🤔 What is Fantom?
Fantom is a smart contract platform that uses DAG(Directed acyclic graph) instead of traditional blockchains to store data.
It aims to overcome Etherium’s limitations(scalability trilemma).
Scalability trilemma was first described by Vitalik Buterin, the co-founder of Ethereum. It states that it is very difficult to develop a blockchain that has all the three features:
A developer can choose a maximum of 2 of the desired qualities.
Fantom aims to solve the scalability trilemma becoming secure, decentralized and scalable.
💡 What role does FTM token play ?
FTM is the native cryptocurrency of Fantom. It is used for:
- Transaction fee: Users pay FTM tokens as transactions fees to include their transactions on Fantom.
- Delegation: Users can delegate their tokens with validators to participate in the process of validating blocks.
- Validator rewards: Validators receive FTM tokens as rewards for building blocks.
- Governance: FTM token holders propose and vote on updates to Fantom protocol.
📝 Origin of Fantom
- Dr Ahn Byung Ik founded Fantom in 2018.
- Fantom testnet went live in 2018.
- Fantom mainnet went live in 2019.
😌 What problems does it solve ?
- Proof-of-stake vs Proof-of-work: Fantom uses s variation of proof-of-stake which has several advantages over proof-of-work:
- It is much more energy-efficient.
- Governments cannot ban miners, unlike proof-of-stake in which governments can trace miners depending on excessive energy usage and seize their hardware.
- It has been observed that proof-of-stake systems get more decentralized over time(Initially Bill Gates had more than 90% of the Microsoft shares, today he has less than 5% Microsoft shares.Whereas proof-of-work systems get more and more centralized over time around hardware, cheap electricity, favorable jurisdictions, etc.
- Forkless way to upgrade: Fantom implements on-chain governance. No hard forks and community splits are involved in upgrading the protocol.
- EVM compatible: Developers can easily migrate their apps from Etherium with minimum changes. Etherium tools like metamask etc can also be used to develop apps on Fantom.
- No downtime: Thousands of node operators running 24 X 7 ensure the network is always online.
- Cheap: Transaction fee is less than a penny.
Note: This may increase as more apps are built on Fantom, but can also reduce if the team is able to scale Fantom even further.
- Speed: It takes around 2 seconds to finalize transactions on Fantom, whereas it takes about 5 minutes on Etherium for a transaction to be considered final.
- Scalability: Fantom can perform 25,000 transactions per second (TPS).
- No trusted third party: Users do not have to trust Fantom team. The code is open source, anyone can see and verify how the code works.
- Efficiency gains: Projects building on Fantom do not have to run servers and hire an army of network engineers.
🤖 How does it work ?
Fantom uses Lachesis aBFT consensus mechanism.
Each Lachesis node stores a local Acyclic Directed Graph (DAG) composed of event blocks, each of which consists of transactions. The DAG, capturing the happens-before relationship between the events, is used to calculate an exact final order of events—and hence transactions—independently on each node.
Lachesis’s event structure is a DAG of events. To optimize storage and retrieval, the DAG is separated into sub-DAGs, each of which is called an epoch. Each epoch comprises many finalized blocks.
Each epoch is sealed when one of these conditions is satisfied:
- The epoch reaches a defined number of blocks.
- The epoch lasts for a specified time.
- At least one cheater is found in this block.
When an epoch gets sealed, its inner epoch indexes get pruned, and new events of the sealed epochs are ignored. Each epoch forms a separate DAG, and thus parents from other epochs are not allowed.
For a sanity check, each event includes the hash of the previous epoch.
Fantom has 3 layers
- Core layer – bottom layer for consensus among nodes.
- Middleware layer – issue rewards and payments, manage smart contract.
- application layer – deploy and execution of smart contracts.
🏛️ Governance model
Fantom’s governance is decentralized. FTM holders propose and vote on updates to Fantom.
🤑 How much money does the project have for future development ?
- The project raised $40.13 million in 2018.
- Founders and project hold 28.62% of FTM token supply.
- Growing ecosystem:Large number of projects are building on Fantom.
- Developer incentive program:
- Fantom will be giving out over 750 million dollars to developers for building on Fantom.
- This is much better than other blockchains that are rewarding users for providing liquidity.
- Switching cost: It will be very difficult for apps built on Fantom to migrate to other blockchain solutions with their community and ecosystem.
- Network effects:
- New apps can use the functionality of existing apps to build new features.
- More apps will attract more users. As more users interact with apps, new apps will decide to build on Fantom.
- Number of Fantom developers will increase as more users and apps join the ecosystem. As more developers learn to code on Fantom: more apps will be built.
Fantom network halted
On Thursday, February 25 2021 at 3.04 PM UTC, Fantom Opera mainnet halted new block confirmations for 7 hours, resulting in a temporary outage.
Two of the biggest validators represent 1/3 of the FTM staked. These two validators faced an issue that resulted in them not being able to mine and validate new blocks bringing the complete network to a standstill.
The team coordinated with the validators to apply a temporary patch to slow down the event emission rate to allow lagging nodes to catch up. Once all the nodes were synced again, they started to confirm blocks and finalize epochs.
This incident shows how centralized the project is!
😨 Risks and challenges
- Centralization: There are just a handful of nodes that mine and validate new blocks.
- Fantom and projects built on it are a direct threat to the current banking, government and legal system. Governments will resist and fight the change
- Competition: There are many crypto projects that are in direct competition with Fantom.
FTM tokens have fixed supply of 3.175 billion, which have been distributed as follows:
- 40% was allocated to Public and Private Sale investors, including private sale bonuses. Those FTM have no vesting schedule.
- 15% was allocated to advisors, with a 3-months lockup.
- 10% was allocated to the founding team. This allocation features a 24-months vesting period with monthly-cliffs.
- 3.6% was allocated to a strategic reserve. Those FTM have no vesting schedule.
- 31.4% was reserved for staking rewards, to be distributed daily until 2024.
These will be released as follows:
Token’s price increases due to demand pressure.
Demand pressure on FTM will come from:
- Governance: Users will acquire FTM tokens to participate in the governance process.
- Transaction fees: Users will acquire and pay FTM tokens to include their transactions in Fantom network.
- Staking: Users will also acquire FTM tokens to participate in the process of block validation.
- Speculators: They will acquire FTM tokens for future price appreciation.
🧐 Indicators to watch out for
- Daily transactions are growing:
- Unique addresses are growing:
- Network transaction fee is growing:
- Number of daily contracts being deployed is growing:
- Twitter account is growing:
- Total value locked is growing: