What is Phantom (FTM): A Guide on the Growing Layer-1 Blockchain

Phantom is a blockchain protocol that provides high-speed, low-cost transactions and more tools for DeFi developers to build on their ecosystem.

Phantom is a Layer-1; a layer-1, also referred to as the main network or main chain, is the base block chain, such as Bitcoin, Ethereum, Binance Chain, Solana, Cardano, etc.

Layer-1s has its own infrastructure for processing transactions and relying on its own security protocols. On the other hand, a layer-2 is built on top of layer-1. Some popular examples are Polygon, Arbitrum and Loopring, which are protocols built on top of Ethereum.

Phantom stands out from its competitors, such as Solana, as one of the few layer-1s that are compatible with Ethereum Virtual Machine (EVM) that allows users to port their applications and projects from Ethereum to Phantom and vice versa.

Phantom is popular because it:

1. Offers users high-speed transactions with a settlement time of around 1 second
2. Provides developers with user-friendly tools for creating applications and smart contracts on the ecosystem
3. It is interoperable with the Ethereum network and Binance Smart Chain
4. Is home to several DeFi projects based on the ecosystem, including popular decentralized exchanges such as SpookySwap and lending protocols such as Aave and Alchemix.

Phantom: How does it work?

Phantom allows users to transfer cryptocurrency seamlessly through Opera, the protocol’s main blockchain. Phantom has a tool token called FTM, which also has an ERC-20 version for use on the Ethereum blockchain and a BEP-2 for use on the Binance chain.

Phantom provides developers with a wealth of resources and tools to create smart contracts and decentralized applications (dApps), and even create their own blockchains with customizable aspects.

Let’s break down Phantom’s features and core components.

Lachesis: Phantoms Consensus Algorithm:

Lachesis is Phantom’s consensus algorithm derived from proof-of-stake (PoS) consensus. In both mechanisms, validators must bet a certain amount of coins to validate blocks in a blockchain. The difference is that Lachesis uses another mechanism called Asynchronous Byzantine Fault Tolerance (aBFT.)

In simpler terms, the aBFT mechanism allows validators to execute commands (such as validating a block to process transactions) at their own pace without waiting for other validators to reach an agreement (consensus.) This allows for a faster transaction flow while maintaining decentralization and security (we will dive deeper into this last point in another section.)

Phantom sier Lachesis is the attempt to solve the problem Blockchain Trilemma which states that it is practically impossible for a blockchain protocol to balance three specific properties in harmony: decentralization, security and scalability. For example, if a blockchain has a high level of security due to decentralization, then it sacrifices speed.

Here are the key features of Lachesis:

• Asynchronous: validators can process transactions at different times, resulting in efficient and fast transaction flow.
  
• Leaderless: aBFT consensus is a leaderless system as no participant plays a special role in the network
  
• Interoperable: all chains on the Phantom are connected to Lachesis, so they can communicate with each other.

Phantoms several chains

Users can create their own customizable blockchains to host their projects. These blockchains can communicate with each other and the Opera chain when connected to the Lachesis consensus while maintaining their autonomy.

Developers can adjust blockchains according to their needs regarding use cases, tokenomics, control and more. We can then describe Fantom as a Layer-1 that hosts several Layer-2s.

Fantom and the Directed Acyclic Graph (DAG)

Here we dive a little deeper into Phantom’s technological stack, especially on the Lachesis consensus team. Let’s try to break it down: Lachesis’ underlying infrastructure is a directed acyclic graph (DAG).

A DAY is a data structuring system that processes transactions in a different way than a blockchain. Instead of blocks, a DAY consists of corners and edges that allow transactions to be registered on top of previously transactions. A DAY looks more like a tree-like graph instead of a, well … a chain of blocks.

Blockchain basic infrastructure compared to Directed Acyclic Graph. Source: Research Gate

All transactions must refer to a previous transaction in order to be successfully confirmed instead of being collected in a block. DAGs can provide higher transaction speeds as each node in the system can process transactions from more than one parent root. The reason here is that nodes do not have to wait for transactions to be completed to process a new one.

The Fantom Token: (FTM)

Fantom ‘has a help symbol called FTM, which is used to pay for transaction fees, efforts and get voting rights in Fantom DAO (Decentralized Autonomous Organization.) FTM has an ERC-20 and a BEP-2 version, which are not usable on Opera Chain.

The total FTM supply is 3.175 billion, with over 2.5 billion FTM in circulation as of July 2022. The token distribution is as follows:

• 40.18%: public and private sales investors
• 38.76% earned for effort rewards, distributed daily until 2024. After this period, the protocol will introduce new ways to stimulate validators.
• 12%: advisors
• 7.49%: teams and entrepreneurs
• 1.57%: public investors

You only need a minimum of 1 FTM to start betting. You can unlock your FTM with a reward rate that is proportional to the lock-in period, which is up to 365 days and a maximum of 15% annual percentage (APY) per July 2022. The minimum lock-in period is 14 days and a dividend of 4.96%.

Become a validator

To become a validator, users must bet one minimum of 3,175,000 FTM. As of July 2022, the price of FTM is $ 0.26, so it’s about $ 825,000.

Where can you buy FTM?

You can buy FTM in almost any top crypto exchange such as Binance, Coinbase or Kraken. Remember that you can also buy the ERC-20 and BEP-2 versions of FTM.

Phantom: History and founders

Michael Kong and Quan Nguyen founded the Phantom Foundation in 2018. The protocol was launched that year, and raised over $ 40 million in a first coin offering (ICO.) Andre Cronje – a popular blockchain developer in the crypto community – participated in the launch of Fantom as a key advisor, but left on March 6, 2022. Cronje was known for his early work on several projects, including Yearn Finance, which is integrated into the Fantom ecosystem, and Sushiswap.

Phantom was designed to solve several problems in the blockchain landscape. The Fantom Foundation has entered into several partnerships with other blockchain protocols to provide an ecosystem with multiple assets and chains. In May 2019, Fantom partnered with Binance Chain to introduce a new token standard for FTM and improve interoperability.

What projects are on Phantom?

There are over 200 decentralized projects from various fields on Fantom, including decentralized exchanges, cross-chain bridges, lending protocols and NFT platforms. Here are the top 3:

• SpookySwap (BOO): currently the most popular decentralized exchange and cross-chain bridge on Fantom, also compatible with Ethereum Binance, Avalanche and other blockchains.
  
• Aave: Originally built on the Ethereum network, Aave is also available for lending and borrowing crypto in the Phantom blockchain.
  
• Beefy Finance: a return-generating protocol that allows users to earn compound interest on their cryptocurrency funds.

Last thoughts: Phantom is a Layer-1 Dark Horse

Ethereum is still the number one protocol for decentralized apps of all kinds – but the problem remains the same: the huge amount of network activity usually outweighs the network’s processing capacity.

Phantom competes against some notable blockchains such as Solana, Cardano and Avalanche. Phantom may not have the same type of network activity as Ethereum, it has shown an ability to seamlessly manage its current ecosystem with ease.

Phantom is home to a multitude of decentralized application projects based on their blockchain – yet things you will see from another Layer-1 such as DAOs, DEXs for NFT and GameFi platforms.

Despite not having the same type of mindshare as an Ethereum or Solana, the Phantom has been building for years, setting it as one of the best Layer-1s in crypto.