Blockchain technology first surfaced more than a decade ago as perhaps the biggest disruptions in the global economic scene, with the Bitcoin and Ethereum platforms paving the way for other alternative smart blockchain projects.
Fast forward to now and the same technology has evolved to accommodate new upgrades, with the goal of boosting efficiency in the emerging industry. Specifically, new smart contract (or blockchain ) platforms have emerged in recent times, aiming to resolve some of the limitations associated with the initial blockchain platforms.
Notably, Ethereum and other layer-1 and possibly layer-2 blockchain platforms, in some instances, have been afflicted with scalability challenges such as low throughput, high gas fees, and congestion, among other things.
While these limitations were unattended for years, alternative blockchain concepts like Fantom swung into action to specifically address some of these challenges, using optimized blockchain infrastructure. Let’s just dive right into the main discussion. What is Fantom?
What is Fantom?
Founded by Ahn Byung Ik, although led by Michael Kong as the CEO, Fantom, nicknamed “the Ethereum killer” is an advanced fourth-generation, open-source smart contract platform that hosts custom-built decentralised applications (DApps) as well as non-fungible tokens (NFTs).
After launch in December 2019, the Fantom Foundation’s smart contract platform provides an alternative to the Ethereum mainnet, albeit with enhanced performance as it delivers greatly in terms of speed, scalability, and security – the trilemma of the older-generation blockchains.
In addition to its core offerings, Fantom doubles as a “all-in-one” decentralised finance (Defi) suite for such activities as minting, trading, yield farming, and liquidity staking where end users can lend and borrow digital assets directly from their wallet at near-zero fees.
How does Fantom work?
Unlike the majority of layer-1 and layer-2 blockchain platforms that adopt either proof-of-work (POW) or proof-of-stake (POS) consensus mechanisms in isolation, Fantom went for something more advanced and truly revolutionary in building up its acclaimed highly scalable blockchain ecosystem.
Specifically, Fantom utilises a permissionless protocol to accomplish decentralisation and security, as well as the asynchronous Byzantine Fault Tolerance (aBFT) or Lachies consensus mechanism, which aided in achieving remarkable speed in the entire end-to-end process.
Just in case you are wondering, aBFT is the most recent consensus mechanism that addresses two of the major issues inherent in the blockchain scalability trilemma which are decentralisation and high-throughput.
Also, without completely discarding the old system, Fantom maintains an advanced trustless and leaderless POS protocol to achieve high network security, thereby resolving the third arm of the blockchain scalability trilemma.
The POS protocol adopted by Fantom, however, eliminates the traditional system where validators have a say on the validity of a transaction. Instead, the adopted model is leaderless i.e, completely autonomous, which makes the platform truly secure.
Furthermore, similar to other smart contracts built on the BFT consensus mechanism, Fantom, in an attempt to achieve interoperability on the platform, likewise adopts a clone version of Ethereum Virtual machine (EVM). This simply suggests that developers can interface with the Ethereum mainnet, and even port their existing dApps from there seamlessly.
The Lachies, as previously mentioned, is further capable of growing to several nodes spread throughout the globe in a permissionless, open environment, allowing for a high degree of decentralization.
Fantom on-chain governance
Despite the fact that Fantom employs the aBFT consensus mechanism, which is commonly used by institutional-focused blockchains, it remains community-focused. As a result, in order to participate in the governance protocol, interested participants must first obtain the platform’s native token – FTM – and stake it in the FTM network.
By staking their FTM, token holders can propose new changes, as well as vote for or against modifications and upgrades intended for the overall network. It is also important to note that the governance power bestowed on token holders depends largely on the amount of FTM tokens they have in possession.
Fantom token – FTM
As mentioned previously, FTM is the default utility token on the FTM network, and it is used as the base medium of exchange. Being an ERC-20 token, it can be used across the platform’s Defi suite, as well as on other compatible exchanges including the Ethereum network, and Binance Smart Chain’s BEP20.
Of the total 3.175 billion FTM tokens in supply, approximately 2.1 billion FTM tokens are already in circulation, with the leftover reserved for providing staking rewards to the FTM holders which, on the other hand, depends on governance decisions.
While the FTM tokens can be bought across major exchanges, the practice is discouraged by the creators who warn against custodial risks. More so, by purchasing the token outside of the mainnet, participants risk losing staking regards set aside for FTM holders who acquire their token on the FTM network.
Other use cases of the FTM token include compensation for those validators who participate in transaction processes, prevention of spam transactions, and the general validation experience.
Ultimately, Fantom is a strong contender for older-generation blockchain systems that are suffering from blockchain scalability trilemma, and is one of the few that offer a viable solution in that regard.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.