What is Fantom? (FTM)
Summary of Fantom
- Fantom is a smart-contract platform that aims to solve the scalability challenges of other blockchains with its Lachesis consensus mechanism.
- FTM is the native token of the Fantom network. It is used for staking, voting, making payments and covering transaction fees on Fantom.
- Fantom has become a popular network because of its focus on scalability, allowing developers to build dApps and run smart contracts while also offering a native token (FTM) for staking and making payments.
These three elements are commonly referred to as the “blockchain trilemma,” meaning a focus on two has often required a tradeoff on the other. Fantom aims to overcome these tradeoffs and make improvements across all three with its innovative proof-of-stake (PoS) consensus mechanism known as Lachesis.
The native token of the Fantom network is FTM. It is used for staking, voting on crucial decisions, making payments and covering transaction fees.
Why is Fantom valuable?
Fantom solves the scalability problems plaguing many traditional blockchains through its high-speed consensus mechanism, Lachesis. Lachesis is leaderless, offers finality, and provides Asynchronous Byzantine Fault Tolerance which allows the chain to scale without compromising on security.
Lachesis also improves transaction settlement; sending FTM on the network takes one second to clear and costs fractions of a penny to process.
Developers can also build dapps and run smart contracts on Fantom.
Currently, dozens of projects have deployed dapps on the network from application providers to protocols supporting Fantom’s work in the decentralized finance (DeFi) space. These include 1inch for cross-chain swaps, SushiSwap — one of the largest decentralized exchanges, BitGem and Bitlootbox NFTs and Travala — a travel booking service accepting cryptocurrency.
Finally, FTM tokens have a variety of uses on the network, including:
- Staking: Fantom operates on a proof-of-stake model, meaning the network relies on users locking up their FTM tokens to become validators. Owners can stake their tokens in this way to earn rewards paid in FTM.
- Governance: The decentralized nature of Fantom means that owning and staking FTM tokens allows holders to vote on crucial decisions about the platform’s future.
- Payments: Users can send FTM over the Fantom network quickly and more cost effectively compared to other blockchain networks.
- Fees: FTM tokens can be used to cover network fees for transacting tokens and deploying smart contracts on the Fantom blockchain.
Who Created Fantom?
Dr. Ahn Byung Ik, a computer scientist from South Korea, and Advisor Matthew Hur conceived the idea behind Fantom as a way to solve the scalability issues of second-generation blockchain networks like Ethereum.
Fantom was officially founded in 2018, with the Fantom Foundation raising $40 million in two funding rounds. The testnet launched in December 2018.
The project has since received additional funding from leading blockchain investment firms, including:
- $35 million from Alameda Research
- $15 million from HyperChain Capital
- £20 million from BlockTower Capital
The Fantom mainnet launched in December 2019 with a total of 3.175 billion FTM initially issued. Token allocation was as follows:
- 40% to public and private sale investors
- 15% to advisors
- 10% to the founding team
- 3.6% to the strategic reserve
- 31.4% reserved for staking rewards
How does Fantom work?
The Fantom network was built around four core principles:
- Modularity: Fantom’s modular architecture makes it highly customizable. For instance, users can easily port Ethereum-based decentralized applications (dApps) to the Fantom mainnet, which is powered by Opera – the open-source blockchain developed by Fantom to power its network.
- Scalability: Applications built on Fantom are independent of each other, meaning the performance and stability of one application is not affected by traffic on the wider network.
- Open source: Anyone can run a node and customize the underlying code of the Fantom protocol, which has been shared on Github.
- Security: Fantom is secured by the Lachesis consensus mechanism, which the Fantom team says is faster, more secure and more scalable than the Classical and Nakamoto consensus systems.
The Lachesis consensus mechanism explained
Fantom offers many features common to other cryptocurrency networks such as smart contracts, dApp deployment and transaction settlement. However, its Lachesis consensus mechanism is unique in the way it solves the scalability problems of existing blockchains.
There are three main features of Lachesis:
- Finality: There’s no waiting for blockchain confirmations when sending FTM to another person, making transaction settlements significantly faster than most blockchains.
- Leaderless: Unlike traditional PoS protocols that often have fewer validators (leaders) to process transactions, Lachesis is leaderless. Being leaderless improves network security because the fate of the network does not rest with a select group of people who can make mistakes, take selfish actions or be influenced by attackers.
- Asynchronous Byzantine Fault Tolerance (aBFT): Nodes can reach honest consensus, even if some act maliciously, and regardless of how many do so. Asynchrony ensures all nodes don’t have to reach an agreement simultaneously.
Asynchronous Byzantine Fault Tolerance (aBFT) Explained
aBFT improves on Byzantine Fault Tolerance (BFT), which is based on the Byzantine Generals Problem.
As the problem goes, multiple generals struggle to organize a coordinated attack on a city because they are located at different points. Direct communication is impossible so they communicate over insecure channels, leading to trust issues between them. Messages can be intercepted or the generals themselves can choose to act dishonestly.
The generals in the example are the computer nodes on a decentralized network. This example describes a problem decentralized networks face — how to get participants with asymmetric information to agree on an outcome.
Byzantine Fault Tolerance (BFT) offers a solution. It lets nodes agree on the timing and order of transactions without needing to trust each other. This allows participants to arrive at a fair consensus even if some nodes act maliciously, by deciding to delay transactions for example. In short, a BFT system can still function if all nodes aren’t working as they should.
However, one problem with traditional BFT mechanisms is if the number of malicious nodes in the network is equal to or greater than one third of all nodes on the network, nodes in the network will not be able to reach an honest consensus.
aBFT removes this upper limit so a fair consensus can be reached even if more than a third of the nodes act maliciously. Messages can be lost or indefinitely delayed as aBFT assumes honest nodes’ messages will eventually go through. The network can still function with fewer operational nodes.
Why does OXT have value?
OXT is the currency in which services are priced on the Orchid network, meaning users must exchange it when they enable its services within the app.
This means that to access Orchid’s services and get internet using a secure connection, users will need to keep OXT in a wallet. The Orchid app will then automatically deduct micropayments as they consume bandwidth.
OXT is also necessary for those seeking to sell bandwidth on the network. In order to compete for bandwidth bids, users must lock OXT in special contracts, a process called “staking.”
The Orchid client weights sellers by the amount of OXT they stake. This means that the more OXT a user stakes, the greater the chance they will get selected to provide bandwidth to users and earn OXT.
Of note, Orchid differs from traditional staking models as users are only compensated for providing bandwidth to users. Users do not gain any additional OXT through staking alone.
Lastly, 1 billion OXT tokens were created at launch, meaning no new tokens will ever be introduced into the software’s economy. This provides a certain scarcity to the cryptocurrency, which may help its value increase over time.
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Why buy FTM?
Developers looking to create decentralized applications in a faster and more scalable environment may want to consider purchasing FTM tokens and using the Fantom blockchain.
People wishing to transfer value to others almost instantly and with low network fees may consider using Fantom and its native FTM token.
Fantom has experienced strong adoption since its launch with the number of unique addresses doubled from early November 2021 to February 2022. Investors may view the strong team behind Fantom as another reason to purchase FTM tokens.
The Foundation behind Fantom consists of experienced engineers, scientists, researchers, entrepreneurs and designers, showcasing Fantom’s experience in blockchain development across the technology stack. One notable individual who has worked on the project is Andre Cronje, a DeFi architect who created Yearn Finance and Keep3rV1, and participated in several other well-known DeFi projects.