What is Fantom (FTM)? The blockchain activates smart contracts promising scalability

Imagine a blockchain platform with unmatched speed, security, and decentralization - a platform that can revolutionize the way we think about decentralized finance and smart contract applications. Meet Fantom, a next-generation blockchain platform that solves the inherent challenges of blockchain through its unique technical framework.

What is Fantom (FTM)?

Fantom is a DAG-based smart contract platform for decentralized applications (DApps). So, is Fantom centralized or decentralized?

Fantom is an open, permissionless, decentralized, and highly scalable platform used to build decentralized cryptocurrency applications. DAG is a data structure and modeling technology, where the network consists of vertices and edges, unlike blockchain, which is formed from blocks. As a result, cryptocurrency transactions are represented by vertices and stacked on top of each other.

Simply put, the blockchain system is like a chain, while the design of DAG is like a graph. Dr. Ahn Byung Ik from South Korea founded Fantom Foundation in 2018, and this smart contract project has become one of the most popular blockchains for DeFi transactions.

It was created to address shortcomings, including the long transaction times of previous blockchain platforms like Bitcoin and Ethereum. FTM is the native coin of the Fantom network, which can be used for governance activities, rewards for validators, and network security.

This guide is intended for beginners to the Fantom blockchain protocol in order to educate the community about the Fantom ecosystem by explaining how the Fantom network operates, how to buy Fantom (FTM), and the differences between FTM and Polygon MATIC.

What makes Fantom special?

Traditional blockchain systems, such as the Bitcoin blockchain, are not designed to scale; instead, they prioritize security and decentralization. For example, a transaction on the Bitcoin network can take anywhere from 10 to 15 minutes. This makes scaling the network in terms of transaction volume difficult.

Team Fantom aims to fill this gap by using a leaderless proof-of-stake (PoS) protocol to secure the network (i.e., compromise-free security and decentralization). Furthermore, a transaction on the FTM network takes only 1-2 seconds to complete. In addition, the transaction costs are much lower than Bitcoin.

The mainnet of Fantom Opera is compatible with the Ethereum Virtual Machine (EVM) and fully supports smart contract functionalities through Solidity. What makes Fantom’s network unique is its self-contained nature, meaning the performance bottleneck in one area does not affect other areas of the network. So, is Fantom its own blockchain?

Each application has its own custom (independent) blockchain with specific tokens, governance rules, and tokenomics, thanks to Fantom’s high scalability. The infinite number of decentralized systems form Fantom, which interact with each other while operating independently in their own areas.

How does Fantom solve the difficult problem of blockchain?

“Blockchain’s Conundrum” that Fantom addresses is a major issue. The blockchain conundrum refers to the inability to balance speed, security, and decentralization simultaneously. Fantom utilizes a permissionless protocol and aBFT to process asynchronous transactions, achieving decentralization and security, which speeds up the process.

The Lachesis algorithm is based on the aBFT (asynchronous Byzantine fault tolerance) DAG of Fantom, which is superior to both the Classical and Nakamoto models. Lachesis is an efficient, scalable, and secure alternative solution, allowing developers to create peer-to-peer applications without the need to build their own network layer.

Lachesis is asynchronous, meaning participants can process orders at their own speed. Furthermore, there is no leader and no one plays a “special” role. Additionally, Lachesis is Byzantine fault-tolerant (BFT), meaning it can achieve consensus even when nodes encounter issues, including malicious activity. Finally, Lachesis output can be used immediately. Transactions are confirmed within 1-2 seconds; therefore, there is no need to wait for block confirmation.

The peer-to-peer network and DAG aBFT consensus algorithm are used to connect Lachesis with other Lachesis nodes to ensure that identical commands are processed in the correct order. The same event repeated in different elections leads to fewer consensus messages being generated. As a result, compared to synchronous BFT, Lachesis achieves faster completion times and lower communication costs.

What is FTM used for?

The primary token of the Fantom network is FTM, which is used for payments, governance, staking, and fees, while also securing the network.

Payment

The fast confirmation speed of the Fantom network makes payments faster (about one second). Furthermore, the high throughput and low cost (about $0.0000001) make FTM token ideal for currency exchange.

Administration

FTM is essential for on-chain governance, where stakers can propose and vote on modifications and improvements through governance. As Fantom is a completely permissionless and leaderless decentralized ecosystem, on-chain governance is responsible for all network decisions. Therefore, the governance token, FTM, must participate in the voting process.

Staking

FTM can be used for staking to secure the Fantom network and receive rewards in FTM tokens without the need for special hardware or software. You can do this from your phone or computer — it’s that simple!

Network fee

FTM is used to pay network fees such as deploying Fantom smart contracts, creating new networks, or even transaction fees.

This fee ensures that the network does not become an easy target for spam, and malicious users cannot cause speed issues or congest the ledger with meaningless data.

Although the fees on Fantom are relatively low, they are sufficient to keep attackers at bay by making system intrusion extremely costly for malicious actors.

Network Security

With the proof-of-stake system, the FTM token is designed to secure the network, where stakers need to lock their tokens, and validators need to hold at least 3,175,000 FTM to participate. Epoch fees and rewards are given to stakers and validators for their services.

Conclusion

Fantom is a carefully designed platform for developing and deploying dApps based on digital assets and smart contracts. The tools and components help accelerate and simplify the creation of dApps that operate safely, quickly, and cost-effectively.

The FTM is attractive primarily because of its role in the Fantom ecosystem, but it can also be traded and used to generate passive income when staking within Fantom’s PoS network.

You can check the price of FTM here.