Fantom (FTM) Analysis & Review

Fantom (FTM) Analysis & Review

Analysis & Evaluation of Fantom (FTM)

OVERVIEW:

Fantom is a native Layer-1 blockchain. It is a DAG-based Smart Contract platform whose goal is to solve the scalability issues of existing public distributed ledger technologies and offer a platform for emerging DeFi and Web 3.0 development.

Fantom is designed to compete with Ethereum and other smart contract platforms by delivering far higher scalability, lower transaction prices and better security thanks to its DAG (Directed Acyclic Graph) blockchain.

The mission of Fantom is to provide compatibility between all transaction bodies around the world and create an ecosystem that allows real-time transactions and data sharing at a low cost.

It's an excellent blue-chip long-term hold and is anticipated to be a major player in DeFi and Web 3.0 space in the years to come.


What is Fantom?

Fantom is a native Layer-1 blockchain platform. The Fantom platform intends to distinguish itself from the traditional block ledger-based storage infrastructure by attempting to employ an improved version of existing DAG-based protocols.

The Fantom platform adopts a protocol known as the “Lachesis Protocol” to maintain consensus. This protocol is intended to be integrated into the Fantom OPERA Chain.

Fantom is comparable to Avalanche, Cosmos, and Polkadot to various degrees insofar as new dApps and projects building on Fantom can essentially launch their own chain.

Primary Use Case:

The Fantom coin has a few different use cases, and in this sense, it resembles other networks. The two most important use cases are listed below.

Compensating Validators

Validators play a key role in the Fantom ecosystem. On top of transaction ideation, they are rewarded for such activities as preventing transaction spam. All rewards are paid in FTM, incentivizing the continual running of the network.

Governance Activities

The FTM coin can be used to direct the development and network parameters, as mentioned earlier. Governance is one of the key uses of the FTM coin, as is the case with other projects of a similar nature.

Use Case Diversity

Fantom’s pivot away from Smart City automation towards DEXs and other DeFi applications speaks to the versatility of EVM-compatible smart contracts.

Fantom aims to be able to scale to sufficient transactional throughput to also be able to support applications reliant on micropayments, such as the gaming sector.

Competitive Advantage

Fantom has several key features that make it stand out among other Layer 1 blockchains:

  • Originality. DAG is not new, but Fantom was the first cryptocurrency to use DAG in decentralized applications.
  • High scalability rates. The Fantom blockchain can process a huge number of transactions and with more nodes, the faster the transaction speed.
  • Relevance. IoT and DeFi solutions can be developed faster.
  • Simplicity. A simple Scala language is used for programming, making it easy to work with Fantom.

Challenges to Adoption

As a layer 1 blockchain, the greatest challenge is the widespread adoption of the blockchain. Fantom has been in development since December 2019 and in this short period of time has already garnered a lot of industry partnerships, especially after their pivot away from Smart City automation.

A major factor to the accelerated adoption of Fantom has been their pivot away from Smart City automation and rather focusing on DEXs and other DeFi applications.


Technology:

Fantom is a smart contract platform that uses a DAG-based distributed ledger combined with Byzantine-fault tolerant rules to achieve consensus on a Proof of Stake blockchain. Some of the project’s technical highlights include:

  • Facilitates smart contracts on a pseudo-blockchain by using DAGs and Lachesis consensus
  • Sorts and records transactions using Lamport timestamps
  • Allows nodes to work independently, without requiring feedback or awareness of other nodes

Fantom calls itself a “fast, high-throughput open-source smart contract platform for digital assets and dApps”. The project seeks to deliver unprecedented speed, security, and reliability through its aBFT consensus protocol - offering instant transactions at very low fees.

Already, more than 200 dApps exist in the Fantom ecosystem. These include decentralized exchanges, cross-chain bridges, lending and borrowing protocols, yield optimizers, NFT platforms, GameFi projects, tools, and wallets.

  • SpookySwap
  • Multichain
  • Geist
  • Beefy
  • PaintSwap
  • Debank
  • fWallet

The Fantom platform uses the decentralized Opera network. The advantage of Opera is that it allows a large number of transactions to be processed, increasing the scale of the blockchain. The chain includes three layers.

  • The first layer contains the core for processing operations.
  • The second layer contains the storage to support smart contracts and the rest of the components that are important for the functioning of the system.
  • The third layer contains the applications that enable DApps to function.

These layers are basic, and they are based on the acyclic graph DAG. At the storage layer, transactions of participants who participate specifically in the data transfer are allowed. Transactions are performed because a request is submitted from the storage to the protocol that curates the transactions. Information about the participants in the operation is collected using a protocol that supervises historical data. Reputation points, smart contracts, and rewards are being considered. Through the reputation protocol, each participant’s points are updated. Next, the rewards protocol comes out so that each party receives a profit that corresponds to their reputation points.

The entire infrastructure kicks in thanks to aBFT’s internal engine, Lachesis. Lachesis is fast, secure, and scalable, unlike other methods of obtaining the appropriate level of consensus.

Consensus Mechanism:

Fantom has a unique consensus mechanism, which makes it different from all other blockchains.

The consensus mechanism is the core of distributed technologies. In a decentralized environment, where no central entity validates transactions, the consensus protocol ensures that all the participants of the network achieve an agreement: the network as a whole validates transactions in a fully trustless way.

Fantom created Lachesis to overcome the limitations of previous consensus algorithms and offers high-throughput, fast finality, and bank-grade security.

Lachesis consensus

Lachesis is a DAG-based aBFT consensus algorithm that offers tangible improvements over both Classical and Nakamoto models. Lachesis is asynchronous, leaderless, and final while also being Byzantine Fault Tolerant.

Lachesis is designed to plug into applications written in any programming language easily. Developers can focus on building the application logic and integrating Lachesis to handle the state machine replication aspect.

Lachesis connects to other Lachesis nodes and guarantees that everyone processes the same commands in the same order. To do this, it uses peer-to-peer networking and a DAG aBFT consensus algorithm.

Unlike Proof-of-Work, round-robin Proof-of-Stake, coinage Proof-of-Stake, and sync BFT, Lachesis nodes don’t send blocks to each other. They only send the events which are being synced between nodes.


Ecosystem Development

Fantom has rapidly grown since its main net launch in December 2019 with many many partnerships, including dApps, Services, DeFi, and offering blockchain as a Service.

Blockchain as a Service

Fantom has also made significant strides in supporting corporations and governments wishing to leverage Fantom-based blockchain solutions. Fantom now supports multiple sectors and verticals, including authentication, IP rights management, pharmaceutical tracking, energy management systems, digital wallets, and CBDCs.

Social Media

The official Fantom Twitter account has 460k followers and an active presence in which it updates users, markets its products, and educates regarding financial technology.

Also, Fantom has a strong Reddit following with ~38,000 subscribers to the r/FantomFoundation subreddit.


Executive Team

The founder of Fantom is Dr. Ahn Byung Ik. He holds a Ph.D. in computer science and is also the president of the Korea Food-Tech Association. He is a contributing author at Fortune magazine and been published in South Korea’s major business media outlets.

However he is currently no longer associated with Fantom and his LinkedIn profile makes no mention of any past connection with the project.

Taking over in the role of CEO at Fantom is Michael Kong, who has several years experience in the blockchain space as a smart contract developer.

Prior to joining Fantom, Michael was the Chief Technology Officer for the blockchain incubator Block8. He also built one of the first Solidity decompilers and one of the first detectors for vulnerabilities in smart contracts.

Also very notably at Fantom is the DeFi architect Andre Cronje, who is well known as the developer of Yearn Finance.

The rest of the team consists of highly successful, motivated and experienced team members from a variety of disciplines including but not limited to finance, cryptography, business development, software engineering, architecture and other related disciplines.


Token Economics

Circulating supply: 2.55B FTM | Maximum supply: 3.175B FTM

Tokenomics & Initial Launch

FTM had an initial supply of 3.175 billion at issuance. The entire, fixed supply of FTM was minted at launch. As of the time of writing, there are 2.55B FTM tokens in the circulating supply (80%).

Fantom underwent 4 major funding rounds including a seed sale, 2 private sales, and a public token sale.

Funding formatDistributionsCost of 1 FTM in dollarsHow much was raised (dollars)
Seed-investors3,15%0,0161,6 million
First private sale25,35%0,03124,8 million
Second private sale11,69%0,03512,9 million
ICO1,57%0,04~2 million
Total:41,76%~39,65 million

The remaining number of coins was distributed among the project team (7.49%), consultants (12%), and reserves (6%). 32.75% were left for rewards for block creators.

There exist pre-mined rewards that contribute to emissions of FTM however, the supply is otherwise capped.

Source: Messari.io

The initial token distribution of FTM was as follows:

  • 40% of the supply was allocated to Public and Private Sale inventors, including private sale bonuses. These FTM had no vesting schedule in place.
  • 15% of the supply was allocated to advisors, with a 3-month lockup period.
  • 10% of the supply was allocated to the founding team. This had a 24-month vesting period, with monthly cliffs.
  • 3.6% of the supply was allocated to a strategic reserve, with no vesting schedule.
  • 31.4% of the supply was allocated for staking rewards and is distributed daily until 2024.

At the time of writing, the majority (80%) of FTM’s supply is already circulating on the open market, meaning there is relatively less supply due to hit the open market in the future.

Staking Fantom

Investors have the opportunity to stake their FTM on the Fantom network. Fantom investors have the opportunity to earn up to 6.9% APY for a one-year staking commitment.


Token Performance

As of the time of writing, November 29th, 2022, the price of FTM is at $0.218, with a market capitalization of $545 million (USD).

The price of FTM has been in a downward trend over the last 365 days with a strong indication of a trend reversal occurring in the last two weeks.

Prior 365 Days (FTM)

Over the last two weeks, we see indications of a potential trend reversal, gaining strength over the last 5-7 days.

Prior 90 Days (FTM)

In the last week, there has been a strong indication of a trend reversal with the price of Fantom hitting higher highs.

Last 7 Days (FTM)

The recent upward movement of Fantom is a result of reports that the Fantom Foundation has generated consistent profits with a 30-year runway without having to sell any FTM tokens.

In recently released financials, it has been revealed that Fantom has $250 million worth of digital assets, is cash flow positive and had been earning over $10 million annually!

Most notably:

Over 450,000,000 FTM, > $100,000,000 in stables, > $100,000,000 in crypto assets, $50,000,000 in non-crypto assets. Salary burn rate $7,000,000 / year. We have ~30 years left (without having to touch FTM).

When to Buy Fantom:

The price of Fantom is near its lowest point since the project started more than two years ago. Fantom is currently trading at $0.22 and a price between $0.20-$0.25 is considered to be an excellent entry point.

A buy-in price of sub $0.25 is considered a good entry point for Fantom.

Where to Buy Fantom:

Fantom is available at many of the large exchanges, including:

If you own a Trezor Hardware wallet, Fantom can also be purchased within the wallet using one of their partner exchanges (No KYC required).



Final Grade:

B+ (80%)

The project has excellent fundamentals but has yet to be fully implemented.
This project exhibits strong tech development, a strong leadership team and ecosystem growth in line with all milestones. However, the project has yet to gain widespread market adoption.

Project development has been consistent in moving toward the proposed governance structure of the network, though full implementation has not yet occurred. The token retains a moderate level of vulnerability to adverse market conditions. While there still are factors present and mitigating factors inherent in future growth, at present the path toward full-scale adoption is considered to be medium risk.

Conclusion

Fantom is an ingenious smart contract platform that delivers lighting-fast transactions at an extremely low price. Users can deploy and write dApps written in EVM-friendly code, which allows the protocol to quickly integrate millions of users, even from Ethereum’s ecosystem.

Fantom has successfully attracted many investors to its ecosystem. If Fantom continues to create incentives for both holders and developers that will outweigh the benefits found on dominant smart contract platforms (for example Ethereum), the project has the potential to become a major competitor of Ethereum and a leading platform for DeFi and Web3 development (the future of the internet).

Delivering high transactions per second and low fees is certainly helping Fantom increase its acceptance in some industries and will push it closer towards enterprise adoption.

The Fantom blockchain is looking to the future and offers advantages over existing platforms especially, especially in support of DeFi and Web 3.0 technologies.  Combined with its strong corporate partnerships, large community, fast transaction speeds, low cost and unique consensus model, it has the potential to become one of the leading Layer-1 blockchains over the next few years.