The cryptocurrency market has disrupted many conventional markets in the past decade. Shortly after the rise of cryptocurrency, blockchain technology emerged as a major breakthrough for decentralized finance, and NFTs followed shortly afterwards.
Fantom might look like another regular crypto project. But in fact, it has the ability to help scale the DeFi field and expand the scope of web3 beyond measures.
The Fantom blockchain is essentially an alternative to the Ethereum blockchain. It redefines decentralized apps and smart contracts only to make them much better and more functional.
Once you go through all the working processes of Fantom, you’ll be able to understand what it can actually do for you. Learning about its tokenomics is another essential step towards understanding the whole thing quickly.
The Need for Fantom
If you want to learn about Fantom, you should start with the history of the platform. The crypto world started in 2009 with the introduction of Bitcoin. After the introduction of Bitcoin, the decentralized industry continued to grow further through the inclusion of blockchain technology and non-fungible tokens later on. This resulted in developing an ecosystem which helped the decentralized finance industry to expand and become highly functional and reliable in the long run.
However, since Bitcoin was the first ever cryptocurrency, it has its own drawbacks as well. For example, the consensus mechanism used in Bitcoin is its biggest drawback. Bitcoin uses the proof of work algorithm for consensus, and it consumes a lot of energy.
Similarly, there are lots of other blockchain projects with their own cryptocurrencies, and all of them have their own shortcomings.
The main components of any blockchain project include impeccable security, decentralization, and scalability. Traditionally, every blockchain project has to choose one of these features and has to sacrifice the rest.
Bitcoin is a perfect example of this trilemma. For example, since Bitcoin is perfectly secure and decentralized, it has to compromise on scalability. This means Bitcoin is not the ideal cryptocurrency and platform for quick transactions.
For many years, Ethereum has been used as an alternative to Bitcoin when it comes to faster transactions. However, the Ethereum network is so congested that the network fees have skyrocketed, and transactions are delayed.
So, scalability is the issue in the case of Ethereum as well. That is why blockchain developers have always been looking for alternatives to treat this problem. This is when layer 2 solutions need to be developed, and layer 1 solutions need to be improved.
Introduction to Fantom
Fantom has been developed as a platform to help with smart contract creation. It is basically an improved layer 1 solution which has much better scalability, EVM compatibility, and much better performance than its alternatives. Fantom mainnet has been named “Fantom Opera”, and the consensus algorithm “Lachesis”.
These essential components allow the Fantom to work flawlessly and much better as compared to other blockchains like Ethereum and Bitcoin. In addition to being completely decentralized and fast, the transaction fees on the network is very low as well.
The design of this network has been made by keeping in mind the growing need for decentralized applications for scalability. Old systems with heavy usage need both their front and their back and to be developed and managed flawlessly to keep working without any interruptions.
Moreover, these systems cannot afford to compromise on their security while going through the blockchain transformation. This is the main reason why the Fantom network has been optimized for very fast digital asset transactions in the blink of an eye.
The best part is that the network does not compromise on decentralization or its security when going for scalability.
The amount of personalization you can access in the Fantom ecosystem is also incredible. You can customize every digital asset transfer platform individually depending on the unique use case in every platform. The network also uses the latest proof of stake consensus mechanism to help with impeccable security.
The way in which all of the nodes in the network are connected with one another ensures a permissionless environment to execute every transaction while remaining perfectly secure. There are no master nodes used in the Fantom network.
How Does Fantom Work?
Learning about the working of the Fantom network is another important step you need to take to increase your understanding of the platform and build interest in it.
Its core functionality is just like many other decentralized platforms, which help in the creation of decentralized apps customized according to your exact needs. Since the platform does not use blockchain, it is much faster compared to its alternatives which use blockchain technology.
The FTM token is used by the Fantom network. The token allows you to take part in the consensus mechanism on the network and work on different nodes. The price of these tokens is used to cover the fees paid to the investors taking their money into the network to help with liquidity and everything else. You can also use the token to transfer value in terms of money.
In order to learn more about the Fantom network, you should understand the technologies behind its creation.
Opera Chain
One of the major selling points and the key difference between Fantom and other layer 1 platforms is the fact that it uses DAG. Platforms using blockchain technology rely on separate blocks of information, which are made with the help of the proof of stake algorithm.
However, in the case of the Fantom network, all of the blocks are already linked with each other through a strong chain. This chain of data is responsible for everything happening on the platform since all of the transaction records is stored in it. The Fantom Opera Chain is used as the mainnet in the case of the Fantom network.
DAG is basically a graph which has all of the nodes available in the network, and it serves to connect them together. It is just like how the blocks in a blockchain are interconnected with one another.
Unlike blockchain technology, Fantom uses every node as a block as well. There are lots of transactions stored in every node. Since the network is not synchronized and every node works differently, you can easily create any transaction on the network without any delays or interruptions.
The transactions can be stored on one or multiple nodes since the blocks can be related to more than one node. This is how DAG in Fantom establishes a linked structure. With the help of this unique structure, the platform can store any number of transactions on the network in real-time while ensuring impeccable security and avoiding any delays.
Since the network does not use blockchain technology, the transaction speed is so fast that a transaction can be approved in as less as one second. This is all possible because of the scalable design of the Fantom network.
Lachesis
Lachesis is another important component of the Fantom network, and understanding its functionality is a key component to understanding the whole network.
It is an alternative consensus protocol used by the network in place of the traditional proof of stake mechanism. Here are some of the most important parts of the Lachesis consensus protocol.
- The BFT protocol used by Fantom avoids any bad nodes from affecting the network.
- Since there is no central authority, no one can be favoured by the network, and the rules apply across the board.
- The longest transaction can take to be approved on the network is 1 to 2 seconds. This is faster than almost every other blockchain network.
- The asynchronous nature of Lachesis allows for better command application flexibility for users.
Lachesis can be effectively used by the Fantom network and can be extended to additional layers as well. It is due to things features of the Fantom that EVM compatibility is made possible.
You can also learn about how Fantom works by employing Lachesis. With Lachesis at its core, Fantom can accumulate more blockchains in the future for easy scaling. With the help of Lachesis, Opera can be used as a flawless consensus protocol, and that’s why EVM compatibility is made sure.
Let’s take a look at how Lachesis works for Fantom.
- First of all, all of the nodes in the network are synchronized by Lachesis.
- Random nodes are selected by the consensus mechanism, and this is also how new blocks of data are formed.
- Every selected node is connected with the other ones for seamless operation.
- The open chain is perfectly synchronized with the nodes, and this is how blockchains are created, and transactions are verified.
- Every block is broadcasted to every node in the network.
- After their creation, new blocks are directly integrated with DAG.
- The whole process is repeated over and over for the creation of new blocks.
Users in the network can take part in the operations through the proof of stake algorithm. There are lots of added benefits of Lachesis over traditional alternatives.
Lamport system is used for time agent and synchronization between all the network nodes. This system makes sure that all of the nodes are managed at the same time. This system also helps make a specific order of blocks in the chain. Lamport makes the Fantom network very efficient and secure. There’s not much room for errors when the Lamport system is managing a network.
Fantom Tokens
Fantom Tokens are one of the most important things in the network. These tokens and ERC-20 tokens and are used as the primary tokens of the Fantom network. These tokens ensure liquidity in the network by facilitating transactions and by rewarding the investors participating with their stakes.
Fantom Tokens are given out to validators for helping the platform, and these tokens can be exchanged for Fiat money just like any other cryptocurrency. Fantom even has its own wallet for these activities.
Tokenomics
Understanding the tokenomics of a blockchain network like Fantom is a major step towards learning its true potential and functionalities. There is a maximum limit of 3,175 billion tokens for Fantom. None of the tokens is withheld, and all of them are in circulation. TVL or the total value locked in the Fantom blockchain, is around $775 million.
So far, the Fantom network only has a handful of decentralized applications under its belt. However, as more developers get to understand the true potential of the network, the user base is expected to grow rapidly in the near future.
Uses of Fantom
The native token of Fantom, FTM, can be used like any other token. For example, it can be used to pay network fees, for value transfer in payments, for governance, and also for staking purposes.
Let’s take a look at the possible everyday uses of the Fantom network.
Better Payments
The unique payment processing system used by this platform solves lots of problems faced in conventional blockchain transactions. For example, the network can handle transactions of any size without any problem and has a minimally low fee as well. This is why many people are using FTM tokens just for money transfers.
Staking in the Network
If you have FTM tokens in your wallet, you can stake them to help the Fantom network with liquidity and earn FTM tokens in return as well. This is done through the proof of stake consensus protocol which doesn’t require you to invest in expensive hardware and mining equipment to start earning FTM tokens.
All you need to do is just stake your tokens through the wallet, and you’re all good to start earning Fantom Tokens.
Better Security
FTM tokens help make the Fantom network secure as well. For example, they require the stakers to lock away their FTM tokens to earn more tokens and require a specific amount of FTM tokens to declare a staker a validator on the network.
Stakes are encouraged to stake and validate on the network with the help of rewards, which are also in the form on FTM tokens.
Improved Governance
FTM tokens are also used for governance on the Fantom chain. Governance is used to gather popular votes on things like new features and major updates in the network.
Since there’s no central authority involved in the Fantom blockchain, its governance system is the only way the whole chain and its features can be controlled and modified.
Since bites are cast with tokens, FTM tokens find an incredible use in this as well.
Paying Fees
Since there are lots of things developers and regular users can do on the Fantom platform, they need to pay the network fee as well. For example, FTM tokens can be used as a fee for transactions, make smart contracts, and for every new project, which includes a fee.
A network fee is charged to benefit the stakers, and to also avoid the network from getting spammed. Spamming attempts can easily slow down any network, and introducing a network fee helps get rid of those issues.
Although the fee is very low in the Fantom network, it will still add to a significant number for any spammer. This is the main reason why the network is made secure with the help of fees.
Fantom Benefits
Fantom is a perfect platform for developers of DeFi applications. The network even boasts its own stablecoin, which is termed fUSD. This coin can be used for activities like staking, borrowing money, and for transactions as well. With the help of its own tokens, the fantom network can finally start its decentralized functionality.
You can participate in the network by developing new applications with the help of its unique features. The finance products provided by this network can also be used on lots of other platforms.
Just like any other cryptocurrency, you can trade your regular crypto for FTM tokens to use on the network.
When you are on the Fantom Network, you can experience decentralization at its finest. That is because you are in charge of your funds, and there is nothing keeping you from using them in the way you like.
Takeaway
Fantom network is simply layer 1 solution perfected. This means it avoids all of the shortcomings of the traditional layer one solutions, and presents them in front of its users in a perfect manner. Moreover, with the help of its unique chain and Lachesis for consensus, it can easily overcome the blockchain trilemma and provide a network which has all the three core functionalities of a blockchain system without compromising on any one of them.
Since the Fantom Network is already becoming highly popular among decentralized finance developers, it has the potential to grow beyond the traditional blockchain system. So, if you are a developer who develops decentralized applications for a living, you should definitely try the Fantom network for impeccable development and a true decentralization experience. Moreover, you can join the network as an investor as well and earn FTM tokens by staking.