Ethereum

What is Phantom? The fast blockchain taking Ethereum

In short

  • Fantom is a layer 1 blockchain aimed at providing an alternative to the high costs and slow speeds that Ethereum users often complain about.
  • Fantom runs on a directed acyclic graph blockchain, similar to Hedera Hashgraph.

Use a Ethereum protocol on a particularly crowded day and you will surely balk at the fees, which can easily exceed the value of your trade if you are trading, for example, crypto that is not worth more than the change in your pocket. Help is at hand in the form of an alternate layer-1 block chains to like Solana, avalancheand the topic of today’s lecture: Fantom.

Ghost is a smart contract– supporting blockchain, powered by its native FTM token. Following a $40 million raise, Fantom launched its mainnet in December 2019. Its blockchain is fast and cheap, and in 2021 proved it could support its own decentralized finance (Challenge) industry.

FTM’s price rose from $0.17 in July 2021 to highs of $3.3 in January 2022, suggesting that there is an appetite for alternatives to Ethereum.

How does Phantom work?

The Fantom blockchain achieves its speed in part thanks to a Directed acyclic graph (DAG), where blockchain transaction histories are displayed as a “hashgraph,” a graph of blockchain hashes. It is similar to the technology that powers Hedera Hashgraph.

Another innovation is Fantom’s “leaderless” consensus mechanism, Lachesis. The mechanism is a variant of proof of stake, called asynchronous Byzantine fault-tolerant (aBFT). The advantage is that it can work smoothly even if a third party of the transaction data is fraudulent.

This means that Fantom’s blockchain nodes can validate transactions independently (the “asynchronous” in aBFT), without having to go through a transaction queue. While it can take several minutes to clear a transaction on Ethereum and Bitcoin, transactions should only take two seconds on Fantom.

Unlike Solana, Fantom is compatible with the Ethereum Virtual Machine (EVM). This makes it easy to port decentralized applications built on Ethereum directly to Fantom. (Avalanche, Binance Smart Chain (BSC) and Polygon are also EVM compatible). For this purpose, FTM is available as ERC-20 and a BEP-20 token, which means there is a version of the token that meets the Ethereum and Binance Smart Chain token standards.

What’s so special about Fantom?

Fantom’s success is best understood in the context of the so-called L1 Wars. Ethereum is slow and expensive to operate, and will remain so (assuming business stays the same) until protocol upgrades are implemented. It could take a few years. It’s too late for people who want to get the most out of decentralized finance protocols today, but find native ETH DeFi apps too expensive to use.

Some developers, like those building Loopring, Abritrum, and Optimism, have opted to build Layer 2, or L2, solutions to accelerate the Ethereum experience without getting rid of Ethereum security.

Other blockchains have decided to replace Ethereum entirely – Ethereum is known as base layer, L1 or layer-1. Solana, Avalanche, PeasTerra (technically a Cosmos appchain) and Fantom are the frontrunners in this race, although all native coins have fallen significantly from their all-time highs. Among these L1 protocols, Terra’s coin, LUNA, is the largest with a market cap of $29 billion as of March 2022, followed by Solana with a market cap of $26 billion. FTM trails with $3.4 billion.

Each of these blockchains hosts its own DeFi cottage industry. According to data on DeFi Llama, Terra’s DeFi market is the largest after Ethereum. As of March 2022, Ethereum had a total value locked (TVL) of $111 billion and Terra had $22 billion. Fantom, in fifth place, has $7.25 billion. That’s more than Solana’s $6.69 billion.

Who builds on Fantom?

  • 💸 Finance Ghost: enables synthetic minting, liquid staking, lending, and decentralized exchanges.
  • 🧙‍♀️ Spooky Swap: A decentralized automatic market maker. Think Uniswap but on Fantom. His token, amusingly, bears the “BOO” ticker.
  • ⛓️ Multi-channel: an inter-chain router protocol.
  • 💱 securely: A decentralized exchange with little slippage. Solidly was created by Andre Cronje, the inventor of Yearn Finance. It works on a (3.3) model, like OlypmusDAO.
  • 👻 Geist Finance: A decentralized lending protocol.

Where to buy Phantom

You can buy Fantom from a decentralized or centralized exchange. According to CoinMarketCapthe largest markets for FTM are BinanceKuCoin and FTX. FTM is supported by cross-chain bridges such as Wormhole and Multichain, and since it is issued as an ERC-20 and BEP-20 token, you can trade it on Ethereum. Uniswap and PancakeSwap from Binance Smart Chain.

The future of FTM

The future of FTM will be determined by the winner of the L1 wars. Currently, Ethereum is losing ground to rival emerging Layer 1 blockchain rivals like Solana, Fantom, and Avalanche.

Time will tell (sorry) if the crypto industry becomes a win-win market where a single blockchain dominates, or if crypto indulges in a multi-chain future where blockchains become application-specific.

That said, it’s worth noting that FTM’s market cap is about seven times smaller than SOL’s – perhaps the winner has already been decided.

In March 2022, Fantom was one of many decentralized finance projects rocked by developers Andre Cronje and Anton Nell’s decision to leave the DeFi space. Cronje was chairman of the Fantom Foundation’s Technology Council between 2018 and 2019, and a technical advisor to the project from 2018; Nell was a senior solutions architect at the Fantom Foundation.

With FTM’s price dropping by double digits following their announcement, the Fantom Foundation released a declaration pointing out that there were also no “lead developers” from Fantom and claiming that the technological development of the project “is continuing as normal”.

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