Fantom, established in 2018, operates as a Layer 1 blockchain network that maintains compatibility with the Ethereum Virtual Machine (EVM) while enabling decentralized applications, smart contracts, and peer-to-peer payment solutions.
Boasting a remarkable transaction speed of approximately 10,000 transactions per second and a block time of 1-2 seconds, Fantom positions itself as a fast and efficient blockchain network.
The gas fee statistics derived from the explorer reveal that routine transactions on the network incur an average fee of $0.06.
The foundation of Fantom aligns with the vision of establishing a secure and efficient platform for the development of decentralized applications and the facilitation of financial transactions among peers.
At the core of the Fantom network is the Fantom (FTM) coin, utilized for staking, governance, and covering fees within the network.
FTM has become a home for various projects, encompassing utility decentralized applications (dApps), NFT initiatives, gaming, and decentralized finance (DeFi) projects.
As per DefiLlama, the total value locked in DeFi projects on the Fantom ecosystem has surpassed $600 million, emphasizing the network’s growing significance in the blockchain space.
How Does Fantom Work?
Fantom is a decentralized ledger network using Proof-of-Stake consensus.
Validators stake FTM to create nodes and validate new blocks.
Beyond the ledger, Fantom functions as a computing platform with a state machine, allowing the creation of decentralized applications on the network.
The Lachesis Consensus Mechanism
Fantom’s Lachesis consensus algorithm is a leaderless, scalable, and asynchronous version of practical Byzantine Fault Tolerance (pBFT), based on a Directed Acyclic Graph (DAG).
It achieves transaction finality in 1-2 seconds by eliminating time-consuming steps of pBFT.
Unlike pBFT, Lachesis does not rely on a leader node and allows an unlimited number of nodes, ensuring speed, agility, and security against malicious actors in the blockchain network.
The Growth of Fantom
In November 2022, the Fantom network experienced a notable surge, creating over one million new addresses in a single day, marking the highest daily increase.
Since then, the network has consistently added over 100,000 addresses daily.
The total number of wallet addresses has grown from just over 3 million before November 2022 to over 43 million at the current time.
The rapid growth, with over 40 million new addresses in four months, is attributed to various developments in the Fantom network.
The Fantom Virtual Machine
Many blockchains use the Ethereum Virtual Machine (EVM) for smart contracts.
Fantom introduced the Fantom Virtual Machine (FVM) at the 2022 Consensus event, designed to address EVM shortcomings while maintaining interoperability.
The FVM improves efficiency with a parallel transaction execution system, handling multiple transactions simultaneously.
It also compiles and translates instructions in batches, saving time compared to the EVM’s sequential approach.
Fantom claims FVM’s modified data structure, using ordinal numbers instead of alphanumeric codes, enhances efficiency over the EVM’s Merkel Patricia Trie.
Fantom’s Gas Monetization and Gas Subsidies
Many blockchains use the Ethereum Virtual Machine (EVM) for smart contracts.
Fantom introduced the Fantom Virtual Machine (FVM) at the 2022 Consensus event, designed to address EVM shortcomings while maintaining interoperability.
The FVM improves efficiency with a parallel transaction execution system, handling multiple transactions simultaneously.
It also compiles and translates instructions in batches, saving time compared to the EVM’s sequential approach.
FTM claims FVM’s modified data structure, using ordinal numbers instead of alphanumeric codes, enhances efficiency over the EVM’s Merkel Patricia Trie.
Positive Cash Flow
On November 28, 2022, Andre Cronje’s Medium post revealed the FTM foundation’s strong financial state, showcasing a net profit and stability.
Despite the crypto winter, Cronje assured the project has funds for the next 30 years.
He detailed fund management strategies, reducing extravagant spending and cutting overall costs.
While not a tech update, the report bolstered investor confidence amid challenging times.
Fantom Ecosystem Vault
On January 19, 2023, FTM introduced the Fantom Ecosystem Vault, funded with 10% of gas fees from the Fantom blockchain.
It’s controlled by the community to support approved projects and improvement proposals.
To access funds, projects must submit proposals, needing 55% community approval from at least 55% of total Fantom stakers.
Fantom aims to nurture decentralized funding for emerging projects through this initiative.
FTM Coin’s Utility
Fantom (FTM) is the native token of the Fantom blockchain.
It powers the core financial aspects of the FTM project and to a large extent, the ecosystem as a whole.
Thanks to the project’s rise to prominence, the FTM coin has seen a rise in daily traded volume.
So, what is FTM used for in the Fantom blockchain?
Gas fee for Native Transactions
To have a transaction minted into the Fantom blockchain, users will need to pay a fee in FTM to the validators.
This fee applies to transactions made directly on the blockchain or over third-party and decentralized applications that depend on the main network to validate their transactions.
Trading on Exchanges
The FTM coin reflects Fantom blockchain technology and the project’s financial health, making it a subject of financial speculation and relevance.
Traders and investors can engage in FTM coin trading on exchanges based on their views on Fantom ecosystem developments.
Read more: How to trade crypto futures in US?
Staking
Fantom blockchain, using proof-of-stake, mandates validators to stake FTM coins for network participation.
Staked FTM earns profits based on an annual percentage yield.
Other investors can also stake FTM for similar benefits.
DeFi protocols in the Fantom ecosystem provide additional staking incentives with rewards paid in different tokens rather than FTM.
DAO Voting
Fantom blockchain doesn’t have a full DAO, but community input, especially through approval votes, is sought for certain aspects like the Fantom Ecosystem Vault.
FTM holders can influence the project’s direction by voting on improvement proposals using their coins.
Peer-to-Peer Transactions
With a reported speed of 10,000 transactions per second and a recorded fee of less than $0.05 per transaction, the FTM blockchain is well-suited for routine commercial transactions and regular transfer of value between peers.
Utility Token
Third-party native apps on FTM aim to enhance the Fantom Ecosystem by incorporating FTM coin into their core functions.
This integration benefits FTM holders, adding value to the ecosystem by increasing demand for the coin and improving its financial structure.
Three Projects to Watch on the Fantom Ecosystem
DeFi is expanding on the FTM ecosystem.
Various projects providing financial services on the blockchain are using Fantom’s technology.
Let’s explore some of these projects.
*Note: These projects were selected based on the total value of assets committed to the project.
SpookySwap
SpookySwap, a major decentralized exchange on the Fantom network, facilitates easy token listing and asset swapping through its Automated Market Maker (AMM) model.
It also operates a versatile token-bridging facility supporting over seven blockchains and 20+ crypto assets, including BNB Smart Chain, Polygon, Avalanche, and Cronos.
The platform rewards liquidity providers and long-term holders through a staking program, offering incentives in selected tokens.
BOO, the native coin, serves as a governance and utility token, allowing holders to participate in the SpookySwap DAO.
With over $100 million in locked assets, SpookySwap continues to play a significant role in the Fantom ecosystem.
Beethoven X
Beethoven X is a decentralized investment platform, presenting itself as the next-gen solution for the future of finance.
It leverages Balancer’s smart contract for core functionalities, offering low-slippage exchange, customizable liquidity pools, and a gas-efficient decentralized exchange.
The vault system efficiently manages liquidity across supported crypto assets, ensuring ample liquidity for all assets.
Beethoven X provides incentives through liquidity farming and single-side staking programs, powered by its native token, BEETS.
With over $85 million in locked assets, Beethoven X is making its mark in the decentralized finance landscape.
Geist Finance
Geist, a decentralized lending protocol on FTM, allows asset owners to lend dormant assets through a lending contract.
Borrowers secure assets by locking collateral, rewarding lenders with interest and borrowers in FTM and Geist tokens.
Geist finance also incentivizes stakers with a program rewarding GEIST token holders for staking or locking assets.
Currently, approximately $45 million worth of assets are locked on Geist finance.
Other Protocols on Fantom
As the DeFi concept and the FTM ecosystem both continue to grow, it becomes increasingly harder to list all the projects that offer services like this.
We have mentioned a few, other notable DeFi projects on the Fantom ecosystem includes:
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Tarot Finance – a lending protocol built on the FTM blockchain
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PaintSwap – Fantom’s biggest NFT marketplace
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SpiritSwap – another decentralized exchange built on the FTM blockchain.
Final Thoughts
Fantom’s TVL has dropped from its 2022 highs in the bear market. However, it’s still among the top five chains on DefiLlama for the number of protocols.
This shows community interest in FTM.
Features like gas monetization, subsidies, the ecosystem vault, and the FVM are likely to draw more projects to Fantom.
Remember, this information is for educational purposes and not financial advice.