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itcoin may have paved the way for cryptocurrencies but altcoins are where crypto-fanatics’ attention truly lies. But because of the insatiable appetite for anything-but-Bitcoin cryptos, the community has now been flooded with altcoins to choose from. Sometimes, too much choice is a bad thing too.
Since its inception, Ethereum has served as the leading alternative to Bitcoin. However, its high gas fees and expensive valuation has forced crypto fans to look elsewhere. Cardano, Terra and Solana are attractive altcoins but one that’s flown under the radar with incredible upside potential is Fantom. And no, it’s not as scary as it sounds.
Launched in December 2019, Fantom is a localised combination of BnKToTheFutureBFT and Proof of Stake (PoS). aBFT enables the network to process data at different times, allowing it to tolerate up to one-third of participants participating in malicious activities without harming the network at all.
For those who understand the intricacies of blockchain, Fantom’s validation technology is built on a Directed Acyclic Graph (DAG). Its decision tree structure, rather than blocks, is incredibly popular with DeFi developers. DAG technology allows Fantom to process several connected nodes simultaneously.
Without going into too much technical detail, Fantom’s blockchain is safe, solid and most importantly scalable, more so than traditional blockchains like Bitcoin and Ethereum.
One metric crypto investors use to measure cryptocurrency valuations is Total Value Locked (TVL). TVL is the overall value of the crypto asset deposited in DeFi protocols. Fantom’s TVL at the time of writing is US$8.72 billion. According to Coin Market Cap, Fantom’s market capitalisation is US$5.62 billion. This gives it a market cap/TVL ratio of 0.64. Meanwhile, Ethereum has a ratio of 3.06, Solana’s is 3.82, and Cardano has a MC/TVL of 1.27; all are considerably higher than Fantom’s.
Based on MC/TVL, Fantom is incredibly undervalued in general but especially compared to its competitors. Having a market cap which is smaller than its TVL is a rarity among dominant coins, and as we’ll discuss, Fantom should seriously be considered as a leading crypto.
Funnily enough, Fantom is locked across three major “ghost” themed decentralised exchanges: Tomb Finance, SpookySwap and Spirit Swap. US$716 million is locked in Tomb Finance, US$1.48 billion in SpookySwap, and $335 million in Spirit Swap. US$529.80 million is also locked in Beefy.finance.
Fantom’s daily transactions have been on the rise over the past three months too. Although Ethereum still has the lead in this area, with around 1.2 million per day, Fantom is not too far from that figure, which is impressive considering the altcoin is not in the same realm of “importance” as ETH.
Analysts are citing new products and higher yield rewards for the explanation of Fantom’s transaction growth.
“Many projects like Radial, veDAO, and 0xDAO came up with liquidity mining launches that vampire-attacked other protocols to gain TVL. These projects share a lot of resemblance to [‘DeFi summer’] projects in 2020”, wrote crypto research firm Delphi Digital.
As mentioned above, decentralised exchanges (DEXs) including Tomb Finance, SpookySwap and Spirit Swap have locked in high volumes of Fantom. Liquidity pools in these DEXs are pegged to Fantom, which requires people to deposit the currency.
Fantom smart contracts are compatible with Ethereum’s virtual machine, meaning these contracts can be built in the same language as Ethereum. Essentially, a developer builds something on the Ethereum network, they can copy their work directly onto the Fantom network. Major Ethereum-based DeFi protocols including SushiSwap and Yearn Finance have already integrated Fantom.
Developers are also integrating Fantom due to the network’s incredibly fast transaction speeds of less than 1 second, and extremely low network fees compared to Ethereum
Furthermore, Fantom is Solana compatible. In February 2021, Alameda Research invested US$35 million into Fantom to “collaborate with the Fantom Core team integrating Solana, Serum, Raydium, and other cross-chain products”.
Speed, Security and Scalability
Fantom’s high speed consensus mechanism Lachesis is truly remarkable. Whilst Solana can process 50,000 transactions per second (TPS), its time to finality (TTF) of 10-12 seconds is slower than Fantom’s. Fantom claims its time to finality is under 1 second – making its verification time the fastest in the market. Although Fantom’s current TPS is around 30,000, its capacity is 300,000.
If Fantom can achieve a TPS of 300,000, it would elevate the bar for rival blockchains and revolutionise the DeFi space. As my eloquently-tongued colleague so sophisticatedly put it, “it’s f**king illogical that something truly decentralised can reach a few thousand TPS let alone 300,000 TPS.”
As it stands, Fantom is already offering unprecedented TPS but its potential to hit 300,000 means it’s incredibly scalable. What’s more, thanks to its leaderless proof-of-stake protocol, Fantom does not jeopardise its security and decentralisation in favour of scalability.
Andre Cronje and his Incentives
Andre Cronje is the DeFi architect of Fantom. Those familiar with the name will attest that Cronje’s involvement with the project adds immeasurable value. Described as a “prolific coder and legendary DeFi founder” by Crypto Briefing, Cronje’s credentials include Yearn.Finance Founder, DeFi architect behind curve.finance, and a number of other prominent DeFi projects.
Cronje is also set to Airdrop his ve(3,3) DeFi project updates on the Fantom blockchain. The South African developer described the project as an “emission based token that could balance ecosystem participants”.https://www.youtube.com/embed/XUIQg23GKKU?feature=oembed
Through the system, users deposit the base token in return for a non-transferable token, which will be locked in the protocol. They will then receive transferable incentive tokens as a reward.
When Fantom announced a 370,000,000 FTM incentive program in August, adopters of the coin surged. Since the program, 21 teams have received incentive rewards and more than 22 million FTM have been distributed.
Although Fantom’s technology can be utilised by anybody, their focus was on company use. From food delivery to medicine, payment systems can be executed through Fantom’s smart contracts efficiently, safely and quickly. Each agent involved in the transaction can be further rewarded by Fantom too.
Furthermore, Fantom claims to be the world’s most eco-friendly blockchain in the world, even consuming less power yearly than a single average US household. “Even as network usage grows, Fantom’s overall energy consumption will remain orders of magnitude lower than other blockchains,” the Fantom Foundation claims.
At a time when environmental concerns are at their highest, and whilst the world waits for Ethereum 2.0, Fantom’s eco-friendly tech is invaluable.
Fantom is also accessible on major crypto exchanges such as Binance. Although it is yet to be supported by Coinbase, it seems almost inevitable that the US-listed company will host it. This once again adds to the growth potential of Fantom.
Amidst the so-called Crypto Winter, Fantom’s FTM price has fallen drastically from its highs of US$3.48, which it reached last month. Although not quite as low as US$1.88, which it hit in late January, Fantom’s current price US$1.99 is still an interesting value proposition.
One month chart FTM/USD: Coinmarketcap
Although price has been attracted to this apparent bottom value level three times now since the end of January, it is not a given that price is supported here. With that said however, there has been an upside reaction today as bottom fishers stepped in to bid Fantom. At this stage it’s too early to call for a full on upside reversal in FTM, because there is still work to be done.
The first step towards this would be an upside clearance of the January downtrend return line around US$2.10 and some constructive price action thereafter. If a breakout does occur, then its reasonable to assume a pullback to the top of the breakout level and this would be the more attractive risk/reward entry level.
Whilst mainstream crypto investors are preoccupied in determining which altcoin is better between Ethereum, Cardano, Solana, etc, opportunistic investors should seriously add Fantom into their roster of cryptos. Unlike its competitors, Fantom is still in the infancy of its growth story, but yet is already (literally) outpacing its rivals.
Thanks to recent bearish market sentiment, Fantom’s price has been depressed. Don’t ghost this opportunity to catch Fantom at its low price, or you’ll soon be haunted with regret.
Disclaimer: the author was holding FTM at the time of writing