as:
- Stargate cross-chain bridge;
- Yield aggregator Yearn Finance;
- DEX exchanges Sushi, Curve, Spooky Swap, Beethoven X and Beef;
- Cream Finance credit protocol.
Fantom has partnered with significant crypto market players such as decentralized oracle network Chainlink, Band Protocol, blockchain data indexing protocol The Graph, Ankr and others. The Fantom team also works with Crypto.com exchange, blockchain-based travel platform Travala (a decentralized analogue of Airbnb) and Ethereum Classic Labs.
Fantom tokenomics
FTM is the native cryptocurrency of the Fantom blockchain, which is used as the primary means of payment for fees, management, and validator staking and rewards.
Fantom was one of the first protocols to implement liquidity stacking. This mechanism was added to Ethereum after transitioning from Proof-of-Work (PoW) consensus to Proof-of-Stake (PoS).
FTM token holders can lock their tokens in a smart contract for 365 days and receive income. Still, they receive so-called sFTM liquidity tokens, which can be used in DeFi like any other tokens: provide collateral, add to liquidity pools, buy and sell on the market, and so on.
The maximum possible number of tokens is 3 175 000 000 FTM tokens, of which 2.8 billion (about 88%) are already traded on the market. The FTM token ranks 59th in capitalisation, which exceeds $820 million. The price reached an all-time high of $3.09 in October 2021 but declined most of the time. At the time of writing, the token is trading at $0.29. The FTM token is available on major crypto exchanges such as Binance, Kraken, Bitfinex, Bitstamp and.
In 2021, the Fantom protocol was one of the top ten networks in terms of blocked assets (TVL), according to DeFi Llama. However, it has now lost ground significantly and ranks only 35th, and its TVL has fallen to $56.9 million, although as recently as March 2022, the figure was as high as $7.6 billion.
The fall was primarily influenced by the collapse of the Terra platform in May 2022, when investors began to withdraw assets en masse from many protocols, and then the hack of the famous Multichain bridge, after which Fantom's TVL plummeted by 67%. Added to this is the general trend of cryptocurrencies falling in value.
Outlook
Fantom was undoubtedly one of the revolutionary solutions in the early years of its launch, but growing competition among blockchains has pushed the protocol down dozens of positions. Adding to this is the lack of support for the leading protocols in the DeFi sector other than Stargate: Uniswap, Aave, 1inch and others. Although the ecosystem consists of more than 300 DeFi protocols, for the most part, these are little-known decentralized projects with little liquidity.
Much of Fantom's success has been held up by the backing of Yearn Finance founder Andre Cronje, but not enough to withstand the rapidly growing blockchain competition in the crypto industry. So far, the Fantom team has not presented concrete plans for the ecosystem. Still, it is known that it is already testing a new virtual machine called Sonic with an optimized consensus that will achieve a throughput of 2,000 transactions per second. Sonic is scheduled to launch in spring 2024.