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What Is Fantom (FTM)?

| Updated
by José Oramas · 7 min read
What Is Fantom (FTM)?
Photo: Fantom Foundation / Twitter

The guide provides everything you might need to know about Fantom – a fast, high-throughput open-source smart contract platform for digital assets and dApps.

One of the next-generation platforms to address several limitations of the existing blockchain networks is Fantom (FTM).

What is Fantom?

Usually, DeFi platforms are blockchain-based networks that provide a series of functions for their users. In this case, Fantom is not a blockchain, rather a network of blockchains that allows users can to build their blockchains with scalability, speed, and effectiveness.

In essence, Fantom is the first DAG-based Layer-1 blockchain and smart contract platform that offers several functions for DeFi users. Among them are minting, trading, lending, borrowing digital assets, staking, and much more. The platform also offers solutions for the typical issues regarding blockchain, like scalability and confirmation time.

Fantom Team

Originally, Fantom was founded by Dr. Ahn Byung Ik – a South Korean computer scientist, President of the Korea Foodtech Association, and co-founder of the food-tech platform SikSin. The current Fantom CEO is Michael Kong. The group behind the project is a team of dedicated computer scientists and developers exploring new ways for blockchain and the DeFi ecosystem as well as issues associated with them.

The team behind Fantom includes:

  • Michael Kong – CEO/CIO, former CTO at Digital Currency Holdings, advisor for Enosi Foundation, and developer at Block8;
  • Andre Cronje – DeFi Architect, former Chief Crypto Code Reviewer at CryptoBriefing, technology analyst at Leminiscap, and blockchain infrastructure engineer at CryptoCurve;
  • David Richardson – Director, former managing CEO at Mid-Ocean Consulting Ltd., President of Oceanic Bank and Trust;
  • Barek Sekandari – Chief Government Relations Officer, Director at SKCHAIN Advisors, Director of Partnerships at Fusion Foundation;
  • Quan Nguyen – CTO.

How Does Fantom Work?

Fantom uses the Asynchronous Byzantine Fault Tolerance (aBFT), an algorithm with a directed acyclic graph (DAG) consensus. To better understand this, the aFBT is an algorithm that belongs to Byzantine Fault-Tolerant consensus and allows for honest nodes of a network to guarantee to agree on the timing and order of a set of transactions fairly and securely.

Byzantine Scenarios

The Byzantine scenario is a trust-issue situation where a system needs to rely on its actors to address a set of failures or attacks. It was first used to describe a situation where a failure could occur in a predetermined moment of a distributed network protocol. When such situations happen, the protocol’s actors have to plan a strategy to address these issues.

aBFT Consensus

To address Byzantine scenarios, Fantom uses an aBFT algorithm with a directed acyclic graph (DAG) consensus, which is a graph directed to one way, without circles connected to other edges. In other words, a node’s information can only travel to another one in a single way.

Essentially, when a network is Byzantine fault-tolerant, all nodes can reach an agreement and continue to function even if there is a malicious attack.

Scalability and Speed

Moreover, Fantom addresses issues regarding scalability and speed with the aBFT algorithm. In particular, aBFT eliminates the dependency on timing assumptions associated with transactions without dismissing security or falling into centralization. Thus, the confirmation speed is faster and more secure, unlike traditional blockchains.

In the Byzantine case, a loss or delay of some messages is possible, the same thing happens in a network. The aBFT consensus is capable of addressing these issues by reaching agreements with the network’s nodes, despite messages being lost.

What is Fantom (FTM) Token?

Fantom (FTM) token is the native-asset of Fantom. Currently, there are three types of FTM tokens circulating in the market:

  • Opera FTM – the token used on Fantom’s mainnet Opera Chain;
  • ERC-20 – the token compatible with Ethereum (ETH);
  • BEP-2 – the token compatible with Binance Chain.

As noted, the ERC-20 token is Ethereum-compatible, but it can not be used in the Opera Mainnet. When a user sends an ERC-20 FTM to the Fantom Wallet, it is automatically swapped to Opera FTM.

The FTM token is a multi-purpose asset that plays a vital role in the Fantom ecosystem.

  • Security. The platform uses Proof-of-Stake (PoS) – a consensus mechanism designed to substitute Proof-of-Work, (PoW). With the PoS concept, all validators are required to hold FTM in order to create blocks. And the more tokens they hold, the more power they have. Validators help maintain the Fantom network secured and decentralized by locking their FTM tokens.
  • Delegation. FTM holders can delegate their funds to validators to receive staking rewards while still keeping custody of their tokens. Likewise, validators will charge a small fee for this service.
  • Validator nodes. To earn transaction fees and rewards, any user with 3,175,000 FTM tokens is capable of running his own validator node.
  • Spam avoidance. To avoid transaction spam, every action in the network costs a small fee paid with FTM tokens.
  • Community governance. Fantom is a platform where validators and delegators can vote on the future of the protocol through an on-chain transparent voting system. The FTM token will work as a governance token, meaning every FTM token equals one vote.
  • Staking. Holders can stake their FTM tokens to receive rewards. In addition, due to a PoS-run system, validators and delegators help maintain the security of the network. The rewards distribution is controlled by a Standard Form Contract (SFC). Likewise, at least 70% of transaction fees are distributed between validators, proportional to their transactions’ reward weight.

The total supply is 3.175 billion FTM, 2.1 billion are currently in circulation.

What Makes Fantom Unique?

What makes Fantom unique is the new integrations and developments taking place in the network. Fantom has already partnered with several universities to work and develop the Fantom Virtual Machine (FVM) – a database similar to the EVM, but with enhanced features to achieve greater overall performance.

Besides, Fantom offers several options and benefits for DeFi users and keeps its network fairly decentralized and secure.

Fantom’s mainnet is the Opera Chain, a blockchain that supports the Ethereum Virtual Machine. So all smart contracts deployed on Ethereum are compatible with the Opera Chain.

Pros and Cons of Fantom

There are pros and cons to consider about the Fantom platform.

Pros of Fantom:

  • Speed and Scalability while using the aBFT consensus algorithm.
  • Community-governance with transparent on-chain voting.
  • Support for ERC-20 tokens and the Ethereum Virtual Machine for smart contracts.
  • Guaranteed network security with TxFlow — an aBFT middleware protocol designed to enhance responsiveness and overall performance, so the platform does not give up speed to prioritize security, rather, it enhances both.

However, there are some disadvantages that you have to bear in mind.

Cons of Fantom:

  • While FTM has an ERC-20 token, it is not compatible with other wallets. While it works on mobile and desk, you can only store your FTM using Fantom’s official wallet – PWA Wallet. The wallet is compatible with other ERC-20 tokens, although they are automatically swapped for Opera FTM.
  • You can not stake FTM with other exchanges like Binance. You can only stake FTM on the platform.

Conclusion

While the project is still under development, it currently provides a steady base for users who want to build their networks with speed, scalability, and great performance.

The Fantom protocol is bringing several benefits for the DeFi environment with its FVM system. Thus, it is enhancing the features of blockchain technologies and their overall performance. The platform offers several benefits for DeFi users with its aBFT consensus protocol and addresses issues like delays, confirmation time, speed, and scalability.

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FAQ

What is Fantom?

Fantom is a network of blockchains. In essence, Fantom is the first DAG-based Layer 1 blockchain and smart contract platform that offers several functions for DeFi users and addresses typical issues regarding blockchain, like scalability and confirmation time.

Who created Fantom?

Originally, Fantom was founded by Dr. Ahn Byung Ik — a South Korean computer scientist, President of the Korea Foodtech Association, and co-founder of the food-tech platform SikSin. The current Fantom CEO is Michael Kong. The group behind the project is a team of dedicated computer scientists and developers exploring new ways for blockchain and the DeFi ecosystem as well as issues associated with them. 

The team behind Fantom includes:

  • Michael Kong — CEO/CIO, former CTO at Digital Currency Holdings, advisor for Enosi Foundation, and developer at Block8;
  • Andre Cronje — DeFi Architect, former Chief Crypto Code Reviewer at CryptoBriefing, technology analyst at Leminiscap, and blockchain infrastructure engineer at CryptoCurve;
  • David Richardson — Director, former managing CEO at Mid-Ocean Consulting Ltd., President of Oceanic Bank and Trust;
  • Barek Sekandari — Chief Government Relations Officer, Director at SKCHAIN Advisors, Director of Partnerships at Fusion Foundation;
  • Quan Nguyen —CTO.

How is the Fantom network secured?

The platform uses Proof-of-stake (PoS) — a consensus mechanism designed to substitute Proof-of-Work (PoW). With the PoS concept, all validators are required to hold FTM in order to create blocks. And the more tokens they hold, the more power they have. Validators help maintain the Fantom network secured and decentralized by locking their FTM tokens.

The platform has guaranteed network security with TxFlow, an aBFT middleware protocol designed to enhance responsiveness and overall performance, so the platform does not give up speed to prioritize security, rather, it enhances both.

What is Fantom token?

FTM is the primary token on the Fantom network. FTM is used for securing the network through staking, governance, payments, and for fees. 

The main utility of the FTM token on Fantom is to secure the network via a Proof-of-Stake system.
To participate, validator nodes need to hold a minimum of 3,175,000 FTM, and stakers need to lock up their FTM. In return for the service, both the nodes and the stakers are rewarded with epoch rewards and fees.

The FTM token is ideal for sending and receiving payments thanks to the Fantom network’s high-throughput, fast finality, and low fees. On Fantom, money transfers take around 1 second and cost about $0.0000001. 

The total supply is 3.175 billion FTM. 2.1 billion are currently in circulation while the remainder is reserved for staking rewards. If the rewards stay at the current levels (depending on governance decisions), it will take more than two years to distribute all the rewards and to reach a full circulation of the total supply.

What is special about Fantom?

While the project is still under development, it currently provides a steady base for users who want to build their networks with speed, scalability, and great performance.

The Fantom protocol is expected to bring several benefits for the DeFi environment with its FVM system, and thus, enhancing the features of blockchain technologies and their overall performance. The platform offers several benefits for DeFi users with its aBFT consensus protocol and addresses issues like delays, confirmation time, speed, and scalability.

Fantom integrates new methods and algorithms to enhance its overall performance. The team has partnered with several universities to work and develop the Fantom Virtual Machine (FVM) — a database similar to the EVM, but with enhanced features to achieve greater overall performance.

Fantom’s mainnet is the Opera Chain, a blockchain that supports the Ethereum Virtual Machine. So all smart contracts deployed on Ethereum are compatible with the Opera Chain.

What are the prospects of Fantom?

Layer 1 blockchain. Users can build their networks on the Opera Chain with scalability, speed, and guaranteed security.

On-chain governance voting system. Fantom is governed by the community. Validators and delegators can vote on the future development of Fantom by using transparent on-chain voting.

Staking. Holders can stake their FTM tokens to receive rewards. Besides, due to a PoS-run system, validators and delegators help maintain the security of the nentwork. The rewards distribution is controlled by a Standard Form Contract (SFC). Likewise, at least 70% of transaction fees are distributed between validators, proportional to their transactions’ reward weight. 

Delegation. FTM holders can delegate their funds to validators to receive staking rewards while still keeping custody of their tokens. Likewise, validators will charge a small fee for this service.

DAG-based aBFT. Fantom uses the Asynchronous Byzantine Fault Tolerance (aBFT), an algorithm with a directed acyclic graph (DAG) consensus. In particular, aBFT eliminates the dependency on timing assumptions associated with transactions without dismissing security or falling into centralization. Thus, the confirmation speed is faster and secure, unlike traditional blockchains. 

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