Chain dissection. Fantom
The Fantom chain has been going through tough times. Although, what network is not going through tough times right now? Anyway, let’s dissect Fantom and find out.
You will learn about:
– Features of the Fantom ecosystem
– FTM tokenomics
– Role of Cronje
– Multichain hack
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– Future plans
Structure and specifics
Fantom is a layer 1 blockchain platform for running decentralized applications, that uses Delegated Proof-of-Stake (DPoS) asynchronous Byzantine fault-tolerant (aBFT) consensus mechanism known as Lachesis.
- Lachesis’s asynchronous approach to consensus differs from probabilistic approaches, such as those utilized by Ethereum. In probabilistic consensus, validators agree upon entire blocks by sending the proposed blocks to one another, while in asynchronous consensus, validators agree upon the transactions and data that individually make up each block rather than the blocks themselves. This design allows the network to operate without issues stemming from block reorgs and the longest chain rule.
FTM tokenomics
- Standard: FTM & ERC-20
- Circulating supply: ~ 2.8 billion
- Total supply: 3,175,000,000 FTM
- Maximum supply: 3,175,000,000 FTM
- Current Market Cap: ~ $560 million
- Current price: ~ $0.20
- All-time high: $3.48
- Current inflation rate: 10.16%
- Inflation structure: The supply of FTM is expected to be fully vested on December 31, 2025, which means the tokenomics will become deflationary.
Interesting fact: Fantom’s staking ratio (the proportion of Fantom’s total supply actively being staked) is relatively high versus other networks like Ethereum and Polygon. At the time of writing, Fantom’s staking ratio is 49% versus Ethereum’s 20% and Polygon’s 36%.
Role of personality in history: Andre Cronje’s case
Andre Cronje, hailed as the godfather of DeFi, is the reason for both rises and falls of the network. He did introduce a lot of innovation to DeFi and to Fantom, but in early 2022, Cronje sold his tokens, making billions and pulling out of crypto. After that, he left Fantom and started harping on crypto being a scam that needed regulation. Then, at the end of 2022, he came back with the article “How cool and underestimated Fantom is”. The FTM price was reacting accordingly all the way, falling and rising several times over. So, the fate of an entire ecosystem being tied to one person is a very bad thing, whether the technology is good or bad. Although it is kind of okay when it comes to meme coins, as in the case of Dogecoin.
Multichain hack
Multichain is a large cross-chain bridge that supports more than 25 chains and more than 1100 tokens. On July 7, 2023, it was hacked with a loss of $126 million. Asset losses in the Fantom amounted to more than $100 million.
Multichain is an issuer of $USDC, $DAI, and $fUSDT stablecoins on the Fantom chain. And it was the only bridge available to transfer funds in and out of Fantom before omnichain solutions such as LayerZero came along. We can even speculate that Multichain was managed by the Fantom team, because they tweeted about the Multichain hack even before Multichain did, and had the largest share of locked assets there, equal to 35% of the total TVL. Anyway, right after the hack, all lending protocols were halted due to the depeg of those 3 stablecoins that were managed by Multichain. TVL in Fantom dropped by about $40 million in a few days.
Future plans
One of Fantom’s initiatives for 2023 is its Gas Monetization program, aiming to reward high-quality applications and offer a sustainable income for developers with a portion of the transaction fees they generate for the network. So far, the Gas Monetization program has accrued ~118,000 FTM as rewards for protocols.
Alongside the Gas Monetization program, Fantom plans on incentivizing builders and developers through its Ecosystem Vault. In Q4 2022, the Fantom Foundation launched the Ecosystem Vault, introducing a decentralized funding process to support ecosystem builders. With the initiative, one-third of the 30% transaction fee burn rate (at the time) would be redirected to a Special Fee Contract (SFC). Through on-chain governance, validators can allocate funds from the SFC.
Output
While the Fantom ecosystem has brought many innovations to DeFi, there is not much unique to the network right now. The Multichain hack severely impacted local DeFi, and it will take a lot of time and effort to regain users’ attention. This is possible while Cronje is in charge, but what happens if he leaves again?
