What Is Fantom? A Guide to Fantom's Ecosystem
Crypto Basics

What Is Fantom? A Guide to Fantom's Ecosystem

Created 3mo ago, last updated 2w ago

CoinMarketCap Alexandria takes a look at a promising layer-1 blockchain. Grab a blanket if you’re scared of ghosts and spooky stories because we’re focusing on Fantom today!

What Is Fantom? A Guide to Fantom's Ecosystem

Table of Contents

What Is Fantom?

Fantom is a decentralized, permissionless, open-source layer-1 blockchain for dApps and one of the biggest Ethereum’s rival. It has been live since December 2019 and attempts to resolve the blockchain trilemma through its innovative architecture, which combines scalability, security, and decentralization.
Its architecture is based on a single consensus layer integrating several execution chains. This consensus layer – Lachesis – has been developed by the Fantom Foundation as the base layer for its Lachesis Protocol, Fantom’s version of the Ethereum Virtual Machine. It uses DAG (Directed Acylic Graph) technology to improve the slow transaction finality and high transaction fees of traditional Proof-of-Work blockchains like Ethereum.
The first layer on top of Lachesis is an EVM-compatible smart contract platform called Opera. In contrast to Ethereum, where gas wars can lead to exorbitant transaction fees or long waiting times for transaction settlement, a smart contract interaction on Fantom has a transaction finality of one second and costs a fraction of a cent.

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How Does Fantom Work?

Fantom uses a consensus mechanism called Asynchronous Byzantine Fault Tolerance (aBFT), allowing it to achieve high throughput and low fees while maintaining scalability and security.
In Fantom’s aBFT consensus mechanism, nodes can process transactions asynchronously without having a designated leader. The Lachesis Protocol has a fault tolerance of one-third, meaning 67% of nodes have to validate a transaction to settle it. Its near-instant finality of one second contrasts the block confirmation time of proof-of-work blockchains and allows Fantom to operate in a faster and more scalable way.
Lachesis acts as the settlement layer, which additional layers can be added on top of. The first – Opera – is a PoS blockchain that is EVM-compatible and uses the Lachesis validator set for approving transactions. Opera is also home to Fantom-native DeFi applications, as well as those that have expanded from Ethereum to Fantom such as SushiSwap, Curve, and Yearn Finance.
Its FTM token is used for staking, governance, payments, and fees, with a total supply of 3.175 billion FTM. Users can stake FTM for 4% APY or choose Fantom’s Fluid Rewards and lock up their FTM for up to 12% APY. Vesting also plays an important role for some of the Fantom DeFi protocols, as we will see later.

Fantom and DeFi

Despite the strong competition in the layer-one blockchain space, Fantom has established itself as a legitimate contender thanks to its strong focus on DeFi use cases. This is particularly due to Yearn Finance founder Andre Cronje, who is also a technical advisor to the Fantom Foundation. Cronje has been instrumental in advising and expanding Fantom’s multi-chain development and has helped with launching its bridge to Ethereum.

At the beginning of 2022, Cronje announced that he and Daniele Sestagalli were working on a new product on Fantom. Cronje announced as much in a tweet on New Year’s Day:

Although details still have not been revealed as of February, the project is rumored to be a collaboration of the two prolific DeFi developers. It could involve one or several of the protocols led by Sestagalli, such as Abracadabra Money and Popsicle. Sestagalli is the self-proclaimed leader of “Frog Nation,” a crypto-native movement focused on preserving decentralization in DeFi. He announced the collaboration on his Twitter:
However, the project is up in the air after one of Sestagalli’s biggest projects, TIME, was exposed to having a convicted credit card fraudster as CFO. Although 0xsifu, aka Michael Patryn, aka Omar Dhanani, was voted out as the protocol’s CFO, Andre Cronje publicly vowed to continue building with Sestagalli, no news about their cooperation has been announced.

Fantom Ecosystem

Fantom has a well-developed ecosystem with dApps mostly focusing on DeFi applications. According to DefiLlama, its TVL is already $9b, putting it ahead of blockchains with a higher market capitalization, such as Solana and Polygon. Much of the recent growth in total value locked has come due to speculation around the aforementioned joint venture by Andre Cronje and Daniele Sestagalli. In a Medium post, Cronje announced the so-called ve(3,3) project would be an AMM supporting swaps of correlated and uncorrelated assets alike.

However, Fantom already has a number of highly popular protocols.

Spookyswap

Spookyswap is an automated market-making DEX based on the BOO token. It is a partner of Popsicle Finance, the money market built by Daniele Sestagalli. Spookyswap provides the classic functions of a decentralized exchange like token swaps, yield farming, single-staking pools, but also NFTs and a bridge.
Token swaps are charged at 0.2% per swap. 0.17% go to liquidity providers and 0.03% to BOO stakers. Users can stake their BOO in single-staking pools to earn more BOO and receive xBOO, which can, in turn, be staked to earn other tokens like wFTM. Spookyswap also offers a bridge to and from several other blockchains like Ethereum, BSC, Polygon, Avalanche, Arbitrum, Harmony, Cronos, and UEC. Finally, the exchange released two sets of NFTs – Magicats and official Spookyswap NFTs – that contribute to the Spooky economy by earning royalties that go into buying back BOO.

Scream

Scream is a decentralized lending protocol providing transparent and non-custodial lending solutions for “high-velocity markets" to improve capital efficiency across the Fantom ecosystem.
Similar to money market protocols like Compound, Cream, and Aave, users can borrow and lend capital by using crypto assets as collateral. Scream supports several different assets like WBTC, WETH, WFTM, DAI, USDC, etc. It aims to be one of the highest liquidity platforms on Fantom to provide users with the best possible incentives.
A unique feature of Scream is its so-called ScLoans, developer tools for undercollateralized loans that have to be returned within one transaction block. They apply for several use cases like arbitrage and collateral swapping opportunities and interest rate swapping. Instead of going through the lending pool, developers can interact directly with the scToken – the token used for flash loans. Fees for flash loans are 0.02%.

Geist Finance

Geist is a decentralized non-custodial liquidity market protocol, where depositors can provide liquidity to earn a passive income, and borrowers can receive flash loans or regular overcollateralized loans. It is based on the Aave money market and rivals other AMM liquidity protocols on Fantom.
Geist operates without governance or ownership, meaning that it does not have a protocol treasury. 50% of protocol revenue is redistributed to GEIST stakers. Liquidity miners on Geist receive rewards with a three-month vesting period, which can be dodged by paying a 50% penalty on claimed rewards. Penalty fees are subsequently redistributed to stakers. Users who vest their GEIST also receive protocol fees from token swaps.
A unique feature of Geist is its generous airdrop allocation (20%). Airdropped GEIST is vested linearly over one year and can be unvested in the same way as staked tokens (applying the penalty). Airdrops have so far been provided to the Aave, Ellipsis, and Lobser DAO communities.

Beethoven X

Beethoven aims to be a “one-stop decentralized investment platform” on Fantom. It is built on Balancer V2 and calls itself the “first next-generation AMM protocol on Fantom.” Beethoven offers different money market products like weighted investment pools, stable pools, and token swaps.
With weighted investment pools, users can collect fees from traders rebalancing their portfolios by following arbitrage opportunities. A pool can consist of up to eight different tokens, with each token assigned a different weight based on its weight in the pool. Assets like stablecoins or synthetics with relatively little volatility are traded in the Curve-like StableSwap AMM.
Moreover, Beethoven allows token launches through its Liquidity Boot Strapping Pools (LBP). An LBP Launch is similar to a crowdfunding mechanism. It allows for transparent price discovery, fair distribution of new tokens to the community, and the ability to bootstrap liquidity for new projects. Since Beethoven is permissionless, anybody can create an auction and do an LBP

Tarot Finance

Tarot is another decentralized lending protocol, where lenders and borrowers interact in isolated lending pools (see a pattern here?). It is essentially a clone of several of the previously mentioned protocols, as Tarot provides the same non-custodial, permissionless lending and borrowing. In addition, users on Tarot can also engage in leveraged yield farming.
Tarot rewards liquidity providers through its Tarot Vaults. Users can automatically earn rewards by providing their LP tokens in lending pools that support Tarot Vaults. The provided liquidity is automatically staked in the vaults and generates additional rewards. Upon withdrawing the LP tokens, the liquidity is also withdrawn from the vaults. A permissionless bounty system enables reinvestment and can be initiated by anyone for the pending reward of a pool. In return, they keep a small percentage of the reward as a reinvestment bounty (1%).
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