What is Fantom (FTM)? Solving the Blockchain Trilemma
Fantom is an open-source, decentralized, and permissionless smart contract platform designed to outclass legacy blockchain protocols via its high-throughput, scalability, customizability, and security.
The core of Fantom is its aBFT consensus mechanism, Lachesis, which lets the protocol operate at high speeds and low costs — while still maintaining robust security.
Additionally, Fantom is unique in that its computing power is not centralized on one distributed ledger. Instead, users of the protocol are able to deploy their own independent networks — making it highly decentralized.
Solving the blockchain trilemma
The Bitcoin protocol — and most of the blockchains that came shortly after it, such as Ethereum — have all run into some form of scalability issues. This is mostly due to the requirement that older projects must compromise on their throughputs in order to maintain a secure and decentralized network. Because it has proven difficult to offer scalability, security, and decentralization, this has become known as “the blockchain trilemma.”
For example, Bitcoin offers proven security through robust decentralization but has been ill-suited for fast retail transactions or any real-world use case that demands speed. Ethereum, meanwhile, offers an industry-leading smart contract platform for decentralized applications but has been absolutely hamstrung by skyrocketing gas prices and exorbitant transaction fees — keeping Ethereum-based decentralized finance unattractive to a mainstream audience.
At the same time, legacy financial systems offer lightning-fast consumer solutions but lack the permissionless and censorship resistance only found through decentralized alternatives.
How does Fantom work?
Fantom tackles the blockchain trilemma head-on by introducing a high-speed consensus mechanism called Lachesis — which does not need to compromise on speed, security, or decentralization.
The key aspect that makes Lachesis work is its modularity. It may be connected into any distributed ledger, and developers may port existing Ethereum-based decentralized applications on Fantom’s Opera mainnet deployment in minutes.
Because every network on Fantom is technically independent from each other, their performance is not degraded by network congestion— as is the case with Ethereum’s Layer 1, where every decentralized application uses the same infrastructure and the same pool of limited resources. On Fantom, every application has its own blockchain that operates independently from all of the other blockchains on the network. Each blockchain may feature its own tokens, tokenomics, and governance mechanisms.
Despite this, the independent blockchains on Fantom are still able to communicate with each other via Lachesis. In this way, instead of being a single Ethereum-like network, Fantom is more like a network of networks.
What is FTM?
FTM is a token that acts as the native asset of Fantom. It comes in three forms:
- Opera FTM, for use on Fantom’s mainnet
- ERC-20 FTM, for use on Ethereum
- BEP-2 FTM, for use on Binance Chain
There are multiple purposes for the FTM token. Most notably, it is used to secure the proof-of-stake consensus mechanism by requiring block validators to hold FTM. Validators must hold a minimum of 3,175,000 FTM.
As is the case with many proof-of-stake networks, the more FTM a validator holds, the more voting power they have. Because of this fact, validators are incentivized to act honestly and in the community’s best interests — as FTM holders may delegate their tokens to validators to participate in the staking process and receive a share of the block rewards.
Additionally, transaction fees on the network are paid with FTM tokens.
The circulating supply of FTM is currently 2,545,006,273 tokens. The maximum supply is 3,175,000,000 FTM.
There is only one option for storing Opera FTM — the Fantom Foundation’s official PWA wallet. Likewise, unlike other proof-of-stake tokens, users are unable to stake FTM via cryptocurrency exchanges.
Decentralized finance on Fantom
Fantom’s aBFT consensus mechanism allows for a unique solution for decentralized finance. Specifically, Fantom users may use FTM tokens to mint fUSD — a stablecoin pegged 1:1 with USD — which may be loaned out for interest or traded for synthetic assets.
The primary benefit of using Fantom for DeFi is utilizing the network’s near-instant transaction times and almost-non-existent transaction fees. Users may pay next to nothing to trade fUSD for fBTC, fETH, or 174 other synthetic tokens, with virtually no slippage — all without ever giving up self-custody.
Users may also use fLend to deposit FTM and fUSD to aliquidity pool for yield.
Who created Fantom?
Fantom was originally created by a South Korean computer scientist named Dr. Ahn Byung Ik.
Today, the Fantom Foundation is headed by CEO/CIO Michael Kong, former CTO at Digital Currency Holdings. The team also features Andre Cronje, a well-known decentralized finance architect and creator of Yearn.finance.
The Fantom Foundation’s primary goal is to develop the open system while supporting the adoption of Fantom.
Fantom is an exceptionally fast and scalable blockchain protocol that allows for the creation of independent-but-connected blockchains via its aBFT consensus algorithm, Lachesis. It is governed by transparent on-chain voting and supports ERC-20 tokens. It is also easy to develop on Fantom because it uses Solidity, the programming language of Ethereum.
Despite its technical merits, Fantom is still a relative unknown in the cryptocurrency space. It has, so far, seen limited adoption. The FTM coin is currently ranked 82nd by market capitalization and is still very far away from the recognition given to legacy blockchain projects and blue-chip DeFi protocols.
Fantom has also received relatively little media attention, even from cryptocurrency-focused media. Recent news coverages largely revolved around a temporary network outage on Feb. 28, 2021, which saw Fantom stop producing blocks for seven hours.
The inability to stake FTM on major cryptocurrency exchanges has also dampened its appeal to users that primarily use a centralized exchange’s yield-generating solutions. Likewise, Opera FTM storage is only supported via the Fantom Foundation’s official PWA wallet — limiting options for users who prefer other cryptocurrency wallets.
Nevertheless, Fantom has partnerships and/or integrations with many leading blockchain projects — including Chainlink, Ren, Band Protocol, The Graph, and Waves — and development and adoption efforts remain strong.