What is Fantom (FTM)?

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robertstevens

Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.

Fantom is a smart contract-supporting blockchain that rivals Ethereum, Solana, and others. It has its own Ethereum and Binance chain-compatible token, also known as FTM, which has a combined market cap of $4.5 billion.

FTM coin has been around since 2018 but the coin’s market accomplished most of its growth in 2021. The coin rose from $0.026 on January 21 to highs of $0.916 in May. Then the crypto market crashed after Elon Musk poured cold water on Bitcoin’s power-hungry consensus mechanism and China iced Bitcoin miners out the country.

But in the summer, crypto came back, and altcoins, including FTM, went flying. The rise started in late July, and as of September 2021 the coin has reached a price of $1.75. Not bad for a coin that’s increased its market cap a hundred-fold since the start of 2021.

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What is Fantom?

Fantom is a directed acyclic graph blockchain, just like Hedera Hashgraph. This is where the history of the blockchain is expressed as a graph of hashes, also known as a hashgraph, that records how history is communicated. This graph grows over time, and all members of the hashgraph keep their own copy of it.

Fantom also uses its own consensus mechanism to verify transactions. Called Lachesis, the mechanism is an example of asynchronous byzantine fault tolerant (aBFT). It’s a variant on proof-of-stake, a consensus mechanism that lets the richest people on the network validate transactions. The difference is that Lachesis is “leaderless”: It can tolerate up to a third of validators giving the green light to spurious transactions without breaking apart.

Unlike some blockchains, no Fantom validator has a special role; everyone is equal. Anyone can play a role in validating the network by staking a minimum of 1 FTM, and earn 4% a year for the effort. It’s also possible to earn up to 12% a year by taking part in Fluid Rewards, which lets you lock up FTM for between two weeks and a year. To operate an entire validator node, you’ll need at least 1 million FTM.

Crucially, each node on the blockchain validates groups of transactions independently. This speeds things up—usually, blockchain nodes have to confirm everything with each other before something gets added to the blockchain, which can slow down transaction times. Then, batches of confirmed transactions are compiled together into blocks, which validators on the wider Fantom network later confirm.

Fantom claims that Lachesis is able to complete transactions within two seconds—far faster than proof-of-work blockchains like Bitcoin, whose notorious miners take several minutes to validate transactions. Fantom also claims that it can support a high capacity of transactions at once and is more secure than other consensus mechanisms.

Fantom launched its mainet, Opera, in December 2019, after raising $40 million in funding. Opera is powered by Lachesis. It’s fully compatible with the Ethereum Virtual Machine, meaning that a piece of software that’s built on Opera can be interoperable with smart contracts on Ethereum.

A cryptocurrency called FTM powers the whole network. You can use FTM within decentralized applications on Fantom, stake it to vote on governance decisions within Fantom’s DAO (decentralized autonomous organization) and pay network fees.

Fantom is deployed in three versions: there’s the native mainnet version, which runs on Fantom’s own blockchain technology. Then there’s the ERC-20 token, which is built on the generic token standard for all Ethereum tokens. And finally there’s a BEP-2 token, which works on the Binance Chain, a blockchain created by Binance, the world’s largest crypto exchange.

What can you do on Fantom?

But what can you actually do on Fantom? Well, the same thing you can do on all the other smart contract blockchains. All smart contract-enabled blockchains attempt to be, more or less, the best version of the same technological ambition: a decentralized, permissionless financial infrastructure on which developers can build non-custodial applications.

Fantom pitches itself as particularly well-suited to DeFi, or decentralized finance, a growing network of non-custodial financial applications like peer-to-peer lending, decentralized exchanges, and liquidity mining.

Most of these DeFi applications are on Ethereum right now, but Etherum is a) too slow, which makes life difficult for arbitrageurs b) hideously expensive, which makes life difficult for everyone, and c) development takes an age, which makes jumping ship to Ethereum-compatible blockchains like Fantom an attractive proposition.

Fantom Finance is Fantom’s proprietary DeFi suite. It is composed of four main parts:

fMint lets you “mint dozens of synthetic assets, including cryptocurrencies, national currencies, and commodities.”

Liquid staking lets you used staked (locked up) FTM as collateral for other decentralized finance applications, meaning you don’t lose out on your opportunity cost when earning rewards for staking FTM.

fLend lets you, unsurprisingly, “lend and borrow digital assets to trade and to earn interest.”

fTrade functions as a non-custodial decentralized exchange. Like Uniswap, SushiSwap, and others, it operates as an automatic market maker. This means you don’t trade against other users, like on traditional crypto exchanges such as Coinbase Pro or Binance, but execute swaps from liquidity pools made up of staked Fantom-based cryptocurrencies.

Nothing on Fantom Finance can’t be done elsewhere, like on Ethereum, for instance, but Fantom promises low fees and quick transaction times, and its own unique development community.

To entice fans of Ethereum, Fantom points out that it is compliant with all tools that people are “already familiar with: Remix, Truffle, and MetaMask.” Fantom has also integrated with other popular blockchain tools, like Chainlink, a decentralized oracle network, and The Graph’s subgraphs.

How to buy FTM

Most FTM trading takes place on Ethereum. As of September 2021, 62.56% of all trades occurred on Binance’s USDT/FTM pairing, where you buy FTM with USDT, a cryptocurrency whose worth is pegged to the value of the US dollar. Binance also supports pairings with other cryptocurrencies, including Bitcoin, BUSD, a stablecoin produced by Binance, and BNB, Binance’s own cryptocurrency.

To buy FTM on Binance, you’ll have to first sign up for an account and submit a form of ID, like a passport or utility bill. (Ontarians can’t use Binance, but buying tokens on all exchanges follows a similar process). Then you’ll have to deposit funds on your account to buy the token with which you plan to buy FTM.

For instance, if you plan to buy FTM with USDT, you might deposit cryptocurrencies or fiat currencies that are paired with USDT. Given the popularity of USDT, it shouldn’t be difficult to find a coin that’s paired with the US dollar stablecoin giant.

Once you’ve loaded up your wallet with USDT, head to Binance’s exchange page and submit an order for FTM. A “market” order buys it instantly at the most recent price. A “limit” order allows you to specify a price at which you’d like to buy the cryptocurrency, so as soon as FTM falls into your price range, Binance will find a trader to fill your offer on the orderbook.

Other exchanges also list FTM, including FTX, Gemini and KuCoin. Decentralized exchanges list it too, including Uniswap, 1inch, and PancakeSwap. Note that there are three different versions of FTM: on PancakeSwap, you’ll always receive the BEP-2 version of FTM, and you can only buy the ERC-20 compliant version on Uniswap.

If you’re withdrawing from an exchange like Binance, you can choose the version of the token you’d like to withdraw. Each version comes with different withdrawal fees.

To withdraw the Binance Chain version of FTM, you’ll have to withdraw a minimum of 0.24 FTM, then pay a withdrawal fee of 0.12 FTM. The FTM version carries a minimum withdrawal of 1 FTM and costs 0.01 FTM to withdraw. The ERC-20 version of FTM is by far the most expensive: it costs 14 FTM to withdraw, and the minimum amount you must withdraw is 28 FTM.

To buy FTM on a decentralized AMM, like PancakeSwap, Uniswap, or fTrade, you connect a browser-based wallet, like MetaMask, and use funds stored on the wallet to buy FTM. Note that these AMMs might charge a little more if there isn’t a lot of liquidity on the exchanges. Protocols like 1inch aggregate liquidity pools to try and find a better price. Again, AMMs on different blockchains will charge different fees, with Ethereum’s Uniswap likely being the highest.

What next for Fantom?

The future of Fantom will be decided by its community. According to Michael Kong, Fantom’s CEO, developers are already building and piloting decentralized applications using Fantom’s technology, including supply chain software, tools for smart cities, and payments tools.

However, Fantom must compete with a broad variety of blockchains trying to beat it at its own game. Ethereum 2.0, although much delayed, may resolve many of the problems that prevent Ethereum from growing to even greater heights. Other blockchains, which also promise exciting innovations, such as Solana and Polkadot, may take the lead. And projects like Cosmos and Polygon could allow there to be more than one winner, since they make it easier for blockchains to communicate with one another.

Last Updated September 20, 2021

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