Fantom ($FTM): Full Protocol Analysis
This is a condensed twitter thread of my full essay altcoinevolution.substack.com/p/fantom-analysis
Video Version: youtu.be/JG2nOHT0q2c
TL;DR below in 3ļøā£ tweets, fullš§µ in 47 tweets
a) The promise: Fast transactions, unparalleled developer and user experience, an interoperable dApp ecosystem that connects multiple chains and absorbs TVL from across the cryptoverse.
b) The reality: The chain is currently much slower than expected with transactions getting congested, major key man risks around Andre and being one of the more obscure Alt L1s could prove difficult to overcome.
c) The rub: To eclipse Ethereum Fantom will have to attract the best of the defi space; talent, protocols, projects, TVL and users.
imo it has the strength to do this, but it will take time and the situation is dynamic especially with the rise of the L2s.
Let's find out...
As always not financial advice, informational purposes only.
Also I have linked to the incredible threads done by others at the bottom - let me know if I have missed any good ones!
Part 1: Protocol
1/47 Background: Fantom was founded in 2018 with the goal to solve some of Ethereumās scaling issues, which were very apparent at the time due to the explosive growth in crypto kitties.
2/47 Fast forward it doesnāt look like a partnership came to fruition with Dubai, instead finding partners in Afghanistanā¦ This was pre-takeover by the Taliban of course, so I think itās safe to assume this is on the backburner for now. twitter.com/FantomFDN/status/1396830019830403079?s=20
3/47 The direction Fantom is now taking is to provide:
A fast, high-throughput open-source smart contract platform for digital assets and dApps.
~ @FantomF
4/47 The platform is for designed developers to build their dApps on fully customisable blockchains (similar to Cosmosā zones/hubs, XRPās sidechains etc). This makes Fantom a network of blockchains rather than just a monolithic chain.
5/47 Fantom makes itās own trade offs on the blockchain dilemma, it does have a couple of key features that sets it apart: twitter.com/JackNiewold/status/1473758254522155008?s=20
6/47 Fantom is Based on a DAG system. "There are several advantages [to DAGs], chiefly being greater speed, no requirement for mining, little to no transaction fees, and no scalability issues." ~ The Defiant
7/47 Lachesis Consensus - As for consensus, a full explanation can be read on Fantomās Blog.fantom.foundation/blog/a-brief-intro-to-lachesis-consensus-engine/
Again The Defiant sums up the pros well: "[Lachesis] allows consistently high-throughput, fast finality, and bank-grade security...
8/47 Developers can also use Lachesis to build apps without creating their own networking layer and leverage its core advantages, chiefly being an asynchronous design, leaderless environment, Byzantine Fault-Tolerant, and [TTF] in 1-2 seconds.Ā
~ @DefiantNews
9/47 While the FDN claims it can scale Lachesis into a decentralised network, others disagree: twitter.com/j0hnwang/status/1478798981312483331?s=20
10/47 Fantomās core belief is things need to be fast. However we are currently only achieving 15 TPS (as per ftmscan.com/).
11/47 This does seem to counteract one of Fantomās main draws of being a platform built for speed. The difference in claimed speed vs reality isnāt unusual as @j0hnwang points out: twitter.com/j0hnwang/status/1481701356943650820
12/47 More important than TPS is TTF, which in this case scoreās Fantom some points. Fantom's time to finality is about a second, versus 13 seconds on Solana and more than a minute on Ethereum. ~ @TheMotleyFool
13/47 Ethereum by comparison can take up to 3 minutes to achieve finality. Therefore while Fantom is slow in TPS for now, it reaches finality very quickly which, taking the whole end to end process of writing to a blockchain is still a strong tick in Fantomās box.
14/47 The key part of the puzzle is interoperability. Fantom built itās own chain from the ground up, but took key decisions to ensure it was compatible with the Cosmos SDK, as well as EVM which opens up Ethereum, L2ās e.g. Polygon / Arbitrum / Optimism, Avalanche, BSC and more.
Part 2: Investors and Tokenomics
15/47 Investment Rounds In terms of funding, Fantom is no slouch having raised a combined $40m worth over a series of rounds: messari.io/asset/fantom/profile/launch-and-initial-token-distribution
16/47 The investors are quite varied, but they seem to lack some of the bigger players backing them. Massive caveat in that I have not had time to look at each one, the only name I recognised was Arrington from this article: medium.com/@cryptoresource1/fantom-the-real-solution-of-scalability-425cc371fecc
17/47 Investor Token Allocation: The allocation is heavier than a lot of others in favour of āinsidersā i.e. founders + investors with 70% of tokens in their pockets. messari.io/asset/fantom/profile/launch-and-initial-token-distribution
18/47 Tokenomics (Supply) The total distribution is 3.175 billion. As of today, the circulating supply 2.55b. This means that their is still 0.625b tokens to be released (nearly 20% of the supply).
Full emission schedule @saleswallet via medium.com/general_knowledge/fantom-ftm-deep-dive-serious-potential-5b91123a7c43
19/47 Demand comes from the apps, which typically rely on FTM lockups etc., and staking. Currently about half the available supply is staked, and, the amount staked is up over 10.54% in the last 30 days as per Stakingrewards.com
20/47 Anyone can set up a validating node by staking a minimum of 3,175,000 native FTM tokensā¦ which may be a reason why there are currently only 59 active validators: ftmscan.com/validators
21/47 One of the bigger issues with Fantom is itās level of centralisation. In March 2021 this issue was laid bare and the whole network went down: chainbulletin.com/2-validators-responsible-for-fantoms-outage/
22/47 This situation doesnāt seem to have changed much when we calculate the share of power of the network today we are still seeing the top 4 controlling >50% of the network ftmscan.com/validators
Part 3: Developers
23/47 There is a wealth of information for developers that has been created via the Fantom Foundation, which has lead to explosive growth in the number of developers working on Fantom related project.
24/47 Electric Capital Developer Report (2021, medium.com/electric-capital/electric-capital-developer-report-2021-f37874efea6d) shows Fantom is growing fast in the number of developers, with 4x as many as in 2020. Only Harmony, Terra and ICP are also in this bracket.
25/47 The jump in developer activity may be in part attributed to the whopping grant program of $792m which ranks it in the higher end of the spectrum as we can see from the blockās research report: theblockcrypto.com/post/127723/the-block-research-2021-digital-asset-outlook-report
Part 4: dApps and Usage
26/47 Fantom is now at the 2.28M unique addresses - Ethereumās 189.26m, BNB 6.79M, Cardano 3.45M, Polygon 138.18M, and Luna 3.62M. Avalanche at 2.11M.
@RobotDefi Just covered this too: twitter.com/RobotDefi/status/1498784587794821130?s=20&t=zZguWL3weIQ2V6_t1hw8aQ
27/47 Fantom (1.18M) surpassed ETH (1.16m) in terms of daily transactions BNB (5.35M), Polygon (3.13M), Avalanche (1.03M), FTM has already eclipsed both Solana (133.82K), Cardano (66.34K)
twitter.com/Tweak896/status/1499403624492929024?s=20
28/47 TVL - Undervaluing Fantom:
@JackNiewold pointed out that Fantom is not some random chain with no activity but has a meaningful amount of TVL:
twitter.com/JackNiewold/status/1473758271420829696?s=20
29/47 Compared to now when Fantom is looking even more undervalued on @DeFiLlamaā¦ defillama.com/chains
30/47 This has meant Fantoms MCap to TVL (02 Mar) ratio is now a meagre 0.344... And @j0hnwang thought a ratio of 1.2 was crazyā¦twitter.com/j0hnwang/status/1478798976249905158?s=20
31/47 N.B. MCap/TVL only looks at two dimensions of an ecosystem - so we would want to consider a much wider range of issues to truly compare the various ecosystems (which is what we are doing in the rest of this essay).
32/47 @TheBlock__ compared a selection of L1s. By normalising growth to a 0 point we can see how the chains have grown relative to their starting size. Avalanche leads the way with their tremendously successful Avalanche rush program, followed closely by Harmony.
33/47 Algorand, Solana and Fantom have all had similar uptakes in TVL when the report was written.
However given what we learned above about the massive influx into Fantom in both Jan & Feb 2022, I think we can assume there will be a nice spike upwards in next years report.
34/47 Fantom has an avid and loyal user base which has been growing as the chain has gained popularity. We can see this in increasing volumes of social activity as tracked by @LunarCrush lunarcrush.com/coins/ftm/fantom?section=summary
35/47 The number of dApps is growing with @dAppRadar reporting 144 different dApps. Cardano and Solana lag behind this number but the other chains have more. @Coin98Analytics
twitter.com/Coin98Analytics/status/1494014279477264385?s=20
36/47 SpookySwap vs SpiritSwap is an interest case of two AMMs tussling for domination on one chain. So far it seems SpookySwap is winning the TVL and Volume battleā¦ However Solidly DEX is rapidly claiming TVL: defillama.com/protocol/solidly
37/47 The launch of Solidly has caused some network issues with the recent congestion on the chain: twitter.com/delphi_digital/status/1499204850776686594?s=21
38/47 Time will tell who will reign supreme on Fantom, but for now SpookySwap seem to be pulling away from all DEXs with increasing numbers of users and volume. twitter.com/Cryptonite_club/status/1497519489457410049?s=20
39/47 Overall Fantom ranks pretty favourably in all areasā¦ the MarketCap does seem at the much lower end of the spectrum given both the on and off chain stats.
Part 5 Team and Governance
40/47 The original founder Dr. Ahn Byung Ik, left the project with the CIO Michael Kong, filling the role of CEO along with a strong team of individuals including DeFi superstar Andre Cronje, previously founder of Yearn Finance. fantom.foundation/about/?__cf_chl_rt_tk=kdnKBu6iuSQR0oLW0IOxu.sjSuc77IfHjOH3xNoUuAE-1646400351-0-gaNycGzNCqU
41/xx Governance: The initial Fantom team transitioned into a foundation to steward the development of the chain early on in the project.
It wasnāt until Jan 2021 that we saw the proposal for an onchain governance system which would direct the protocols development
42/47 This brings us to the end of our analysis part now we put it all together for the Bear and the Bull Cases for Fantom.
43/47 š Bull Case
Itās ability to absorb TVL from other chains continues to win over new users and developers
It eventually becomes the chain of choice for DeFi development
44/47 ... cont. Plus thereās no denying that Fantom is still a relatively small chain with strong onchain metrics which does give it potential to produce outsized returns: twitter.com/JackNiewold/status/1473758264806551559
45/47 š» case / headwinds: Thatās not to say Fantom doesnāt face some headwinds in the form of stiff competitionā¦ The onchian summary table from earlier demonstrate the uphill battle they have against the likes of Polygon, Binance, Avalanche, Luna and of course Eth.
46/47... cont. In addition we have the issues as mentioned earlier:
- Issues with scaling Lachesis could require tweaking the algorithm
- Still 20% of the supply to be released
47/47 Overall, Fantom ($FTM) has a strong start in the world and if it can continue to compound its success I have no doubt it will hit the top 10 in short order.
Fantom Protocol legends to follow: @FTMAlerts, @fantom_daily, @crypto_klay, @DoubleyouW3, @j0hnwang, @AndreCronjeTech, @Route2FI,@JackNiewold, @shivsakhuja, @Coin98Analytics, @AvgJoesCrypto and many more
Best of the Mega-Threads in chronological order:
Nov 23rd 21 @milesdeutscher twitter.com/milesdeutscher/status/1463019229762842629
0xGregH (šļø,šŗ,āļø, š¦)
@0xGregH
Web3 start-uper @peerkatofficial, growth hacker @safaryclub & data analyst. Follow me for BUIDL updates and analysis of top crypto projects.