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Fantom (FTM) set out to solve the blockchain trilemma and end the need to compromise scalability, security, or decentralization. The breakthroughs they made during the development necessitated a migration to a completely new chain, and the Fantom Foundation has announced a rebrand to Sonic.
What are the foundations of the Sonic Chain, previously Fantom (FTM)? How will this migration work? The ChangeHero team explains in this guide.
Key Takeaways
- Fantom is a smart contract platform built on a layer-one distributed ledger that uses a directed acyclic graph (DAG) to secure transactions. DAG achieves near-instant finality and high transaction speed because it allows them to be processed asynchronously.
- Fantom supports several application layers, each secured with the FTM token. FTM is necessary for staking, paying transaction fees, and voting.
- In August, Fantom announced a rebranding to Sonic (S). Developers and Fantom (FTM) holders will be able to migrate to the new, improved chain when it launches in Q4 2024, although the old one will not cease to exist.
What is Fantom?
Fantom does not use a blockchain like Bitcoin and other cryptocurrencies do. Instead, it uses a similar but non-linear structure — a directed acyclic graph (DAG) with its own advantages and challenges.
Consensus Protocol Lachesis
At its core, the integrity of records in Fantom is secured with Byzantine fault tolerance like in most proof-of-stake blockchains. To achieve this with a directed acyclic graph, Fantom developers came up with a type of BFT-securing protocol that works asynchronously.
In a linear blockchain, ideally, there is only one block from which the sequence can be continued. If competing miners create a block at the same time and nodes register them simultaneously, the chain can be split temporarily.
The core consensus layer Fantom uses, called Lachesis, can accept two or more blocks that get produced simultaneously, preventing transactions from failing. Another defining feature of Lachesis is that this bespoke consensus algorithm is leaderless, so every block producer has equal status.
Application Development Layer Opera
With the Lachesis aBFT consensus engine as the foundation for security, the second layer, Opera, is reserved specifically for building. Opera is Fantom’s mainnet deployment platform, with one of its key features being Ethereum virtual machine-compatible. In simpler terms, it means anything that can run on the Ethereum blockchain, can run on Fantom, too.
In fact, Opera is only one of the execution chains that can be supported by the Lachesis consensus layer. This is why Fantom can support chains fashioned after other blockchains such as Binance Smart Chain or Ethereum.
Sonic Chain
In October 2023, the Fantom Foundation announced the new technology stack, Fantom Sonic. It is built on the same technology as Opera but with considerable improvements overall. More specifically, transaction speed, efficient transaction processing, gas fees, and storage are all supposed to be a few times better than in the original stack.
This August, the news broke out that the entire network would migrate to the Sonic chain, including the native FTM tokens. Sonic utilizes its own utility token S, so Fantom (FTM) holders will need to migrate their digital assets and convert them into S.
History and Team behind Fantom
The main principles that Fantom uses were described in 2018 by a set of researchers and cryptographers. Key contributions were made by Quan Nguyen, Sang-Min Choi, Jiho Park, Michael Kong, and Andre Cronje.
The team and company that has supported the Fantom product offering is the Fantom Foundation. Kong and Nguyen serve there as CTO and CIO respectively, while Cronje used to contribute as an advisor. After briefly quitting crypto, he would later return to an executive role as the CTO of Sonic Labs.
The development and launch were funded with proceeds from the presale, held in 2018 in February and June in four rounds. The Foundation raised about $45 million in funding from Alameda Research, Block Tower Capital, and other VCs from around the world.
The testnet for the platform went live in 2018, and v.0.1 with Opera was released on the mainnet in December 2019. The latest upgrade the Opera chain has received was greenlit in October 2023, and at that time, the Foundation planned to support both Opera and Sonic chains.
To support the projects building on the emerging chain, Fantom Foundation established Sonic Labs in late 2023. What started as an incubator by August 2024 would become the new brand for the whole crypto project.
What is FTM?
Fantom’s security protocol Lachesis is essentially a Proof-of-Stake specification. And in Proof-of-Stake, native digital assets are used to represent monetary rewards and sometimes, voting power.
Moreover, in Ethereum Virtual Machine-powered platforms, the nodes operating EVM are also incentivized with tokens. To execute smart contracts, users pay for gas with a native token.
Fantom supports several networks, each with its own token. The Ethereum chain of Fantom uses the ERC-20 FTM token, and the Binance Smart Chain needs BEP-2 FTM.
The total supply of 3.175 billion FTM was minted at launch. 40% of it was sold to investors, with the rest going to the team, advisors, and to the staking rewards pool.
The team’s and advisor’s FTM were released into circulation three months after the launch, in November 2020. By the time of writing, all FTM tokens have entered circulating supply but with the launch of Sonic chain on the horizon, new challenges are on the way.
What are FTM tokens used for?
Let’s recap the several ways to use the FTM coin:
- Staking. If you are not meeting a requirement of 1,000,000 FTM to run a validator node, you can delegate as little as 1 FTM and receive a proportional reward. The team claims the current APR for a FTM stake or delegation is 4%, or 13% for a year-long commitment.
- Network fees. Any transaction, be it a token transfer or an EVM call, incurs a fee in FTM. This fee will be used to pay the validators.
- Voting. Validators can take part in an on-chain vote regarding things such as block rewards and technical committees. Delegators can’t use their stake to vote but they can pick the validator that will represent their views.
What about the S tokens on the Sonic chain? In addition to all of the above, the Sonic tokens are expected to have a dedicated use case in the Ethereum Gateway. For now, no further details as to what it could imply are available.
Comparison with Similar Projects
Fantom was not the first project to set out to solve the blockchain trilemma: scalability, security, and decentralization. Algorand also strives to solve this problem.
The differences between these two are structural: Algorand uses probabilistic finality while Fantom opts for asynchronicity. Algorand is also layer-one first in design, while Fantom puts significant attention toward sub-chains.
Fantom wasn’t the first platform to use directed acyclic graphs either. Another example of a DAG network is IOTA’s Tangle ledger, which does not have transaction fees at all to be usable in Internet-of-Things.
Finally, in structure, Fantom is more similar to the Cosmos blockchain, with its security layer and application layers. In fact, you can use the Cosmos SDK to build on Fantom.
What is the future of the Fantom ecosystem?
At the time of writing, according to DefiLlama, Fantom (FTM) Network accounts for over $100M in total value locked (TVL). What is next for all the projects in this ecosystem, after the migration?
Some fundamental incompatibilities allegedly prevented the developers from updating the Opera chain with a soft fork to the Sonic stack. Nevertheless, the networks remain compatible, and all projects can freely migrate from Opera to Sonic chain. Moreover, Sonic Labs announced a $100M ecosystem fund to boost development on the new chain.
FTM holders can also expect to gain some more from the transition. The Foundation has announced an airdrop for Fantom (FTM) holders and builders to incentivize migration. However, the airdrop and ecosystem development rewards would come from the increased token supply, although the Foundation claims to have burning mechanisms in place to counter inflation.
How to store Fantom?
To access to all the features of Fantom, the developers suggest using the Fantom Wallet. If you are frequently using other cryptocurrencies, though, you might want to look at multi-coin alternatives.
Fantom (FTM) can be stored in the Exodus and Arctic wallets, where you can instantly trade Fantom (FTM) with any other supported cryptocurrency with ChangeHero. The ERC-20 FTM has even wider support, with CoolWallet and Edge as more options.
If you are looking for a more reliable Fantom crypto wallet, Trezor and CoolWallet cold wallets also support FTM in native and token forms.
Where to Buy Fantom Crypto (FTM)?
FTM can be traded on some crypto exchanges but it comes with a lot of unnecessary hassles. You have to create an account and deposit funds into the exchange’s custody, giving up your control over them.
ChangeHero is an alternative way to trade FTM against any currency supported by the service. It’s a non-custodial instant cryptocurrency exchange, so you won’t have to worry about losing access to your funds or setting up an account.
For your convenience, FTM can be bought on ChangeHero in five easy steps:
- Choose the currencies on the home page, amounts, and the type of exchange. Provide your wallet address in the next step and check the amounts;
- Double-check the provided information, read and accept the Terms of Use and Privacy Policy;
- Send in a single transaction the sum of the cryptocurrency you will be exchanging. Fixed Rate transactions have a 15-minute limit;
- All done? Now we are doing all the work: checking the incoming transaction and doing the exchange as soon as it arrives;
- As soon as the exchange has been processed, your FTM is on the way to your wallet.
Customer support is available 24/7 in chat on our website, official Telegram group, or through email: [email protected].
Conclusion
The future of Fantom (FTM) is more uncertain now with the Sonic chain in the picture. Both chains will coexist, and although only one will continue to receive support from the Foundation, it does not necessarily mean the other will not survive.
Browse our blog for even more educational articles and Fantom crypto news. ChangeHero is on social media, too: find us on Twitter, Facebook, Reddit and Telegram.
Frequently Asked Questions
Why is Fantom so popular?
Fantom is a popular smart contract platform thanks to its lower cost in comparison to Ethereum and a wide choice of existing dApps (decentralized applications).
What does FTM crypto do?
FTM is a native token of the Fantom network, needed for staking, transaction fees, and on-chain voting. FTM tokens exist in several forms depending on the application chain they run on.
What is special about Fantom crypto?
Fantom is developing with a particular focus on decentralized finance (DeFi), thanks to the contribution of Yearn.Finance founder Andre Cronje. It houses DeFi protocols that come together to over $100 million of total value locked.
Is Fantom better than Ethereum?
The goal of the developers is to make Fantom scale up to 300,000 finalized transactions per second. On 25 January 2022, when the Fantom network processed more transactions in a day than Ethereum, its actual throughput reached eight transactions per second.
What wallet to use for Fantom?
The project team suggests using Fantom Wallet to access all features of the Fantom’s mainnet. If you need to manage more crypto assets, research Arctic, Exodus, Edge, Trezor, and CoolWallet as more options.
Disclaimer
This article is not a piece of financial or investment advice. When dealing with cryptocurrencies, remember that they are extremely volatile and thus, a high-risk investment. Always make sure to stay informed and be aware of those risks. Consider investing in cryptocurrencies only after careful consideration and analysis of your own research and at your own risk.
