Fantom is a popular Layer-1 (L1) platform for smart contracts. It’s scalable, secure, decentralized, and highly compatible with the Ethereum Virtual Machine (EVM). At its core is a bespoke consensus mechanism called Lachesis, an innovative Proof-of-Stake (PoS) algorithm based on a Directed Acyclic Graph (DAG) rather than a traditional blockchain.
How Does Fantom Work?
Fantom has two core components:
Its consensus layer, Lachesis.
Its mainnet Opera, the network delivering its smart contract functionality.
Together, they create an open-source, permissionless, environmentally-friendly, and secure platform for users to both deploy decentralized applications (DApps) and make digital currency transactions.
What Is Lachesis?
Fantom utilizes a unique Proof-of-Stake (PoS) consensus mechanism called Lachesis, which is built around two different types of data structures:
a traditional blockchain
a Directed Acyclic Graph (DAG)
Lachesis is a Byzantine Fault Tolerant (BFT) consensus algorithm that its creators claim overcomes the Blockchain Trilemma. This is the long-standing issue of having to sacrifice either security, scalability, or decentralization when creating a blockchain network.
Byzantine Fault Tolerance (BFT) refers to a decentralized network’s ability to keep reaching accurate consensus even in the presence of malicious participants or faulty nodes. It’s based on the popular Byzantine Generals Problem.
The BFT algorithm is also asynchronous because nodes on the network can verify transactions at different times and don’t need to exchange finalized blocks in a particular order to achieve consensus (like with other PoS mechanisms). Unlike other similar projects in the crypto world, Fantom isn’t based solely on a traditional blockchain. Instead, it incorporates a different type of distributed ledger called a Directed Acyclic Graph (DAG) to manage transaction data.
What Is a DAG?
A Directed Acyclic Graph (DAG) is another form of data structure – an alternative to a blockchain – that can be a distributed ledger, with some unique advantages.
A graph is a popular data structure based on two components: vertices and edges. Broadly speaking:
Vertices are the points where the data is stored.
Edges are the connections between the data (vertices).
Together, graphs form tree-like structures. With a few extra constraints, graphs can become directed (i.e. flow in only one direction) and acyclic (i.e. impossible to flow in a cycle where following a series of edges leads you back to where you came from).
The property of DAGs to be acyclic is important for distributed networks because it allows for efficient and consistent data propagation. Data can't be sent back and forth between nodes in a cycle or closed loop, enabling greater scalability and data consistency.
Acyclicity also allows for efficient algorithms in graph traversal, making DAGs a powerful data structure for representing complex relationships between data.
Does Fantom Have a Blockchain?
Since Lachesis uses DAGs, you may wonder if any blockchains are a part of Fantom at all. The short answer is yes: Fantom uses both DAGs and chains to manage transaction data.
The data at the vertices in the Lachesis mechanism’s DAG are actually blocks. Validators on the network “gossip” blocks between each other to share any that they’ve found are valid. Once these blocks have been sufficiently propagated through the network, they become root blocks and are added to a main chain. Like with many other networks, a copy of this chain is stored within each node and regularly updated.
The blockchain provides Lachesis validators with easy access to historical transaction data and can be used to process new transactions more efficiently.
Fantom utilized both DAGs and blockchains to get the best of both worlds: asynchronous transaction processing and immutable, secure data storage.
What Is Opera?
Opera is Fantom’s mainnet — the main blockchain network on Fantom that powers its smart contract functionality.
Opera utilizes the aBFT, DAG, and the blockchain-based Lachesis consensus mechanism to secure and decentralize its operations – without sacrificing speed and efficiency. Lachesis’ asynchronous consensus building makes Opera a “leaderless” network where no single validator holds more power or influence than another.
Opera is currently one the fastest blockchain in terms of block finality, which is the time it takes for a block of transactions to be considered immutable (i.e. unable to be changed).
Time-to-finality (TTF) on Fantom clocks in at a little over one second.
Note: Block Time vs. Block Finality
Block time refers to the speed with which new blocks are added to a blockchain.
Block finality measures how long it takes to be relatively certain a block can’t be changed and transactions reversed. It's often referred to as Time-to-Finality (TTF).
Time-to-Finality (TTF) is considered the ultimate measure of a blockchain network’s speed since most participants in such networks value security and accuracy above all else.
Opera Works With Solidity & the Ethereum Virtual Machine (EVM)
The Fantom Opera mainnet is fully EVM-compatible, running the default go-Ethereum virtual machine implementation for executing smart contracts.
Developers building on Fantom can seamlessly port Ethereum-based decentralized applications (DApps) to the network and build native apps with Ethereum’s main smart contract programming language, Solidity. Creating apps on Opera is simple as it’s entirely open-source.
What’s Unique About Fantom?
Fantom is “complete,” meaning that all of the core steps in its development have been covered, and its main functionality has been rolled out. This puts it ahead of many similar projects in the blockchain space. Its one-of-a-kind consensus mechanism also makes it one of the fastest Layer-1 (L1) networks.
Beyond the purely technical, Fantom cleverly utilizes its native FTM token to enable staking and governance for its users (more on that below).
What Is FTM in Crypto?
FTM is Fantom’s native cryptocurrency. It powers the Fantom ecosystem and is primarily used to drive its consensus mechanism through staking and enable decentralized governance on the platform.
Fun Fact: Governance on Fantom is unique thanks to the 5-point scale participants are asked to vote on. When presented with a call to vote, users can pick a number between 0 and 5 to represent how much they support a proposal. In most other organizations, votes are limited to “yes” or “no.”
How to Stake & Earn FTM
Users on Fantom can delegate as little as 1 FTM to a Fantom validator node to generate staking rewards. If a user has more than 1,000,000 FTM (~$430K at the time of writing), they can launch their own validator.
Important: Punishment for misbehaving validators on Fantom includes a penalty that slashes 100% of that validator’s staked FTM. This includes all FTM provided to the validator through delegation. Be careful to choose a reputable validator when staking your Fantom tokens.
There are 64 active validators on the Fantom network at the time of writing.
FTM Tokenomics, Distribution, & Vesting
On Fantom, FTM is used to pay for transaction fees (e.g. gas), generate staking rewards, allow users to engage in on-chain governance, and act as a medium of exchange.
FTM’s total token supply is 3.175 billion. Of that amount:
~40% were sold during seed and private sales prior to the network launch in 2019.
~33% of the supply was reserved for block rewards
12% went to the team and project advisors
6% was allocated to a token reserve
1.5% was sold during the project's initial coin offering (ICO)
7.5% went to the founders
The vesting schedule for FTM is expected to last until December 31, 2025.
What Was the Highest FTM Price?
During the 2021 bull run, FTM reached its all-time high of $3.16 on November 9th.
During the subsequent market downturn during all of 2022, FTM’s price slipped to nearly $0.16 – a drop of almost 95%. This was mainly due to Fantom’s ties to Alameda Research, the now-bankrupt investing firm associated with the FTX collapse.
The token has recovered somewhat since then and – at the time of writing – appears to be rallying, however slightly.
What Is Fantom Wallet (fWallet)?
fWallet is Fantom’s official wallet. You can use it to access dApps on the network, stake FTM, send and receive crypto, and interact with the broader DeFi ecosystem.
It even features a built-in dashboard for governance on Fantom, where you can use the wallet and your coins to vote on proposals.
Check out the official docs for more info on how to use Fantom Wallet.
Who Started Fantom?
Fantom was created in 2018 by South Korean Dr. Ahn Byung Ik, a computer scientist.
In 2019, Ahn stepped down as CEO of the Fantom Foundation and was replaced by experienced Ethereum smart contract developer and colleague Michael Kong. A popular personality in the crypto world, Andre Cronje was also on the team in Fantom’s early days, adding indispensable knowledge about the inner workings of DeFi. He’s best known in the DeFi space for creating yearn.finance, a popular Ethereum-based lending protocol.
Before launching its mainnet in December 2019, the Fantom team had already raised $40 million in venture capital. This was followed by an additional $15 million in 2021, excluding the $35 million from Alameda Research.
Fantom’s list of partners includes some of crypto’s biggest projects: Chainlink, The Graph, and Ren.
The company behind the project includes specialists, scientists, researchers, designers, and entrepreneurs from numerous countries.
Pros About Fantom
There’s no denying Fantom looks like a fleshed-out product that’s full of potential. It’s seen its partner ecosystem grow to hundreds of DApps and protocols – and it’s even managed to partner with a few governments (e.g. Tajikistan, Pakistan) and private companies to tackle various issues.
A strong contender in the L1 space, Fantom’s pros include:
Unique and flexible consensus mechanism
Simple on-chain governance process
As little as 1 FTM required to participate in delegated staking
Speed, scalability, and a fair degree of decentralization
Support from some of the industry’s most important players
Experienced team
Well-organized and user-friendly suite of tools
Full EVM compatibility
Cons About Fantom
Like many other projects in the space today, concerns about Fantom revolve around its decentralization and the pace with which the network is attracting new users.
Fantom’s cons include:
An incredibly high validator participation threshold (1,000,000 FTM needed)
Only 1/3 of the validators on the network need to act maliciously to corrupt the network
Only 64 validators (as of the time of writing)
Is Fantom Centralized?
While Fantom has a very small number of validators, it has a few safeguards to ensure its decentralization. Namely, a 15 million FTM staking limit for each validator node and strict penalties for malicious activity (which can result in 100% of staked tokens getting slashed).
However, compared to some other L1 networks (especially Ethereum), Fantom appears to be significantly more centralized.
Does Sonar Studio Support Fantom?
Yes. Sonar Studio has expanded its indexing to include Fantom’s mainnet, Opera, and now features data about all applications running on the blockchain. This is part of Sonar’s ongoing efforts to index data from all the major blockchains to power our analytics and portfolio management tools.
Want to get more Fantom news and learn about similar crypto projects? Subscribe to our newsletter, so you don’t miss out on the latest Sonar Academy articles and updates on our platform’s development.