Fantom (FTM) Is Winning Fans In the Crypto-World: Here Is Why You Have To Pay Attention

The past few months in the cryptospace have been dominated by the rise of the so-called Ethereum killers. These are blockchain projects that overcome many of Ethereum's shortcomings including high transaction costs and scalability. Indeed many of those, including Solana ($SOL) have started making headways into fields dominated by Ethereum (ETH); notably in the non-fungible token (NFT) domain. Joining this growing fray is Fantom. Before you yawn and glaze over at the news of another 'Etherum killer', I suggest paying attention to the specifics of Fantom.

To begin with, Fantom has undergone a price rise of nearly 10,000% since 2020 and a 500% rise since August 2021. So people are indeed piling onto ETH alternatives and Fantom touched an all-time high in September 2021 (before declining again). The September boost arguably came from a $320 million incentive program, designed to attract new protocols and liquidity to the Fantom ecosystem.

Figure: Fantom Price Action (Oct 2020-Oct 2021)

What makes Fantom so attractive is its ability to facilitate smart contracts (such as those deployed on ETH). The Fantom blockchain runs on a directed acyclic-graph-based distributed ledger and is integrated with the Ethereum Virtual Machine (EVM) and the Web3JS stack. It uses an asynchronous Byzantine Fault-Tolerant (aBFT) Proof-of-Stake (PoS) consensus mechanism called "Lachesis." Additionally, given ETH's higher transaction costs, Fantom is fast emerging as an alternative for non-fungible tokens (NFTs). However, superior technology and cheaper transaction costs are being offered by many other blockchain projects. To critically evaluate Fantom's investment potential, its important to look at its distinguishing features

What Separates Fantom from the Rest?

To begin with, Fantom has attracted a lot of institutional interest. As of this year, Fantom has entered into a partnership with the international digital assets platform Fireblocks that serves over 200 financial institutions and secures over $400 billion in digital assets. A proposed central bank digital currency (CBDC) platform for the central Asian country of Tajikistan will be built on the Fantom blockchain. The Fantom Foundation will work with OJSC Orienbank, one of the oldest banks in Tajikistan, on a possible CBDC product to be evaluated by the country’s central bank. Uzbekistan would use its technology to modernize the country's IT infrastructure. It's also attracted several DeFi projects and has $850 million in total value locked (TVL) on the system. While no one knows the impacts of governmental entries into the blockchain arena, but a partnership with governments at this stage may be deemed a positive development.

Buy Or Skip?

While Fantom has many attractive features, interested investors should tread with caution. While its transaction speed is high, they are not as high as Solana's. However on the plus side, at under $2, Fantom is much cheaper. It remains to be seen how well Fantom's technology will scale up. Most worryingly, many of its projects were based in Afghanistan and regional turbulence raises questions on not just its Afgan projects but also its existing partnerships in Central Asia. It's unlikely the currency will see a 10,000% jump any time soon, so those interested in this asset will benefit from a long-term perspective. I am personally waiting for the currency to come closer to the $1 mark before moving in.