The world of crypto changes fast, and a new breed of next-gen blockchain platforms are making their presence felt – including Fantom (FTM).
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Market-leading cryptocurrencies like Ethereum have countless applications but are expensive to trade, particularly for low-value trades where the fees can exceed the trade value.
Layer-1 blockchain alternatives are emerging, with faster speeds and lower charges.
Cryptocurrency investors hunger for these blockchains, alongside contemporaries such as Solana and Avalanche. The native utility token price for FTM rose from $0.17 in July 2021 to a high of $3.30 in January 2022.
The Fantom Blockchain Explained
So, why is Fantom so much faster than Ethereum?
The improved performance is partly due to a directed acyclic graph – a type of equation model that records blockchain transactions as a graph of blockchain hashes or a hash graph.
Another factor is the leaderless on-chain governance, called Lachesis Consensus.
The mechanism incorporates proof of stake principles, called an aBFT algorithm (Asynchronous Byzantine Fault Tolerance). That means it keeps running smoothly, even if up to 30 per cent of transaction data is fraudulent.
Proof Of Stake vs Proof Of Work
The difference between proof of stake and proof of work is critical – in proof of work systems, the miner has to keep their equipment running continuously, with a knock-on operating cost.
Blockchain nodes need to work through potentially long transaction queues, so it can take a fair while for an Ethereum transaction to clear.
In contrast, Fantom uses proof of stake validation, so once a trader buys a token to secure blocks within the proof of stake model, their transactions can clear in just one or two seconds.
The nodes verify transactions independently (via aBFT), so there isn’t any downtime.
Interestingly, Fantom and the Ethereum virtual machine are compatible so that you can port any dApps built on Ethereum over to Fantom without a hitch.
You can also buy FTM tokens as ERC-20 or BEP-20 tokens, conforming to the blockchain standards of Ethereum and the Binance Smart Chain.
The Fantom Success Story
There are several big selling points behind the Lachesis Consensus algorithm, primarily because it processes transactions flexibly and quickly, with a high faulty user tolerance that doesn’t threaten the wider network.
The aBFT method cuts the duration of transaction times while remaining scalable, so it’s an efficient model.
Key takeaways include:
- Transaction verification is approximately one second.
- Highly scalable network with over 100 nodes.
- Lachesis means Fantom is leaderless and decentralised.
- The smart contract is written in the Ethereum coding language, Solidity, so it has cross-chain functionality and compatibility.
- Users can create either private or public ledgers.
Although Ethereum is expected to become faster and less expensive in the context of increasing competition, that will require multiple protocol upgrades that could take a couple of years.
Users looking for decentralised finance protocols often find native DeFi apps in ETH simply too expensive, so developers are choosing to build alternative solutions to take advantage of Ethereum security but need to speed up the blockchain protocols.
Some blockchains have replaced Ethereum, referred to as the L1, layer-1 or base layer, altogether, led by Fantom and other native coins, albeit with some dips from market-high values.
Rivals include LUNA, the Terra coin, with a $29 billion market cap, Solana with a $26 billion cap, and FTM at $3.4 billion.
However, Fantom’s $7.25 billion DeFi market is the third-largest only to Ethereum and Terra, beating Solana’s $6.69 billion value.
Applications For Fantom Tokens
The native FTM cryptocurrency token is used for several purposes:
- Staking crypto through the proof of stake model, securing the network and earning rewards in return.
- Contributing to governance, with FTM holders able to propose or vote on suggested changes.
- Paying network fees, including transaction charges, smart contract deployment fees and the costs of creating additional networks.
- Making third-party fund transfers with those speedy transaction turnarounds and low fees.
The biggest challenge for Fantom will possibly be the extent of competition, with plenty of Ethereum alternatives out there.
Solana is growing quickly, and Cardano (ADA) saw major growth in 2021.
If and when Ethereum upgrades to Ethereum 2.0, it will transition from proof of work to the successful proof of stake model, which could be a game-changer with the resulting cost reductions and improved speeds.
That said, the smaller market cap and FTM price dips make it an attractive cryptocurrency investment, even though it’s anyone’s guess how this innovation race will eventually play out.
It may be that crypto becomes a multi-chain market, with a range of application-specific blockchains, or one blockchain may overtake the rest to dominate the market – and Fantom is emerging as a front-runner in this scenario.
Investing In Fantom Tokens
Lots of smaller cryptos are pretty difficult to buy, but Fantom is available on several big exchanges, including FTX, Binance, Crypto.com and Gemini.
Tokens are also listed on several decentralised crypto exchanges, facilitating peer-to-peer trades, including Sushiswap and Uniswap.
Why The FTM Price Dropped
Earlier this month, developers Andre Cronje and Anton Nell announced that they were leaving DeFi projects, causing a bit of a hiccup.
Cronje had been a chair of the network’s Technical Council from 2018 to 2019 and was a technical advisor from there onwards.
Nell had worked at the Fantom Foundation as a senior solutions architect.
This news resulted in a sudden double-digit price drop, but the Foundation issued a statement clarifying what it describes as ‘miscommunication’ and ‘factual inaccuracies’.
Cronje also made a statement, calling the Fantom team ‘nothing but honourable’ so it doesn’t sound like there is any bad blood there. Much of the fallout has been based on assumptions about the future of Fantom.
Hyper Chain Capital, based in Singapore, has also declared a $15 million Fantom investment, which has helped FTM surge ahead and take one of the pole positions on the exchanges, so it’s not staying down for long.
Fantom: The New Crypto On The Block FAQ
What is the Fantom blockchain?
Fantom is a blockchain network used primarily for digital crypto payments, managing medical records and verifying digital identities.
The network achieves the three desirable attributes of a blockchain; security, scalability and decentralisation. Most other networks, in contrast, can only achieve two of the three.
Every Fantom app has its own blockchain and isn’t impacted by traffic or transaction backlogs, making it scalable and significantly faster.
Transactions are approved in around one second and cost pennies, with a leaderless proof of stake mechanism called Lachesis.
While anybody can use Fantom to run validator nodes, the cost is a whopping one million FTM, so although it’s a very high-performance network, there are some downsides.
BTC vs FTM – Should I buy Fantom or Bitcoin?
It isn’t easy to talk about crypto without mentioning Bitcoin (BTC), which remains the highest valued and largest volume cryptocurrency in circulation. However, FTM is more of a rival for Ethereum.
Both coins use a proof of work consensus, although Bitcoin is mineable, whereas Fantom is not.
In terms of pricing, the USD prices are $46,985 per BTC – a drop of 31.95 per cent from the all-time high of $69,045 in November 2021.
At the time of writing, FTM is valued at $1.44, down 58.38 per cent since it reached $3 in October 2021.
Is Fantom a good investment?
The current price drops could potentially be an opportunity to buy FTM at a discounted cost, depending on your opinion about the long-term network prospects.
Fantom has over $7.5 billion in total value locked, with a market cap of only $3.6 billion, so although prices fell a good 20 per cent in one 24-hour period, that isn’t necessarily indicative of the future.
The Fantom Foundation has quickly pointed out that the departures of Cronje and Nell are not fundamental to FTM, given that there are a further 40 employees and hundreds of developers behind it.
Is Fantom a cryptocurrency?
Fantom is an open-source smart contract platform built as a blockchain network to rival Ethereum with massively lower fees and quicker speeds.
The network is permissionless and decentralised, with custom tokens and governance rules for each blockchain – although all the blockchains use Lachesis, so they are compatible and able to interact.
What dApps are designed for Fantom?
Developers are hard at work creating a huge range of dApps using Fantom. Examples include Fantom Finance, which is used for liquid staking, and decentralised trades and loans.
Spooky Swap is an automated market maker, a little like Uniswap (which we mentioned earlier). Its USP is the ticker – BOO.
Solidly is one of the apps created by Cronje, the now-departed developer who also invented Yearn Finance. Solidly is a decentralised exchange.
Geist, Scream and WigoSwap all operate exclusively from Fantom – for the time being – but you’ll find others such as Curve, spread across Polygon, Avalanche and Fantom.
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