As the second oldest EVM blockchain, Fantom served as the gateway to DeFi for many users. Yet, recent mishaps like the Multichain exploit and questionable business moves of prominent figures such as Harry Yeh have cast shadows over its once-thriving ecosystem, leading to a decline in users and liquidity.
However, amidst these challenges, the foundational strengths of Fantom have only grown stronger. Fantom remains the fastest EVM blockchain with a time-to-finality (TTF) of ~1 second. Moreover, the eagerly anticipated “Sonic” upgrade promises to propel the network to sub-second finality, all while slashing storage requirements by 90%.
In addition to these technological advancements, the foundation has launched a ton of recent ecosystem initiatives and development updates, to strengthen its developer community.
In this write-up, we’ll explore Fantom’s fundamental strengths and identify areas of improvement while charting a proposed path forward ahead of Fantom 2.0’s (Sonic) release.
Fantom’s Strengths
Fast & Scalable Tech
Fantom’s strength is rooted in its core technological abilities to process transactions fast and scale effectively.
At the heart of its technology stack is its consensus mechanism, Lachesis, which merges asynchronous Byzantine fault tolerance (aBFT) with directed acyclic graphs (DAGs).
aBFT enables nodes to handle transactions autonomously, eliminating the need for sequential block exchanges and thus speeding up transaction processing. In addition, DAGs, represent interconnected transaction blocks in a non-linear fashion, further enhancing this efficiency.
Fantom’s technology stack has positioned it as the fastest EVM chain. According to a Messari report comparing blockchains based on time-to-finality (TTF), Fantom ranked second overall among all live blockchains, and first in terms of EVM blockchains:
Fantom 2.0 Sonic Upgrade
Scheduled for release in spring 2024, Fantom 2.0 aka the Fantom Sonic upgrade, is poised to make the network the fastest public blockchain.
The Fantom Sonic mainnet will bring forth a series of enhancements to the network, including:
- Fantom Virtual Machine (FVM)
- Carmen database storage
- Optimized User Client (Sonic)
- Optimized Lachesis consensus mechanism
During tests, Sonic achieved 2,000+ transactions per second (TPS) at an average finality of one second. However, these figures represent the upper limit, and the network will offer a far quicker sub-second finality under real-world circumstances.
As for storage, Sonic reduces storage requirements by up to 90%, reducing validator node size from ~2,000 GB to 300 GB and non-pruned archive node size from >11 TB to <1 TB.
These storage reductions allow anyone to launch validator nodes at far lower costs with vastly improved synchronization times and live-pruning support. For instance, archive nodes which previously would take weeks to deploy can be done in approximately 36 hours. In certain cases, the synchronization can be even shorter.
Altogether, these upgrades help the network achieve the following benefits:
- Faster smart contract execution
- Reduced storage requirements for nodes
- Increased transaction throughput
- Reduced confirmation times for transactions
Developer Onboarding/Incentive Programs
To support current and future developers, Fantom is spearheading multiple initiatives to ease the transition to Fantom and provide financial support for emerging teams.
These developer-focused endeavors are integral to the growth of any blockchain, as developers rely on support and funding to focus on doing what they do best: building!
Here are some of Fantom’s latest initiatives for builders:
- Gas Monetization program (GSM)
- Ecosystem Vault
- Sonic Labs
Gas monetization program (GSM)
Fantom’s Gas monetization program (GSM) allows dApps to earn a share of the gas fees their applications generate, giving developers an extra income. Similar to Web2’s creator incentive networks that reward creators for the traffic they garner, Fantom is rewarding teams for the amount of gas fees users spend while using the dApp.
Fantom’s Gas monetization program (GSM) currently rewards eligible dApps with 30%+ of the gas fees they produce. However, Fantom is considering raising the share of fees for certain projects in the future.
Ecosystem Vault
Fantom’s Ecosystem Vault collects 10% of the network’s total transaction fees and distributes $FTM to prospective projects through quarterly funding rounds on Gitcoin.
During these rounds, users vote on participating projects to determine the amount of funding the projects receive from the vault. The last round of funding recently concluded and the Foundation distributed 750,000 FTM to nine projects!
Sonic Labs
Sonic Labs is a start-up incubator for developers building dApps on Fantom’s Sonic testnet.
As shown by blockchains like Solana, ecosystem-level incubators have helped to foster communities of home-grown developers, and Sonic Labs intends to have the same effect on the Fantom network.
With Sonic Labs, developers compete to receive access to private capital from Fantom’s VC partners, direct mentorship from Andre Cronje, and Marc Tillement from Pyth, and other perks including:
- An equal share of 1,000,000 FTM
- Compliance and payroll support from Request Finance
- Company structuring and legal guidance from Fantom Foundation’s Eli Bernstein.
- The opportunity to be part of the official Sonic mainnet launch in early 2024
DeFi Ecosystem
At the heart of any blockchain ecosystem is a thriving DeFi community. After all, users need viable and trusted products to use.
Since 2019, Fantom has been home to dApps that introduce new use cases and push the boundaries of branding.
Some notable Fantom dApps include:
- Tarot – Lending Market
- BeethovenX – Decentralized Exchange
- Liquid Driver – Yield Aggregator
- Reaper Farms – Yield Aggregator
- Equalizer – Decentralized Exchange
- TombPlus – Prediction Market
The Byte Masons team, the creators of Reaper Farm, have been instrumental in Fantom’s initial growth. However, despite the Byte Masons having always shown stark support for Fantom, the team’s latest dApp releases have been on chains like Optimism, and Mantle.
It would be great to see them launch their new dApps and strategies on Fantom, which could help attract more users to the network.
Another potential move that could increase Fantom’s roster of innovative dApps was teased by “the forefather of DeFi”, Andre Cronje, who also happens to be Fantom’s current Director.
Andre Cronje created a Twitter poll to gauge the sentiment around him releasing shelved DeFi prototypes exclusively to Fantom. Answers to the poll were overwhelming, “yes”, and If Andre follows through with launching these new dApps, it could onboard a wave of new users to Fantom.
https://x.com/AndreCronjeTech/status/1750064861931872551?s=20
Strong Core Team
Fantom’s core team represents a group of thought leaders and leading engineers which showcases a high ability to execute. For starters, Fantom’s CEO, Michael Kong is an expert in distributed systems and has held multiple C-suite level positions for crypto hedge funds, and brokerages.
Other notable core team members include Fantom’s Director, Andre Cronje, the “forefather of DeFi” who pioneered OG DeFi products like Yearn and Solidly.
The Fantom team also has an engineering giant on its roster, Prof. Bernhard Scholz. Prof Scholz is a professor at the University of Sydney and has created programming languages used by companies like Oracle. Furthermore, he has contributed greatly to the advancement of virtual machines and the field of computer science, through his research.
Deflationary Tokenomics: Positive price action for speculatoorrs
It’s nearly impossible to predict the behavior of investors (or asset prices), however, tokenomics that favor a deflationary token supply are known to help promote positive price action over time.
The current makeup of Fantom’s supply combined with initiatives launched by the Fantom Foundation is working to help $FTM appreciate over time.
For instance, $FTMs token supply is 88% unlocked, according to CoinmarketCap. After $FTM reaches its cap, token emissions will decrease significantly helping to drive the asset price up.
Another important characteristic is $FTM’s staking percentage. Approximately 47% of the token is staked, and as more holders stake Fantom it will consume more of the circulating supply. Aside from its impact on price action, the high staking rate shows strong community support and increased security.
Lastly, Fantom burns 5% of all gas fees, which itself is an effective measure in gradually decreasing the circulating supply over time.
Banking License
For the past few years, Fantom has been working on a banking license. Though it’s still underway, the banking license would provide DAOs and Fantom users an API-based fiat payment rail. This would allow users to pay for real-world products using assets in their cryptocurrency wallet.
The initial phases of Fantom’s banking license are a great first step presenting an opportunity for future capabilities like off-ramp/on-ramping funds between banks and cryptocurrencies.
Fantom’s Areas of Improvement
Fantom has a great foundation, however, there are notable areas of improvement that Fantom will have to address to garner more users.
Native stablecoin
Fantom has faced its fair share of challenges in recent years. Arguably, the worst event was the infamous Multichain exploit where the multichain bridge was exploited leaving Fantom’s users with stablecoin derivatives worth 20% of their initial values. As expected, this caused outrage as many users tend to hold their “on-chain savings” as stablecoins, using them as a store of value against volatility.
To return funds to users, Fantom Foundation is actively engaged in a legal battle with Multichain to recover the frozen stablecoins totaling approximately USD$65 million. Recently, the court has progressed towards appointing a liquidator, akin to a Chapter 7 bankruptcy in the US, to retrieve and manage bridge assets, evaluate and handle claims, and allocate any recovered funds.
The successful liquidation of Multichain will be a big win for Fantom, however, the Fantom network still requires a permanent stablecoin solution.
With a native stablecoin, Fantom users could access a reliable store of value encouraging them to store more funds on the Fantom network. Additionally, if Fantom wants to compete with other networks to facilitate global remittances and use cases like on-chain payroll, a native stablecoin is a primary requirement.
At the moment, Fantom is integrated with Layerzero and Axelar, which are promising solutions, however, they still rely on bridged assets –bearing much more risks than native stablecoins.
However, there is hope on the horizon. During ETHDenver 2024, Fantom CEO Michael Kong revealed that the foundation is working on creating a “canonical stablecoin.” While the term “canonical” isn’t fully defined, whether Fantom chooses to introduce a native stablecoin similar to USDC or something different like Fantom’s fUSD, Michael Kong appears optimistic that it will address users’ requirements.
Community Support
Fantom has a diligent community that they need to empower more. Fantom’s die-hard fans require a platform where they can engage in discussions about Fantom’s latest innovations, fostering an open channel of communication between the foundation and its users.
To address this need, I suggest that Fantom hosts bi-weekly town halls or ecosystem calls, facilitated by Vertical Blocks, to showcase the most recent updates. These calls could promote unity within the ecosystem, enabling participants to collectively celebrate the successes and discuss the updates of their favorite blockchain.
Additionally, it would serve the foundation good to provide grants for DAOs and community initiatives. By supporting the development of strong communities represented by DAOs, Fantom can demonstrate that is not only a hub for DeFi but also governance and other real-world uses of blockchain technology.
Airdrop
In line with additional community incentives, Fantom Foundation should facilitate an airdrop. The airdrop should consist of multiple rounds, with the first round emphasizing users affected by the multi-chain hack as well as the most consistent users over the past year. If the airdrop is allocated in this manner it could help to (a) strengthen the existing community members and (b) attract new users looking to farm the airdrop in further rounds.
Although some people believe airdrops only invite mercenary capital, I strongly believe that users will appreciate Fantom’s transaction speed, and fall in love with the overall user experience. Moreover, as more dApps emerge –thanks to Fantom Foundation’s developer initiatives– users are likely to retain their funds on the chain for longer periods.
At ETHDenver 2024, Michael Kong has actually confirmed the implementation of a future airdrop for Fantom, which takes into account “the Fantom ecosystem as a whole.” Furthermore, he mentioned the introduction of “liquidity incentives for certain applications on the network to encourage their development.”
Marketing: Fight back using PR
Fantom must enhance its communication strategy to highlight its successes more effectively. While setbacks such as Andre Cronje’s hiatus and the multi-chain exploit garnered significant attention from major crypto news outlets, the chain’s major achievements like Sonic Labs and the partnership with Amazon often go unnoticed.
To address this, the Fantom team should proactively target these publications with press releases, ensuring that positive developments within the ecosystem receive the same level of exposure as the challenges.
By amplifying its accomplishments in the media, Fantom can influence both users and developers to perceive the platform more positively, ultimately accelerating the journey toward widespread adoption. This increased visibility will not only bolster confidence in Fantom but also attract more participants to contribute and utilize its ecosystem, fostering further growth and innovation.
Conclusion
Despite facing some setbacks, Fantom has continued to improve its core strengths. For example, upcoming upgrades like Fantom Sonic will make transactions faster and the network more scalable. Additionally, Fantom is focused on helping developers with programs like Sonic Labs and the Gas Monetization program.
However, there are notable areas of improvement that Fantom will have to address to garner more users. The pursuit of a native stablecoin and the ongoing enhancements to community support and marketing strategies are pivotal for attracting more users and bolstering adoption. Anticipated announcements slated for the end of Q1 2024 indicate a promising trajectory toward addressing these challenges.
By addressing these areas, Fantom can solidify its position as a leading Layer 1 blockchain and attain the users that the novelty of its technology warrants.
