What’s The Deal With Fantom?
Another Layer 1 Deep Dive
Layer 1 protocols have really taken off this bull run. Whether it’s been Solana, Avalanche, Terra, or our beloved Ethereum, they have all skyrocketed to unforeseen heights in these past few months.
One L1 that has been making its way into the light lately is Fantom. In the past 90 days, FTM has risen from a price of $0.28 to a current price of $2.84. For those of you that are having trouble doing the math, that’s more than 10x from its previous price.
Some crypto enthusiasts predict that there may still be more X’s left in the tank. However, I won’t say yay or nay to that. I’m only here to explain the protocol itself, not make price predictions or provide financial advice.
So what is Fantom, and why are investors betting big on its future? Well, that’s what we’re about to find out. So, let’s dive in!
What Is Fantom?
Fantom is described as being, “a high-performance, scalable, customizable, and secure smart-contract platform.”
There are also some key features that sets Fantom apart from the other L1s.
Fantom uses Proof-Of-Stake to validate transactions. Their POS method is different from the traditional methods.
Fantom’s nodes do not send blocks to one another.
“Only the events are being synced between nodes. Validators don’t vote on a concrete state of the network; instead, they periodically exchange observed transactions and events with peers.” – Fantom
This is achieved through Lachesis.
Now, let’s talk about Fantom’s custom consensus algorithm, Lachesis.
I’m sure everyone is wondering what aBFT is. Don’t worry, I got you covered.
aBFT stands for Asynchronous Byzantine Fault Tolerance.
Fantom’s native token is FTM. The token has a few different utilities, such as:
Payments: FTM’s throughput and finality is extremely fast and cheap. Transfers take approximately one second, and the fee is only $0.0000001 (almost non-existent).
On-Chain Governance: Holding and staking FTM gives the stakers the ability to propose and/or vote for changes and improvements.
Securing The Network: FTM is mainly used for network security.This is achieved through staking. Validators are able to run a validator node for a minimum of 500k FTM. Stakers are able to lock up as little as 1 FTM into the protocol. Both stakers and validators are rewarded with a portion of the network fees and epoch rewards. The validator fee is fixed at 15%, and stakers receive ~4% for stake-as-you-go, linear up to ~13% for 365 days lock. This also helps prevent network centralization.
Network Fees: The network fees act as a barrier to protect against malicious attacks by making it expensive for a bad actor to spam the network.
Here is a detailed look at how the on-chain governance works
There are 3.175B FTM in the total supply. 2.5B are currently in circulation. The remaining tokens are reserved for staking rewards. Full token circulation will be reached within the next two years, contingent that the token rewards remain at the current level.
Fantom operates as a foundation, but it has a very strong founding team. The CEO/CIO is Michael Kong. Michael has been in the crypto industry since 2016.
He has served as an advisor, developer, and CTO to multiple projects.
The COO is Barek Sekandari. Barek has been a part of projects, such as GoChain, COTI, and Fusion just to name a few.
One of the main architects is none other than the DeFi legend, Andre Cronje.
Andre’s reputation precedes him. He is well known for building other revolutionary DeFI products like Yearn Finance ($1.2B market cap) and AnySwap ($181M market cap).
He has gained the respect of many people and companies within the crypto community.
Now that we’ve covered what Fantom is and the team responsible for the creation of this protocol, let’s attempt to uncover what makes investors so bullish on its future.
Why So Bullish?
Fantom has a current market cap of over $6.6B, and a TVL of $5.7B locked inside of its protocol. While that’s not the highest TVL that we’ve seen locked inside of an L1, it’s definitely nothing to sneeze at. It also shows proof that the protocol is being used.
A healthy ecosystem (80+ dApps) that consists of Dexes, cross-chain bridges, NFT platforms, wallets, yield optimizers, etc. exists on Fantom’s blockchain.
Fantom also has numerous partnerships, integrations, governments/enterprise clients, and oracles/apis. The list is constantly growing.
Community members express why they’re excited about Fantom.
There are extensive threads detailing why Fantom will be successful.
There you have it, folks. That’s the breakdown of what Fantom is and what makes it special. The main thing that everyone wants to know is which L1 will come out on top? Will it be Ethereum, Solana, Cardano, Fantom, etc.?
In the end, I believe that there will be a need for most of the Layer 1s that are continuously building. The industry is too big for one protocol to provide every solution.
So, the question isn’t who will be the winner. The real question you need to ask yourself is which L1 fits your investment thesis/narrative? Once you decide that, constructing your game plan will become much easier.