Fantom: Redefining DeFi with Scalability and Interoperability

The cryptocurrency market is evolving rapidly, driving innovation to address blockchain challenges. Fantom (FTM) stands out as a smart contract platform based on a Directed Acyclic Graph (DAG), providing essential solutions to the blockchain trilemma. Born in 2018, Fantom, backed by the Fantom Foundation, plays a central role in DeFi by offering responses to scalability and redefining the decentralized financial ecosystem.

Technological Foundations of Fantom

🔹 Structure of the Fantom Network

➮ Introduction to Directed Acyclic Graph (DAG)

Fantom relies on an innovative architecture called Directed Acyclic Graph (DAG). Unlike the linear structure of traditional blockchains, the DAG adopts a tree-like approach. Each transaction creates an independent branch, allowing for simultaneous and efficient transaction processing.

➮ Resolving the Blockchain Trilemma by Fantom

The blockchain trilemma, involving the trade-off between decentralization, security, and scalability, poses a major challenge. Fantom addresses these issues by leveraging the DAG, offering a solution that enhances scalability without compromising decentralization and security.

🔹 Advantages of the DAG Model

➮ Increased Scalability

The DAG model allows Fantom to achieve significant scalability. Theoretically capable of supporting up to 300,000 transactions per second (TPS), Fantom provides a performant alternative to the longer confirmation times encountered on other blockchains.

➮ Comparison with Other Blockchains (Bitcoin, Ethereum)

Compared to well-established blockchains like Bitcoin and Ethereum, Fantom distinguishes itself by its ability to process a considerable number of transactions simultaneously. While Bitcoin may take hours for block confirmation and Ethereum minutes, Fantom achieves transaction finality in one to two seconds, offering a faster and more efficient experience.

Architecture of the Fantom Network

🔹 Foundation and Creation of Fantom

The genesis of Fantom dates back to 2018, with the establishment of the Fantom Foundation in South Korea. At that time, the team identified shortcomings in blockchain technology, particularly scalability, as a major obstacle. This led to the birth of Fantom, with the aim of overcoming these challenges through innovative approaches.

🔹 Use of DAG in Network Construction

Fantom stands out by adopting the Directed Acyclic Graph (DAG). Unlike traditional blockchains, the DAG allows for a tree-like structure, offering exceptional flexibility in transaction processing. Each node in the network functions as an independent blockchain, facilitating efficient management of simultaneous operations.

🔹 Unique Features of Fantom as a Smart Contract Layer 1

As a smart contract layer 1, Fantom positions itself as the first platform to integrate the DAG. This combination offers significant advantages, such as very low transaction fees, on the order of cents, and fast finality times, ranging from one to two seconds. This speed and efficiency make Fantom a competitive network capable of supporting real-time transactions at minimal costs.

Fantom thus emerges as a pioneer in harnessing the potential of the DAG, providing a robust infrastructure for smart contract deployment and the creation of decentralized applications (DApps).

Lachesis Protocol and aBFT Consensus

🔹 Lachesis as Leaderless Proof of Stake (LPoS) Consensus

The Lachesis protocol defines Fantom’s consensus by adopting a Leaderless Proof of Stake (LPoS) approach. Unlike traditional systems where validators or validator groups play a privileged role, LPoS ensures leaderlessness, empowering each network node to create its own transactions. This characteristic enhances decentralization, with each node being an autonomous blockchain within the network.

🔹 Asynchronous Byzantine Fault-Tolerance (aBFT)

Fantom relies on Asynchronous Byzantine Fault-Tolerance (aBFT) to ensure network security. By opting for this mechanism, Fantom allows each network node to operate asynchronously, functioning at different times without the need for simultaneous consensus. Data propagates through the network via a gossip system, where nodes only transmit data to neighboring nodes. This approach offers temporal flexibility without compromising security.

🔹 Decentralization and Validation Mechanisms

Currently, the Fantom network has 57 validators, but the relative decentralization is being questioned. High entry barriers and centralized control of some validators pose challenges. Approximately 811 million FTM are controlled by 5 validators, raising questions about the project’s true decentralization. However, the Fantom network maintains a zero-tolerance policy towards dishonest nodes, with the possibility of losing all staked FTM in case of non-compliant behavior.

The Lachesis protocol thus combines decentralization, temporal flexibility, and security to establish robust consensus within the Fantom network.

Scalability and Performance

🔹 Initial Transactions Per Second (TPS) Goals and Adjustments

Fantom initially set ambitious goals in terms of transactions per second (TPS), theoretically reaching up to 300,000 TPS according to the whitepaper. However, in 2021, this estimate was revised to 4,500 TPS. Although this figure decreased, Fantom remains among the most high-performing networks. This revision reflects a realistic approach to scaling challenges and demonstrates the project’s transparency regarding its capabilities.

🔹 Comparison with Other Platforms in Terms of Costs and Finality

Fantom’s performance stands out when compared to other major blockchains. Transaction fees on Fantom are remarkably low, on the order of a cent, while transaction finality is in the range of one to two seconds. In comparison, Bitcoin requires about an hour for block confirmation, and Ethereum takes a few minutes. This efficiency positions Fantom as a fast and cost-effective solution for users.

🔹 Zero Tolerance for Dishonest Nodes

Fantom maintains a zero-tolerance policy towards nodes on the network that behave dishonestly. This rigor enhances the security and integrity of the network. Malicious nodes risk losing all of their staked FTM, a deterrent measure aimed at preserving trust within the Fantom ecosystem. This approach strengthens the network’s reliability by ensuring the honesty of participants.

Interoperability and EVM Compatibility

🔹 Mainnet Opera and Its Role in Scalability

Mainnet Opera, Fantom’s flagship infrastructure, plays a central role in improving scalability. Specifically developed to overcome scalability challenges, Opera enables real-time transaction processing while offering significant data storage capacity. This infrastructure forms the foundation on which Fantom’s native cryptocurrency, FTM, resides.

🔹 Interoperability with Ethereum Virtual Machine (EVM) and Cosmos SDK

Fantom positions itself as a major player in interoperability by being compatible with the Ethereum Virtual Machine (EVM) and the Cosmos SDK. This compatibility means that a DApp developed on the Ethereum network can be easily deployed on Opera, benefiting from Fantom’s advantages, including its scalability. Smart contracts on Fantom are also written in Solidity, Ethereum’s native programming language. This seamless integration provides developers with a familiar environment to build and deploy their applications.

🔹 Flexibility Offered to Developers by the Lachesis Protocol

Thanks to the Lachesis protocol, each DApp deployed on the Fantom network has its own blockchain. This unique feature provides developers with great flexibility, allowing them to define their own governance rules and token issuance. While remaining independent, these applications can interact smoothly with other DApps on Fantom. This modularity and interoperability make Fantom a flexible and potentially Layer 2 (L2) solution for Ethereum, opening up new possibilities for decentralized application development.

Fantom Ecosystem

🔹 Over 120 DApps and 300,000 Smart Contracts Deployed

The Fantom ecosystem stands out for its vibrancy, hosting over 120 decentralized applications (DApps) and boasting approximately 300,000 deployed smart contracts. This dynamic growth positions Fantom among the most active and diverse blockchains, offering a wide range of opportunities for users and developers.

🔹 Popular Applications (SpookySwap, Yearn Finance, Scream, Geist Finance)

Among the notable applications deployed on the Fantom network, SpookySwap emerges as the largest decentralized exchange. Yearn Finance offers yield optimization, while Scream and Geist Finance stand out as lending protocols. Projects from Ethereum, such as SushiSwap, have also found their place on Fantom. These popular applications contribute to the diversity and functional richness of the Fantom ecosystem.

🔹 Developer Grant Program

Fantom actively supports innovation within its ecosystem by launching an ambitious grant program. Endowed with 370 million FTM, this program aims to fund developers capable of creating original and useful DApps for the Fantom network. Rewards can reach up to $1 million per month, incentivizing developers to design compelling applications for users, thus enhancing creativity and the continued expansion of the Fantom ecosystem.

Use of the FTM Token

🔹 Network Governance and Staking

The FTM token, as the native cryptocurrency of Fantom, plays several essential roles in the operation of the network. Firstly, it is widely used in network governance. FTM holders can participate in the staking process to secure the protocol. Becoming a network validator requires a minimum amount of 500,000 FTM, a step that promotes decentralization by allowing a variety of actors to contribute to the network’s security.

🔹 On-Chain Voting System and Proposals

Since 2021, the @FantomFDN has implemented an on-chain voting system, providing every FTM holder with the opportunity to participate in decision-making within the network. Each FTM held equals one vote, establishing a direct relationship between a holder’s engagement and their influence in the decision-making process. To submit a proposal to the network, one simply needs to stake FTM and pay the submission cost, set at 100 FTM. This democratic approach reinforces Fantom’s decentralized governance.

🔹 Access to the Fantom DeFi Suite and FTM Usage in the Ecosystem

FTM plays a central role in accessing the Fantom DeFi suite. FTM holders can use their tokens for staking, thus generating rewards in the form of annual interest. Additionally, the liquidity of staked FTM allows users to actively participate in Fantom’s DeFi ecosystem. They can use their staked FTM as collateral to mint fUSD tokens, Fantom’s stablecoin, and thereby access Fantom Finance, the decentralized exchange for synthetic assets. This comprehensive integration of FTM into the DeFi ecosystem enhances its utility beyond mere governance.

🔹 Tokenomics Point

➮ We will provide you with the pie chart showing the distribution of $FTM tokens.

➮ We will also give you a link to Token Unlock (an application providing extensive information on tokenomics, including token release schedules) : https://token.unlocks.app/fantom

➮ as well as a link to CryptoRank (which is also an application providing extensive information on tokenomics and focusing on vesting schedules, private investor statistics, etc.) : https://cryptorank.io/price/fantom

Fantom and the Sonic Upgrade

🔹 Technological Evolution: The Challenge of Costs and Speed

Faced with persistently high costs and slow speeds on networks such as Ethereum and Bitcoin, Fantom visionary Andre Cronje proposes Sonic. This major upgrade aims to transform the Fantom technology stack to significantly increase transaction speed and reduce costs.

🔹 The Promises of Sonic

Currently being deployed, Sonic promises a speed increase of 65 times, making network security more affordable for everyday users. Although participation requires 50,000 FTM tokens, Sonic specifically targets credit card issuers and international banks, underscoring the need for technological advancement in the blockchain sector.

🔹 Outlook and Future Deployment

Currently in the testnet phase, Sonic plans a full launch next spring, offering significant improvements for the blockchain ecosystem. With clear ambitions to attract major financial institutions, this upgrade highlights its potential impact on the entire blockchain industry.

In conclusion, Fantom ($FTM) positions itself as an innovative blockchain platform, solving the blockchain trilemma through its directed acyclic graph (DAG) structure. With solid technological foundations, a unique architecture, and strong interoperability, Fantom delivers remarkable performance in the DeFi sector. Its dynamic ecosystem, coupled with the strategic use of the FTM token, demonstrates its relevance in the rapidly evolving cryptocurrency landscape. Fantom stands out for its ambitious vision and ability to offer a comprehensive decentralized finance experience, thereby solidifying its position in the blockchain market.