Fantom is designed for DeFi, providing a directed acyclic graph (DAG) smart contract platform with a unique consensus algorithm aimed at bringing down transaction speeds for smart contracts. Its developers claim that Fantom's infrastructure can process smart contracts in under two seconds, making it a highly attractive platform to build fast and highly capable DeFi projects and other dApps on.

The cryptocurrency FTM, which is the native token used within Fantom's ecosystem, is ranked 34 in terms of market capitalization as of October 2021. It offers compatibility with DeFi leader Ethereum, making it possible for users to purchase ERC-20 standard FTM which gets automatically converted to the native FTM upon receipt into users' wallets. Another version of the FTM token uses the BEP2 standard for compatibility with the Binance Smart Chain, making it a highly versatile crypto from a DeFi perspective.

In 2020, FTM enjoyed an ROI of nearly 60%. However, 2021 being the year of DeFi saw the token really explode and make a big splash in the crypto sector, giving back an ROI of almost 10,000% in one year till October 2021.

FTM Breakdown

A Layer-1 blockchain, Fantom leverages a brand new consensus mechanism called the Lachesis consensus engine or Lachesis protocol. This protocol leverages a DAG-based algorithm to achieve asynchronous Byzantine fault tolerance (BFT) and has been implemented as a consensus layer in Fantom. Over this layer sits Fantom Opera, an EVM-compatible smart contract platform that uses a PoS consensus and Lachesis to validate transactions and generate new blocks.

Like Ethereum, Fantom offers a robust ecosystem to house dApps and DeFi projects, with a mission to "grant compatibility between all transaction bodies around the world." This is a key strength which offers hope for a promising future ahead, especially as it incorporates the principle of interoperability and can potentially support communication and transfer of tokens from its ecosystem into different blockchain networks, and vice versa, giving dApps far higher levels of scalability than can be offered by a single blockchain.

The Fantom Foundation, which manages the blockchain network, has on its board Yearn Finance's founder Andre Cronje as a technical advisor. The addition of Andre to the team ensures its commitment towards fostering the development of the DeFi ecosystem, in addition to driving more interoperability.

Fantom History

Fantom was founded by Dr. Ahn Byunk Ik, a South Korean computer scientist, and its team of developers include specialist engineers, scientists, researchers, designers and entrepreneurs, giving it comprehensive support in its development. The Fantom Foundation was set up initially in 2018 and its EVM-compatible smart contract platform Opera saw its mainnet launch taking place in December 2019.

In May 2019, the foundation also announced that it would partner with Binance Chain on efforts towards developing interoperability by fostering the creation of a multi-asset and cross-chain ecosystem. This involved the creation of FTM's ERC-20 and BEP-2 versions, which allowed dApps from Ethereum and BSC to integrate with Fantom's Opera in early 2021.

In May 2021, the Fantom Foundation announced the addition of Application BlockChain Interface (ABCI) to the Lachesis protocol, making the consensus mechanism even more versatile. The update gave Lachesis all the functionality from Tendermint, allowing transactions to be processed in any programming language.

FTM Price Factors

Like most other cryptocurrencies, the Fantom price is subject to high levels of volatility and unpredictability. One of the biggest drivers of the FTM rate is moves in market leaders such as Bitcoin and Ethereum. As the largest cryptocurrencies, investor sentiment towards BTC and ETH often have a positive correlation on FTM price as well, sending it higher when they trade bullish and vice versa.

Positive news of adoption of cryptocurrencies worldwide also offer support to FTM's price while negative news reports, especially those concerning increased regulatory scrutiny towards the crypto market in general tend to scare investors off Fantom and other digital currencies, causing a drop in its value.

As a blockchain known for its DeFi capabilities, news specific to the DeFi sector also plays a key role in driving the Fantom rate. Increased adoption of Fantom's ecosystem by DeFi projects and dApps tend to boost on-chain activity on the network and support an uptrend in FTM's value. However, if more projects move away from the Fantom ecosystem to other blockchains, the FTM price takes a hit.

Trading Fantom

Fantom is an exciting cryptocurrency to trade with significant potential for growth but requires quite a bit of care. To start with, it would help to get an understanding of how cryptocurrencies work, the underlying technology and market drivers. In addition, you should stay updated about all the current events that can impact Fantom's price, including fundamentals and news related to cryptocurrencies in general, market leaders such as Bitcoin and Ethereum as well as all the latest developments related to DeFi. Understanding how the DeFi sector works is an essential factor that can help you trade FTM confidently.

Once you have done your research, you can register for an account with a crypto exchange or broker that lists FTM as an option for trading on their platform. You can then convert your trading capital from fiat to buy, trade, hold and sell FTM based on the price action and your analysis of the market trends.