The entire cryptocurrency market is on a hot streak this 21st century, and Fantom (FTM) stands among the big winners. Despite hundreds of cool crypto blockchains in the entire space, nothing can compare to the mind-blowing stuff in the Fantom network.
The hustle and bustle around Fantom mainly come from its potential to be a higher quality version of Ethereum (ETH), which is currently crowned as the second-largest cryptocurrency. If you’re thinking of adding Fantom (FTM) into your portfolio, this primer write-up will cover the main points you should learn about it.
What is Fantom (FTM)?
As a starter, it is essential to latch onto what Fantom does. Every block in a blockchain possesses data, and each block should have data about the block before and after it, making it a chain. Fantom utilizes DAG, which is not a blockchain but rather referred to as a rumor-spreading machine by some.
In DAG, there are a large number of computers, and these computers just communicate back and forth concerning the transactions that they have with computers from a short distance away. These computers spread data like rumors and agree on which data should bestow on them throughout time.
Fantom (FTM) Consensus Mechanism
Fantom’s consensus mechanism is Lachesis, a special type of proof-of-stake mechanism and has only around 50 validators in their network. To qualify as a validator, a holder must possess a minimum of 1 million Fantom coins, which pretty much cost a lot. This requirement doesn’t show the essence of decentralization that much.
The DAG and Lachesis model allows easy access of online criminals to the network, allowing them to fake transactions. In fact, it only takes about 1/3 of the network, which is much, much less compared to other crypto networks.
In Fantom’s consensus model, there’s no need for validators for users to earn rewards since having validators is quite expensive to set up. Instead, users can delegate their Fantom coins to another validator that they fully trust in order to use them in the DAG.
Only one Fantom coin is needed in order to do this, and users can already earn delegated staking rewards. However, this staking requires Fantom coin holders to lock up their coins for about one day to one year. The longer a user locks up his token, the higher his reward.
Because of the nature of DAG and Lachesis staking protocol, the Fantom network runs truly fast. The network can handle about 4,500 transactions every second, including smart contracts and basic transactions.
More than the number of transactions that the network can handle, the most important thing to look for in a blockchain is the finality— when the transaction actually gets confirmed.
In Bitcoin’s case, transactions get confirmed for about an hour, while it takes just about 10 minutes in Ethereum. But do you know what’s cool about the Fantom network? It only takes about one or two seconds for transactions to be confirmed.
Aside from the top-tier speed that the Fantom network offers, it also boasts its insanely low transaction fee, which that only costs less than a penny.
Another thing to look up for the Fantom network is holders can actually lock up their coins to mint F USD— a stablecoin backed by the Fantom network at a 5-1 ratio.
Ethereum Virtual Machine (EVM) Compatibility
Fantom is pretty compatible with Ethereum Virtual Machine (EVM), so when you build something on the Ethereum network and want to put it into Fantom, you can just simply copy-paste it into the Fantom. After a copy-pasting, it will only take you a few tweaks to make it work.
This strong compatibility between Fantom and EVM is a piece of good news for porting over popular decentralized applications (Dapps) such as Curve Finance, Sushi Swap, and Cream.
Fantom’s Incentive Program
The generosity of Fantom is visible in their incentive program. At the time of writing, they are promising half-billion dollars’ worth of tokens to developers who will be able to design a unique and useful application on top of their network.
Polygon and Avalanche’s incentive program literally just gave tokens away for the sake of advertising. After all, getting more people in their network will make them more money in return. In contrast to this, Fantom instead gives incentives to developers than users— which is a bold and wise move.
Users just go to where the money flows, so when you give money to them and eventually run out of money to spare for them, they will hop out of your network and transfer to another. Perhaps, this may be the reason why Fantom prefers giving the incentive to developers.
Encouraging developers to build projects that will keep people in the network is more beneficial in the long run. When a network continues building good projects, it will encourage investors to stay on the network.
Of course, this also comes with a downside. Although the network will indeed perform well with good projects, the earning won’t be as high as other networks.
Fantom Branding
Everyone who gets to know Fantom understands how awesome their branding is. They have a marketing team designated for every project, even for decentralized applications like Spooky Swap (a decentralized exchange), Tarot (a decentralized lending and borrowing protocol), and Scream Finance (a highly scalable decentralized lending protocol similar to AAVE).
Fantom Governance
Blockchains usually have voting systems where coin holders dictate the user’s power to come up with new ideas. Basically, coin holders can use their coins to make a decision, and the number of coins they stake will determine the power of their decision. The final decision will come from the majority vote.
Fantom doesn’t govern their network the way other does.
Rather than simply asking yes or no to conclude a decision, Fantom asks holders to rate from 1-4 on how much they want to vote on a new idea. Hence, instead of answering just black and white, participating individuals can answer based on the extremity of their acceptance of the idea.
For the idea to pass, 66% of the participating individual should at least say yes to the idea. This implemented method is a fresh idea in the crypto space.
Can Fantom overthrow Ethereum?
Out of thousands of cryptocurrencies in the market, Fantom possesses the best odds in dethroning Ethereum as the go-to platform for decentralized applications (Dapps) and decentralized finance (DeFi).
The technology that backs Fantom is among the best in the space, especially when it boils down to decentralization. It has all the means to overthrow Ethereum and become a leader in decentralized finance.
However, the greatest strength that Fantom has can also be its weakness. Even though Fantom has its blockchain, compatibly integrates with Ethereum Virtual Machine (EVM), and all the applications are created through Solidity, the Fantom network is yet to have a proprietary software development kit. But the network states they have plans to release Fantom Virtual Machine the sooner they can.
There’s a big chance for Fantom to dethrone Ethereum, but right now, it only stands as a good compliment to Ethereum.
Fantom Tokenomics
The native coin of Fantom is called FTM. These coins are designed to be inflationary, but they have maximum supply. Currently, the number of FTM coins in circulation is about 2.6 billion, and 500 million are held at staking smart contracts. The coins that are locked up are given out as staking rewards.
Back in December 2020, Fantom only costs about 1 penny, and just a year later, it’s already at $1.50.
