Fantom (FTM) is a modern, high performance smart contract platform that aims to solve the limitations of prior blockchain systems such as Ethereum. Below is my thought process when I consider adding a new token to my portfolio.
Risk Hedge vs. Growth
While some might consider this move late to the party in crypto, some investments must be risk hedging moves, not everything can be pure speculation. By adding projects that have gained traction and made it to the over 4 or 5 billion-dollar market-cap range, you can reduce risk in your portfolio while still having tremendous upside.
I wanted to write an article about a project I do not yet own and write about how I come to my decision when purchasing a new token. I have been bullish on Fantom (FTM) for a while but have been struggling to add it to my portfolio. FTM has been on my watch lists since around 20-30 cents, there are so many good projects out there. Since I specialize in main ecosystem plays such as DOT/SOL/AVAX/Ethereum type plays it is hard to ignore FTM.
Checking the Boxes
Sometimes the first thing that draws me to a project is simply noticing how often it is mentioned on social media, Twitter is a massive platform for crypto news. Over this second half of the year FTM has come up many times, often from personalities I highly respect. Some of my favorite video news sources have mentioned the project also. The first thing I look for when looking at large market cap projects, is holder rewards.
FTM offers “Fluid Staking” which allows the investor the choice of how long to lock the tokens, as well as the choice to use the value of their tokens as a type of loan. This loan has to be paid back before receiving the locked tokens, this is a type of leverage. Longer lock periods also bring higher APY returns[1].
This is a great concept as it provides the best return for the true long-term investor. In crypto, time frames are much different than the stock market. Six months is long term, a year is quite long for anything other than Bitcoin and Ethereum. This staking process is very accessible since you can do it right on your phone, you only need 1 FTM minimum.
FTM has a capped supply of 3.175 billion total, 2.1 billion are circulating. The rest of token allocation is reserved for staking rewards, FTM estimates approximately 2 more years of staking rewards at the current rate. This rate can be changed by on chain voting with token holders (governance). Below is an example of how expensive Ethereum transactions can get.
Creative Consensus Mechanism
FTM’s claim to fame is known as Lachesis. Lachesis was created to overcome the shortcomings of traditional blockchains. Lachesis claims to have bank grade security, much faster transactions, and high usability[2]. These days, people do not want to wait for anything. Ever get frustrated waiting for a website to load? People want very fast, user-friendly technology with no hiccups. Lachesis is the engine for the automobile that is Fantom, it is the consensus mechanism. Like Bitcoin, the network works together to agree upon transactions in a decentralized manner, this prevents single entities from colluding.
Lachesis is also designed to work with any coding language without too much hassle. Since FTM does not use proof of work, the energy concerns are minimal. FTM also brings a unique method into play to separate itself from the rest. Instead of sending blocks to each other, Lachesis takes many snapshots of moments between nodes, and at certain time frames to place transactions in order. By using this process instead, transaction finality is much faster.
Partnerships and Collaboration
To begin, FTM is integrated with Chainlink and Band, the two largest oracle blockchains, this is important for prices of tokens and other data. FTM has partnered with REN, Superfarm, Orion,DAO Maker, and Injective. I have heard of every one of these projects, and understand them greatly, I even own Superfarm and have swing traded Injective.
FTM has also partnered with crypto.com, a massive crypto exchange available in America, and Travala, a website that allows users to purchase flights and other traveling needs with cryptocurrency. FTM is currently working with Pakistan and a few other governments to authenticate educational documents and more. They are working to authenticate medical products and fight against counterfeit drugs. Also, FTM has a massive ecosystem already, check the infographic out below.
FTM Thesis
At Coinbusters, we try to not get overly technical with our project reviews, we instead like to focus on what separates the project from the herd. FTM provides a new approach to make transactions faster and cheaper, while maintaining security. Staking is always a massive interest for me personally, and this tends to draw in long-term investors. After all, tokens locked in staking are tokens not on the market, reducing supply trading supply.
The Fantom Virutal Machine upgrade will be ground breaking when it arrives, this will hugely increase the current speeds and lower fees. FTM already has a decent ecosystem underneath it with dexs and other apps. The savvy investor could easily look below FTM and make astronomical gains, much like we look below Polkadot, to lower market cap plays to make higher returns. I believe that FTM sits up there with the likes of Solana, Cosmos, and Avalanche.
FTM is usable, has value locked in the ecosystem, and is user friendly, it is undervalued in my eyes. I am looking for FTM to provide around a 4x return from this point assuming Bitcoin behaves itself, there is always a chance this party comes to an end from market dynamics. I have not purchased FTM but am considering selling the news on the Polkadot parachain auctions in November and taking profit.
This will let me reallocate a portion of DOT, add some FTM, and maybe some Ethereum. I also might start dollar-cost averaging sooner. As always do your own research about what draws you to a project, this article is my opinion. This is a summary of the basics on how I go about forming a thesis on a project, it is more complicated than just this writing. If you have read our other articles, you can take that knowledge and add to this process. Thank you!
[1] https://docs.fantom.foundation/
[2] https://fantom.foundation/lachesis-consensus-algorithm/
