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Fantom (FTM) coin review: Why’s FTM relevant in 2021?

date March 23, 2021 time 7 min read 133 views

There is a growing list of crypto networks vying for the position of Ethereum. One such platform is Fantom. It incorporates unique architecture and powers a smart contract-enabled platform that is impervious to network congestion. Continue reading for more insight on the workings of this project and the opportunities that Fantom coin presents.

Few cryptocurrencies have been as profitable as Fantom coin since the beginning of 2021. With the price of FTM recording over a 1,500% increase in the first two months of 2021, it is clear that the digital asset and its native network have begun to deliver on the promises made 2 years ago.

Among other things, Fantom aims to disrupt the DeFi narrative by providing the infrastructure for processing fast transactions with negligible fees. In this Fantom coin review, we will dissect the workings of this project and determine whether its recent rally is sustainable.

What is Fantom?

Fantom uses a process called DAG to solve the blockchain trilemma
Fantom uses a process called DAG to solve the blockchain trilemma (source: fantom.foundation)

The main objective of Fantom was to create a lightweight network that solves the “blockchain trilemma”. From decentralization, speed, and security you can only pick two but not all three.

When it launched in 2018, the team envisioned that Fantom would become one of the major building blocks for smart cities. Creating infrastructure for traffic management, smart home systems, healthcare, and education.

However, following the emergence of DeFi, the team quickly pivoted this project and adopted decentralized finance as one of the core components of the Fantom ecosystem. It is worth noting that this move has brought the project into the limelight and spurred the growing demand for Fantom coin.

Fantom has opted for a unique crypto framework that uses something called a Directed Acyclic Graph (DAG) architecture and what they claim is an “improved” staking protocol.

What’s DAG?

Fantom has deviated from a common blockchain where transactions are bundled into, well, blocks. Instead, each transaction is treated individually by doing away with blocks altogether. Fantom is not a chain of blocks. Rather, it is a chain of transactions.

Now that you have an idea of what Fantom is trying to achieve, let us show you how it works.

How does Fantom work?

Fantom uses a DAG-based Asynchronous Byzantine Fault Tolerance (aBFT) algorithm, called Lachesis, to process up to 300,000 transactions per second. 

The team behind Fantom believed it was almost impossible to solve the blockchain trilemma using common blockchain consensus algorithms like Proof-of-Work (used for mined coins like BTC and ETH). Therefore, Fantom incorporates a leaderless technique that does not require specific nodes or master nodes to find new blocks and fill them up with transactions.

One way Fantom increases network speed is by not requiring all nodes to save the entirety of the blockchain’s data. Instead, nodes simply take a snapshot of the applicable part of the chain to confirm the validity of each unconfirmed transaction. Only when the node completes the task of confirming the last transaction on the chain can submit its own unconfirmed transaction. Subsequently, another node must reference each new submission for it to be confirmed. 

This continuous process ensures that every node plays a role in securing the validity of the protocol. With the help of an algorithm, Fantom also makes sure that chains with more confirmations are picked over newly formed chains or short chains.

In contrast to the Proof of Work and Proof of Stake consensus models, Lachesis doesn’t choose validators to vote on the final state of the network. Validators on Lachesis only observe the confirmations executed by each node and ensure that the data held by nodes are valid.

In addition to this consensus layer, there are two other layers in the Fantom architecture. They are:

The Opera Ware layer: This is the middle layer designed to govern specific functions like payment, reward distribution, and the creation of ‘story data.’ Story data is a small piece of data stored on each executed transaction. This makes it possible to track past transactions.

The Opera Application layer: Here, dApps can connect to publicly available APIs on Fantom to integrate with the functionalities of the consensus layer and the Opera Ware layers.

These three layers form what is known as Opera, Fantom’s protocol, which was officially launched in 2019.

Fantom DeFi features

Notably, Opera is compatible with Ethereum. Applications on Ethereum can port to Opera seamlessly to enjoy better speeds and low transaction fees. 

This possibility has become the unique selling point of Fantom in recent months. The team claims that transaction confirmations take only 1 to 2 seconds on Fantom and cost only a fraction of a cent.

In March 2021, Sushiswap, originally an Ethereum-based decentralized exchange, announced that it was live on Fantom, among other smart contract-enabled blockchains.The founder of Yearn.finance, Andre Cronje, is an active member of Fantom’s development team. He has stated that he hopes to bring ERC20 tokens to the Fantom ecosystem.

What is Fantom Coin?

Fantom coin, or FTM, is the native coin of the fantom ecosystem and the economic anchor for its emerging DeFi market. There are 4 types of FTM currently circulating in the crypto market. The first one was the ERC20 token launched during the Fantom ICO in June 2018 and distributed to investors in October 2018.

Later, BEP-2 and XAR variants were created in 2019 to enable interoperability with Binance Chain and XAR Network. However, after the Opera mainnet launched in 2019, a new Opera-based FTM token was released native to the blockchain. Following the launch, the Fantom team created bridges allowing you to swap other variants of the FTM token to the Opera token.

Fantom coin use cases

Validation

FTM is used for settlement on the Opera Ware layer and is also critical to the consensus and governance mechanics of the network. You can stake FTM on Opera to become a validator and earn rewards.

Interest earning

Likewise, the protocol allows liquidity staking. That means you can stake FTM and mint an equivalent amount of another token called sFTM which you can use to earn more income on Fantom’s DeFi platform.

Fantom DeFi offerings include:

  • fMint: Here, you can mint a stablecoin, fUSD, by collateralizing FTM or staked FTM tokens.
  • fSwap: You can trade synthetic assets without having to deposit your FTM in a protocol. The trades are processed directly from your FTM wallet.
  • fLend: You can lend your FTM or fUSD to liquidity pools on the protocol to generate interests. This service also allows you to borrow synthetic assets.

Voting

Thanks to the introduction of Fantom’s on-chain governance in January, FTM holders get to have a say in the future development of the ecosystem through on-chain voting.

Network fees

Lastly, participants of the Fantom ecosystem can only pay network fees with FTM.

Fantom coin price

FTM has performed beyond expectation in February 2021
FTM has performed beyond expectation in February 2021 (source: tradingview.com)

FTM sold for $0.04306/coin during its ICO campaign in June 2018. Unfortunately, a combination of the crypto bear market and a delay in token distribution caused the value to crash by 50% by the time the token was eventually issued in October 2018. 

The price of FTM continued to falter until it reached an all-time low of $0.003105 in the second month of 2019 before a 200% increase in the following months. This recovery was later amplified by the introduction of BEP-2 FTM tokens and a listing on the Binance DEX and Binance Exchange. 

During this eventful period, the value of Fantom coin rose by 300% and peaked at $0.039614 in June 2019. It surpassed the $0.04 mark briefly for the first time in September 2020 and eventually exploded at the beginning of 2021.

In the first 2 months of 2021, the price of FTM surged by 1,500% and set a new all-time high of $0.844425.  Without any doubt, the introduction of new utilities for FTM at the start of 2021 has had a positive impact on its price.

Is Fantom coin a good investment?

The future of Fantom coin firmly rests on its capacity to deliver on its promise for a sustainable, Ethereum-like, application-based ecosystem. 

The decision to provide DeFi services directly to FTM holders is likely a step in the right direction. Due to this strategic shift in its operation, Fantom will feature more frequently in the future DeFi conversation.

The DeFi opportunities of Fantom have some risks
The DeFi opportunities of Fantom have some risks (source: pixabay.com)

However, you should remember that Fantom is not the only Ethereum-wannabe promising an improved blockchain. Fantom must contend with the likes of Polkadot, Cardano, and Polygon to have a shot at success. Judging by how competitive this crypto sector is, it will take a bit of ingenuity on the part of Fantom to achieve sustainable growth.

And although Fantom has been around since 2018, its DeFi offerings are relatively new. Therefore, it may take a while for DeFi users to fully come to terms with Fantom’s value proposition. However, if Fantom continues to maintain a high level of speed and affordability, it has a better chance of becoming mainstream.

Where to buy Fantom coin

According to Coingecko, Binance is the most active FTM market accounting for over 50% of the daily FTM volume. Other exchanges where you can buy FTM with other cryptocurrencies include VCC Exchange, Digifinex, Kucoin, and FTX. 

However, you should ascertain the type of FTM you are buying. Remember that there are 4 different iterations and the token framework of each determines the type of wallet that you would need for storage.

Alternatively, you could opt for an FTM loan to access the DeFi opportunities of the Fantom ecosystem without having to trade your crypto.

With platforms like MyConstant, all you need to do is collateralize your crypto to receive instant FTM loans with low-interest rates. Other benefits include:

  • 24/7 customer service.
  • Rates as low as 6.5%.
  • Early repayments for lower rates.
  • Instant matching.
  • Store and borrow against over 70+ different cryptocurrencies.

Sounds interesting? Sign up for a free account today and start exploring the possibilities of the Fantom project.

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