What Is Fantom? A Guide to Fantom's Ecosystem

What Is Fantom?

Fantom is a decentralized, permissionless, open-source layer-1 blockchain for decentralized applications (dApps) and one of Ethereum's rivals, claiming greater scalability and low-cost transactions.

Fantom grew in popularity in late 2021/early 2022, as prolific developer Andre Cronje announced a project built initially on the Fantom blockchain, causing a rush of assets into Fantom protocols.

However, the subsequent failure of the project to live up to the hype, coupled with Cronje's decision to leave the industry — and subsequently the current bear market drawdown has hit FTM extra hard. The token is down over 90% since hitting highs in mid-January 2022.

Fantom 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 (EVM).

It uses Directed Acyclic Graph (DAG) 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 (12-14 seconds for Ethereum) 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 proof-of-stake (PoS) blockchain that is EVM-compatible and uses the Lachesis validator set for approving transactions.

Opera is also home to Fantom-native decentralized finance (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 in some of the Fantom DeFi protocols, as we will see later.

How To Buy Fantom

You can buy Fantom (FTM) on any of the exchanges listed on their respective pages. Here is our step-by-step demonstration on how to buy FTM on Binance.

1. Open Binance and log in to your account.

Create an account if you do not yet have one and pass the KYC verification to be able to buy and trade cryptocurrencies. Choose one of the circled options in the screenshot: buy crypto if you don’t have any cryptocurrencies in your account yet or trade if you want to swap another cryptocurrency for FTM.

2. Select FTM from the dropdown menu.

If you want to buy FTM with fiat currency, select one of the options from the dropdown menu. If you want to purchase with your credit card, select the option and proceed to the next menu, where you have to add your credit card information and pay.

3. Add a credit card and process the transaction.

If you want to swap another cryptocurrency for FTM, head to trade and select convert from the dropdown menu. You will see the following option, where you have to choose which coin you want to swap for FTM (in this case USDT).

Where To Buy Fantom (FTM)

You can buy FTM from different centralized exchanges and decentralized exchanges like Binance, FTX, Coinbase, Kraken, Huobi, Gemini, KuCoin, Bitfinex, Gate.io, SushiSwap, 1inch Exchange, Poloniex and others.

Fantom Wallets

There are several wallet options for the Fantom blockchain.

Fantom Wallet (fWallet)

The Fantom Wallet (fWallet) is Fatom's official web-based wallet. You can send, receive, and stake FTM tokens and other tokens like wrapped FTM and staked FTM. It also supports ERC-20 and BEP-20 tokens.

Metamask

Metamask is the most popular web-based wallet. It serves the Fantom blockchain and other popular blockchains like Ethereum and BNB Chain. With Metamask, you can also buy, store, send, and swap FTM.

Coinbase Wallet

The Coinbase Wallet is the non-custodial wallet of the Coinbase exchange. It has the same functionality as the other wallets and also supports other blockchains.

DeFi on Fantom

Despite the strong competition in the alternative 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 fraudster as CFO. Although 0xsifu (aka Michael Patryn or 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.

The project that Andre was working on was Solidly Exchange, a protocol-to-protocol exchange running on an automated market maker (AMM) model. The hype surrounding this prolific launch resulted in a race amongst Fantom DeFi protocols to accumulate TVL on Fantom — in a bid to obtain a share of future Solidly token. DAOs like veDAO and 0xDAO were formed just to accumulate funds. TVL grew from $3.95B at the start of 2022 to over $8B in about three months.

In a move that caught the space by surprise, shortly after the launch of Solidly, Cronje announced that he is leaving the industry. Unsurprisingly, SOLID crashed, prompting calls of rug pull by crypto users speculating on the token and participating protocols.

Total Value Locked on Fantom

The TVL on Fantom exploded in the winter of 2021 when DeFi applications on Fantom grew in popularity. It multiplied from under $2B to over $5B and peaked in January 2022 at $8.19B, according to DeFi Llama, an analytics site. The total value locked on Fantom now sits at $492M after the Solidly hype died and the overall crypto market entered a bear phase. While almost all chains saw a decrease in TVL, Fantom now sits at a respectable 8th position in TVL, below Optimism and Avalanche.

The Top 10 DApps by TVL on Fantom

According to DeFi Llama, there are 4 Fantom-native DApps among the top 10 by TVL and 6 cross-chain DApps. The top 10 DApps by TVL on Fantom at the time of writing are:

The Top DeFi Projects on Fantom

Fantom has a well-developed ecosystem with dApps mostly focusing on DeFi applications. Most of the total value locked on Fantom comes from DeFi projects. Here are some of the top DeFi projects on Fantom:

SpookySwap
Equalizer Exchange
Beethoven X
QiDao
Geist Finance
Beefy Finance
Curve
Tarot Finance
Spartacus
Yearn Finance
PaintSwap

Decentralized Exchange (DEX) on Fantom

Spookyswap

Spookyswap is an automated market-making DEX based on the BOO token. It is a partner of Popsicle Finance, the money market founded 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.

Equalizer Exchange

Equalizer Exchange is a decentralized exchange (DEX) built on the Fantom blockchain. It allows users to trade cryptocurrencies without the need for a central authority, using an automated market maker (AMM) system. Users can earn rewards by providing liquidity to the exchange and participate in governance by voting on proposals using their EQUAL tokens.

The exchange uses a vote escrow model to incentivize users to vote for their preferred liquidity pools, which determines the allocation of rewards. By locking their EQUAL tokens, users receive a VE-NFT that represents ownership rights to the locked tokens. Voting with the NFT determines the share of EQUAL emissions that the liquidity pool receives for the upcoming week. After voting, the NFT is blocked from movement until the following Thursday. Merging two NFTs involves burning one and transferring its voting power and EQUAL amount to the other. Voting rewards include trade fees and bribes, which are paid out on Thursdays

SpiritSwap

The second most popular DEX on Fantom behind SpookySwap, SpiritSwap is based on the Uniswap constant-product AMM model and utilizes its native token SPIRIT for rewarding liquidity providers on the platform. The platform allows users to swap, provide liquidity, yield farm for rewards, lock SPIRIT to acquire inSPIRIT which can be used for governance and boosted farming rewards.

inSPIRIT can also be wrapped to winSPIRIT (locked forever) to boost farm APYs by 2.5X on Grim Finance and Liquid Driver. The total supply of SPIRIT is 1,000,000,000, of which the distribution is as follows: Farm: 81.82%; DAO: 8.18%; Development: 7.50%; Airdrop: 2.5%.

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 Bootstrapping 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

Yearn Finance

The platform's native token is called YFI, which is used to govern the Yearn Finance ecosystem. YFI token holders can vote on important protocol decisions such as adding new assets to the platform, changing governance parameters, and more.

Yearn Finance is essentially a yield aggregator that uses smart contracts to automatically move users' funds between different DeFi protocols to earn the highest possible yield. The platform supports a variety of DeFi protocols, including lending protocols, decentralized exchanges, and stablecoin pools.

Users can deposit their funds into Yearn Finance's pools and the platform will automatically allocate those funds to different protocols based on the highest yield available. The platform also offers vaults, which are essentially more advanced yield farming strategies that involve leveraging multiple DeFi protocols to optimize returns.

Overall, Yearn Finance aims to simplify the process of yield farming and make it accessible to mainstream users. By automating the yield optimization process, users can earn higher returns without having to navigate complex DeFi protocols on their own.

Stablecoins

QiDao

QiDao is a zero-interest crypto lending protocol that offers stablecoin loans at 0% interest rates.

Lending

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 LobsterDAO communities.

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%).

Vaults

Beefy Finance

Beefy Finance is a top yield optimizer in DeFi, supporting 10 blockchains with over $379M in TVL. It's a multi-chain platform with Vaults allowing users to compound yield farm rewards, and a DAO structure for governance. Beefy built on Fantom due to earning opportunities and compatibility, experiencing great infrastructure and partner support. Fantom's low fees and fast transactions resulted in a successful launch, with almost $40M in TVL currently.

Spartacus DAO

Spartacus DAO is a decentralized reserve currency and the most popular OHM fork on Fantom. Users can bond stablecoins like DAI to mint SPA tokens and then stake these SPA tokens for additional yield. Spartacus DAO was highly popular during the boom of Olympus (OHM).

The Top NFT Marketplace on Fantom

NFTs are just as popular on Fantom as they are on other blockchains. However, Fantom NFTs are not traded on popular Ethereum NFT marketplaces like OpenSea but on native solutions.

PaintSwap

Paintswap is the top NFT marketplace on Fantom. It was first a DeFi platform that aimed to become the premier decentralized automated market maker on Fantom but has since rebranded into an NFT marketplace.

PaintSwap has 2.5% service fees and offers minting tools and basic listing options for NFT creators. It also has a native token for staking called BRUSH, which is used for marketplace listing fees, NFT minting fees and collection fees.

Andre Cronje Rejoins Fantom

In December 2022, news broke that Fantom founder Andre Cronje was returning to Fantom, months after announcing that he was quitting his many projects and leaving the crypto industry altogether.

Much to the dismay of many crypto enthusiasts, Cronje exited the company in March 2022. He blamed his decision on the current crypto culture, citing a “toxic” DeFi community as his primary reason. The founder, who previously created protocols such as Yearn.finance and Keep3rV1, also called for more regulation in the crypto space.

Surprisingly, Cronje is back to Fantom and has accepted a position as a board member for both Fantom Foundation Ltd and Fantom Operations Ltd.

Following his return, Cronje hinted at what Fantom will be working on in 2023. According to him, the primary goal will be to create a sustainable environment for DApp developers, with a core focus on gas monetization, account abstraction, gas subsidies, economic abstraction of gas fees, and new middleware Fantom Virtual Machine, among others.

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