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What is Fantom (FTM)? A Beginner's Guide

What is Fantom (FTM)? A Beginner's Guide
Author: changehero
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Most blockchains have to choose two out of three: scalability, security and decentralization. This so-called blockchain trilemma has inspired many blockchain developers to find a solution without compromise. What is Fantom’s solution to this problem, how does it work and why does it need the FTM token — explained in our Beginner’s guide.

Key Takeaways

What is Fantom?

Fantom does not use a blockchain like Bitcoin and other cryptocurrencies do. Instead, it uses a similar but non-linear structure — direct acyclic graph, which comes with its own set of advantages and challenges.

Consensus Protocol Lachesis

At its core, the integrity of records in Fantom is secured with Byzantine fault tolerance like in most proof-of-stake blockchains. To achieve this with a direct acyclic graph, Fantom developers came up with a type of BFT-securing protocol that works asynchronously. In a linear blockchain, ideally there is only one block from which the sequence can be continued. If competing miners create a block at the same time and nodes register them simultaneously, it can temporarily split the chain. The protocol Fantom uses, called Lachesis, can accept two or more blocks that get produced simultaneously, preventing transactions from failing. Another defining feature of Lachesis is that it is leaderless, so every block producer has equal status.

Application Development Layer Opera

With the Lachesis layer being the foundation, the second layer, Opera, is reserved specifically for building. Opera is Ethereum virtual machine-compatible, essentially meaning that anything that can run on the Ethereum blockchain, can run on Fantom, too. In fact, Opera is only one of the execution chains that can be supported by the Lachesis consensus layer. This is why Fantom can support chains fashioned after other blockchains such as Binance Smart Chain or Ethereum.

History and Team behind Fantom

The main principles that Fantom uses were described in 2018 by a set of researchers and cryptographers. Key contributions were made by Quan Nguyen, Sang-Min Choi, Jiho Park, Michael Kong and Andre Cronje. The team and company that now supports the Fantom development is Fantom Foundation. Michael Kong and Quan Nguyen serve there as CTO and CIO respectively, while Andre Cronje contributes as an advisor. The development and launch were funded with proceeds from the presale, held in 2018 in February and June in four rounds. The Foundation raised about $45 million in funding from Alameda Research, Block Tower Capital and other VCs from around the world. The testnet for the platform went live in 2018, and v.0.1 with Opera was released on the mainnet in December 2019.

What is FTM?

Fantom’s security protocol Lachesis is essentially a Proof-of-Stake specification. And in Proof-of-Stake, native tokens are used to represent monetary rewards and sometimes, voting power. Moreover, in Ethereum Virtual Machine-powered platforms, the nodes operating EVM are also incentivized with tokens. To execute smart contracts, users pay for gas with a native token. Fantom supports several networks, each with their own token. The Ethereum chain of Fantom uses the ERC-20 FTM token, and the Binance Smart Chain needs BEP-2 FTM. The total supply of 3.175 billion FTM was minted at launch. 40% of it was sold to investors, with the rest going to the team, advisors and to the staking rewards pool. The team’s and advisor’s FTM were released into circulation three months after the launch, in November 2020. All FTM are expected to be unvested in late 2023, when the staking rewards pool will distribute the rest of the supply in circulation.

What is Fantom crypto used for?

As already discussed in the previous section, there are a number of ways to use the FTM coin:

Comparison with Similar Projects

Fantom was not the first project to set out to solve the blockchain trilemma: scalability, security and decentralization. Algorand also strives to solve this problem. The differences between these two are structural: Algorand uses probabilistic finality while Fantom opts for asynchronicity. Algorand is also layer-one first in design, while Fantom puts significant attention toward sub-chains. Fantom wasn’t the first platform to use direct acyclic graphs either. Another example of a DAG network is IOTA’s Tangle ledger, which does not have transaction fees at all to be usable in Internet-of-Things. In structure, Fantom is more similar to the Cosmos blockchain, with its security layer and application layers. In fact, you can use the Cosmos SDK to build on Fantom.

What is Fantom Criticized For?

Messari Research described direct acyclic graph platforms in general as vulnerable to attacks in low transaction activity periods. In Fantom’s profile, they mention Fantom Foundation did not deliver on proposed improvements to smart contract platforms. Fantom’s key contributor Andre Cronje inadvertently became involved in the Wonderland controversy this January. Cronje announced a collaboration with Daniele Sestagalli not long before another of his projects, Wonderland, was linked to a serial fraudster. Cronje stepped away from the joint project after the news. The case did not affect the Fantom ecosystem directly.

Partnerships and Future Plans

At the time of writing, the total value locked in Fantom is $8.46 billion USD across 158 protocols, according to DeFi Llama. Aside from the most popular Ethereum-compatible DeFi protocols and stablecoins, Fantom houses several popular protocols native to the chain. For example, automatic market maker Spookyswap, lending protocol Scream and non-custodial liquidity protocol Geist Finance. The three protocols account for more than $3 billion in TVL. As for the future updates, the largest one in the works is the Fantom Virtual Machine. There are no estimated dates of shipping yet, but it will significantly improve the capabilities of the network.

Fantom on Social Media

Users often compare Fantom to Ethereum, given the purposes and use cases of both networks.

Fantom is trending in the CoinGecko database searches, hinting at an increasing user demand.

Trader CryptoBullet gives a short-term forecast for FTM. To close the volume profile visible range, FTM’s price has to go to the support level they highlighted.

How to store Fantom?

For access to all the features of Fantom Network, the developers suggest using the Fantom Wallet. If you are frequently using other cryptocurrencies, you might want to look at multi-coin alternatives. ERC20 FTM can be stored in the Exodus wallet, where you can instantly swap the tokens with any other supported cryptocurrency with ChangeHero. For more reliable storage, Trezor cold wallets also support ERC20 FTM. 

Where to Buy Fantom Crypto?

FTM can be traded on some crypto exchanges but it comes with a lot of unnecessary hassles. You have to create an account and deposit funds into the exchange’s custody.  ChangeHero is an alternative way to trade FTM against any currency supported by the service. It’s a non-custodial instant cryptocurrency exchange, so you won’t have to worry about losing access to your funds or setting up an account. For your convenience, FTM can be bought on ChangeHero in five easy steps:

  1. Choose the currencies on the home page, amounts and the type of exchange. Provide your wallet address in the next step and check the amounts;
  2. Double-check the provided information, read and accept the Terms of Use and Privacy Policy;
  3. Send in a single transaction the sum of cryptocurrency you will be exchanging. Fixed Rate transactions have a 15-minute limit;
  4. And now, relax! We are doing all the work: checking the incoming transaction and doing the exchange as soon as it arrives;
  5. As soon as the exchange has been processed, your FTM are on the way to your wallet. We’ll be happy to hear your feedback if you enjoyed using ChangeHero!

Customer support is always available in chat on our website, official Telegram group or through the email: [email protected].

Conclusion

Fantom offers an unconventional solution for the blockchain trilemma that will only improve by onboarding more users. The competition in smart contract platforms is saturated, but Fantom is already making a name for itself. Browse our blog for even more educational articles and Fantom crypto news. ChangeHero is on social media, too: find us on Twitter, Facebook, Reddit and Telegram.

FAQ

[sc_fs_multi_faq headline-0=“h4” question-0=“What is Fantom?” answer-0=“Fantom is a distributed ledger that consists of two layers: consensus layer and multiple application layers that support decentralized apps compatible with the Ethereum virtual machine.” image-0="" headline-1=“h4” question-1=“What does Fantom do?” answer-1=“Fantom is developing with a particular focus on DeFi, thanks to the contribution of Yearn.Finance founder Andre Cronje. It houses 158 protocols that come together to $8.46 billion of total value locked.” image-1="" headline-2=“h4” question-2=“What is FTM?” answer-2=“FTM is a native token of the Fantom network, needed for staking, transaction fees and on-chain voting.” image-2="" headline-3=“h4” question-3=“How fast is Fantom?” answer-3=“The goal of the developers is to make Fantom scale up to 300,000 finalized transactions per second. On 25 January 2022, when Fantom network processed more transactions in a day than Ethereum, its actual throughput reached eight transactions per second.” image-3="" headline-4=“h4” question-4=“What is the future of Fantom?” answer-4=“Fantom is attracting builders to their DeFi ecosystem to improve the security of the network. The largest upgrade in the pipeline is the native Fantom virtual machine.” image-4="" count=“5” html=“true” css_class=""]

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