Cryptocurrency users seek fast transactions with minimal fees. In response, the industry offers various platforms and protocols that operate much faster than Bitcoin or Ethereum networks.
Fantom stands out as a platform where transactions can be completed in seconds. This article explores how the team has achieved such rapid processing times.
What is Fantom?
Fantom is a high-performance and scalable decentralized platform for smart contracts, based on Directed Acyclic Graph (DAG) technology. It is compatible with the Ethereum Virtual Machine (EVM) and supports smart contracts and decentralized applications written in Solidity.
Due to its ease of migration, fast, and low-cost transactions, Fantom has developed a vast ecosystem encompassing dozens of blockchain projects, including decentralized exchanges, DeFi lending protocols, and NFT marketplaces.
In the fall of 2021, the Fantom ecosystem entered the top 10 blockchain platforms by total value locked (TVL), and the number of unique addresses on the network exceeded 1 million. The Fantom ecosystem hosts over 300 DApps, with an average transaction fee of around $0.01, according to the team.
As of May 2, 2024, the total value locked (TVL) in the Fantom network is estimated at $110.1 million, according to DeFiLlama.
History and Development of Fantom
Fantom was launched in 2018 by South Korean programmer and computer science PhD Dr. Ahn Byung Ik. In February 2019, Dr. Ahn departed the project, and the Fantom Foundation, led by Michael Kong, took over its development. The foundation is headquartered in the Cayman Islands.
In 2019, the team launched the EVM-compatible Opera network, consisting of three layers:
- The Core Layer: The foundational layer for transactions.
- The Opera Wayer Layer: Supports smart contracts and other functionalities.
- The Opera Application Layer: Facilitates third-party applications.
The network can process up to 200 transactions per second (TPS), distinguishing Fantom from its competitors.
That same year, the developers announced a partnership with Binance Chain to create a cross-chain ecosystem, resulting in bridges for moving FTM between Ethereum and BNB Chain networks.
The team later focused on expanding the DeFi ecosystem, notably through collaboration with yearn.finance co-founder Andre Cronje.
In May 2021, Fantom partnered with the blockchain oracle network Chainlink, enabling developers to use Chainlink VRF as a secure and reliable source of external data for creating products like NFTs.
Collaboration with Web3 infrastructure provider Ankr allowed Fantom to leverage Ankr’s API services for easier deployment of decentralized applications (dApps).
In 2023, Fantom launched the Ecosystem Vault initiative to support dApp developers, funded by 10% of network transaction fees. This initiative aims to increase decentralization, with community members overseeing its development.
In March 2024, Fantom Foundation CEO Michael Kong introduced the Sonic upgrade roadmap. The new technology is expected to increase transaction processing speed tenfold, reaching 2000 TPS. Post-Sonic upgrade, the network could potentially handle around 180 million transactions per day.
Key Features of the Sonic Upgrade
- Improved Transaction Throughput: The upgrade will significantly boost network capacity.
- Simplified and Liquid Staking: The team plans to decouple the annual percentage rate (APR) from coin lock-up periods, expected to boost DeFi activity and increase the network’s total value locked (TVL).
- Rollups and Cross-Chain Bridge with Ethereum: Enhancing interoperability.
- Expansion of Grant Programs: To support further development within the ecosystem.
- User Reward Campaign: To incentivize participation in the main Opera network and the Sonic update.
- Parallel Fantom Virtual Machine (FVM): To enhance network functionality.
- Announcement of a “Canonical” Stablecoin: Expected in the near future.
How Does the Fantom Blockchain Work?
Fantom utilizes a Directed Acyclic Graph (DAG) architecture, similar to projects like IOTA, Nano, Dero, and Coti. However, Fantom is unique in that it is the first to implement smart contract support on a DAG-based platform.
At the core of Fantom’s technology is the Lachesis aBFT (asynchronous Byzantine Fault Tolerance) consensus mechanism, which has several key features:
- Asynchronous Processing: Transactions can be processed independently by different nodes.
- Leaderless Structure: There are no central nodes controlling the network.
- Byzantine Fault Tolerance: The network remains operational even if up to one-third of the nodes are faulty or malicious.
- Rapid Transaction Finality: Transactions are confirmed within 1-2 seconds.
Each Lachesis node maintains its own local DAG, consisting of event blocks that contain transactions. Unlike linear blockchains, where blocks are passed between nodes to achieve consensus, Lachesis nodes exchange transactions and events periodically, synchronizing them within a single epoch that lasts a few minutes.
Lachesis is fully compatible with the Ethereum Virtual Machine (EVM) and can be integrated with the Cosmos SDK. This allows developers to quickly port existing smart contracts and applications written in Solidity to the Fantom network, reducing the time and cost of launching new products.
What is FTM?
FTM is the native cryptocurrency of the Fantom network. It is used for various purposes, including transaction fees, staking, and governance within the network.
The team conducted an initial coin offering (ICO) in June 2018, selling 40% of the total supply of FTM to early investors, raising $40 million.
Fantom processes transactions in seconds with low fees, even during periods of high network demand. As of May 1, 2024, the average transaction fee was around 41.9 Gwei (~$2.28), according to FTMScan. This efficiency makes FTM practical for daily use and transferring funds.
FTM holders can participate in the governance of the network by voting on proposed changes and improvements. Additionally, they can stake their FTM to support the network’s decentralization and security.
To participate in staking, users can delegate as little as 1 FTM to a chosen validator, with an annual percentage rate (APR) of 6.3%.
Running a validator node does not require specialized technical knowledge or powerful hardware, but there are significant financial requirements. Prospective validators must stake at least 50,000 FTM in a smart contract. As of the writing of this article, 58 validators support the network.
As of May 6, 2024, the price of FTM is $0.71, according to TradingView.
What Partnerships Has the Fantom Foundation Established?
Since its inception in 2018, the Fantom Foundation has been actively seeking global partnerships to implement blockchain technology across various sectors, including businesses and government institutions.
Initially, Fantom focused on building partnerships in South Korea. During its ICO, the project announced collaborations with SoftBank Korea and Oracle Korea. Additionally, the foundation’s close ties with the Korea Food-Tech Association led to early agreements with companies in the Korean food technology sector, though these did not progress further.
In August 2018, Fantom Foundation formed a strategic alliance with POSBANK, a provider of POS terminals, to develop a platform for restaurant reservations and order delivery in 5,000 South Korean restaurants.
In October 2019, Fantom began working with Danish company Danfoss, which specializes in building automation and renewable energy solutions. The agreement focused on testing distributed ledger technology for IoT infrastructure.
In 2020, Fantom Foundation expanded its collaboration with the Afghan government on multiple fronts. The plan included creating a blockchain platform with the Ministry of Industry and Commerce to digitize archives and transition document management and local business registry to the blockchain. A pilot program was also launched with the Ministry of Health and startup Chekkit to track pharmaceutical supply chains. However, these efforts were halted following the takeover by radical Islamist forces.
In April 2021, the Ministry of Industry and New Technologies of Tajikistan signed an agreement with Fantom to use its blockchain solutions for e-government infrastructure. Later in September 2021, Fantom announced a partnership with Orient Bank, one of Tajikistan’s oldest banks, to develop a national digital currency (CBDC).
In the same month, Fantom signed a deal in Pakistan to initiate a pilot project deploying distributed ledger software to optimize operations at the Punjab Prisons Department.
Additionally, in April 2021, Fantom Foundation secured an extra $15 million investment from HyperChain Capital, which had previously participated in the project’s initial private round in 2018.
How is the Fantom Ecosystem Developing?
Fantom Foundation has achieved significant progress in expanding its decentralized application ecosystem. The surge in popularity among DeFi developers began in the spring of 2021. By autumn of that year, several blockchain projects, including Aave, Curve, C.R.E.A.M, and yEarn, were utilizing the network.
Key Factors Driving Growth
The rapid expansion of the ecosystem was fueled by two main factors:
- Cross-Chain Bridges: These bridges facilitated the migration of liquidity from Ethereum and Binance Smart Chain networks to Fantom.
- Developer Support Campaign: The Fantom Foundation actively supported and incentivized developers.
In June 2021, the foundation launched its first grant program, involving nine projects, such as SpookySwap and SpiritSwap.
In August 2021, Fantom Foundation introduced a new incentive program for DeFi service teams. A total of 370 million FTM, valued at approximately $300 million at that time, was allocated for this initiative. Depending on the amount of locked funds, projects could receive rewards ranging from 1 million FTM to 12 million FTM. These funds are distributed in equal monthly installments over a year and can be used for any purpose. In October 2021, the incentive program was expanded to include GameFi projects.
Following the launch of the incentive program, the number of DeFi projects on Fantom grew rapidly. By October 2021, the total value locked (TVL) exceeded $5 billion, placing the ecosystem among the top ten.
In October 2021, TrueUSD announced that it would use the Fantom network for issuing the TUSD stablecoin, fully backed by the US dollar.
At the beginning of 2022, Fantom Foundation planned to launch a new Fantom Virtual Machine (FVM) to achieve higher performance and security while maintaining full compatibility with Ethereum smart contracts. The development of FVM is being conducted in collaboration with the Eno University and the University of Sydney.
Official Links
Should You Invest in FTM?
Investing in FTM, like any cryptocurrency, involves both opportunities and risks. Here are some factors to consider when evaluating whether to invest in FTM:
Opportunities
- High Transaction Speed and Low Fees: Fantom’s DAG-based architecture allows for high transaction speeds (up to 2000 TPS with the Sonic upgrade) and low fees, making it attractive for DeFi and dApp developers.
- Growing Ecosystem: Fantom has seen rapid growth in its ecosystem, particularly in DeFi and GameFi sectors. Its partnerships and developer incentives contribute to this expansion.
- Strong Developer Support: The Fantom Foundation actively supports developers through grants and incentive programs, which could drive further innovation and adoption.
- Cross-Chain Compatibility: Fantom’s ability to integrate with Ethereum and other networks via cross-chain bridges enhances its versatility and potential for widespread use.
- Upcoming Upgrades: The planned Sonic upgrade and the new Fantom Virtual Machine (FVM) promise to improve network performance and security, which could positively impact FTM’s value.
Risks
- Market Volatility: Cryptocurrencies, including FTM, are highly volatile. Prices can fluctuate dramatically, which can lead to significant financial risk.
- Regulatory Risks: The regulatory environment for cryptocurrencies is evolving. Changes in regulations could impact Fantom’s operations and FTM’s value.
- Competitive Landscape: The blockchain and DeFi spaces are highly competitive, with many projects vying for market share. Fantom faces competition from other blockchain platforms with similar goals.
- Technical Risks: Despite ongoing developments, technical issues or vulnerabilities in Fantom’s protocol or upcoming upgrades could affect network performance or security.
- Adoption and Network Effect: While Fantom has seen growth, the success of its ecosystem depends on continued adoption by developers and users. Failure to maintain momentum could impact the value of FTM.
Conclusion
Investing in FTM presents a blend of promising opportunities and potential risks. Fantom’s innovative DAG technology, high transaction speeds, and low fees make it an attractive option in the blockchain space. The network’s growing ecosystem, strong developer support, and strategic partnerships further enhance its appeal.
However, potential investors should be mindful of the inherent volatility of cryptocurrencies, regulatory uncertainties, and the competitive landscape. While Fantom’s future prospects are bolstered by upcoming upgrades and expanding applications, careful consideration of these factors and a well-informed investment strategy are essential.
FAQ
- What is Fantom?
Fantom is a high-performance, scalable blockchain platform that utilizes Directed Acyclic Graph (DAG) technology for smart contracts and decentralized applications (dApps). It is compatible with the Ethereum Virtual Machine (EVM) and supports Solidity-based contracts.
- How does Fantom achieve rapid transaction processing?
Fantom employs the Lachesis aBFT (asynchronous Byzantine Fault Tolerance) consensus mechanism, which allows for asynchronous processing of transactions, eliminates central leaders, and provides rapid transaction finality within 1-2 seconds. This mechanism, combined with its DAG-based architecture, enables high transaction speeds.
- What are the key features of the Sonic upgrade?
The Sonic upgrade aims to:
- Increase transaction throughput to up to 2000 transactions per second (TPS).
- Simplify and support liquid staking.
- Implement rollups and a cross-chain bridge with Ethereum.
- Expand grant programs and user reward campaigns.
- Introduce a Parallel Fantom Virtual Machine (FVM).
- Announce a “Canonical” stablecoin.
- What is FTM?
FTM is the native cryptocurrency of the Fantom network, used for transaction fees, staking, and governance. It was first offered through an initial coin offering (ICO) in June 2018 and is integral to the network’s operations.
- How can I participate in staking FTM?
Users can delegate as little as 1 FTM to a validator for staking, with an annual percentage rate (APR) of 6.3%. Running a validator node requires staking a minimum of 50,000 FTM.
- What partnerships has Fantom Foundation established?
Fantom Foundation has formed partnerships with various entities, including POSBANK, Danfoss, the Afghan government, the Ministry of Industry and New Technologies of Tajikistan, Orient Bank, and the Punjab Prisons Department in Pakistan.
- How is the Fantom ecosystem developing?
Fantom’s ecosystem has seen significant growth, especially in DeFi and GameFi sectors. Key developments include cross-chain bridges, developer incentives, and a rapid increase in total value locked (TVL). The network hosts over 300 dApps and continues to expand its applications and partnerships.
- Should I invest in FTM?
Investing in FTM involves considering both opportunities and risks. The network’s high speed, low fees, growing ecosystem, and upcoming upgrades offer potential benefits. However, market volatility, regulatory risks, competition, and technical issues are factors that could impact investment outcomes. Careful evaluation and a well-informed strategy are essential for potential investors.
- What is the current status of FTM?
As of May 6, 2024, the price of FTM is approximately $0.71, with the total value locked (TVL) in the Fantom network estimated at $110.1 million.
- Where can I find more information about Fantom?
For more details, you can visit the official Fantom Foundation website, and follow their updates on Twitter, Reddit, Github.
