Most recent update: [March 11th , 2022]
No securities regulatory authority has expressed an opinion about the Crypto Contracts or Fantom, made available on the VirgoCX Platform, including an opinion that Fantom is not itself a security and/or derivative.
What Is Fantom?
Fantom (FTM) is a highly scalable, directed acyclic graph (DAG), based smart contract platform for decentralized applications (dApps). It operates as a single but multi-purpose platform, catering to several blockchain uses and solutions. FTM aims to address some of the serious issues faced by networks like Bitcoin and Ethereum, it offers a potential solution to the blockchain trilemma by ensuring speed, scalability, and decentralization. The cryptocurrency makes use of Lachesis, a revolutionary and bespoke aBFT (Asynchronous Byzantine fault tolerance), this enables Fantom to be much faster and cheaper than any other older technology.
Moreover, Fantom is a high-performance, EVM-compatible blockchain platform that plays a crucial role in the decentralized finance arena, the platform also provides tools that make the integration of existing dApps simple and several built-in DeFi tools. Fantom has also received strong support from projects like Curve, C.R.E.A.M, and SushiSwap because of its cheap network fees and one-second transaction finality. The purported goal of this blockchain platform is to make advanced technologies more accessible and easily integrated for a wider audience.
Thanks to its super-fast, highly scalable, and secure blockchain network, the digital asset is named the ‘Ethereum-killer’ by several crypto enthusiasts, according to FTM’s whitepaper, it is also the world’s first DAG-based smart contract platform that supports dApp development. Fantom has left its unique mark even in the hot and booming NFT (non-fungible tokens) arena. It permits users to develop highly customized decentralized applications and NFTs, therefore the number of NFT projects has doubled in number as creators are leveraging the network’s low fees and extremely fast transaction speed for creation, customization, and trading.
How Does FTM Work?
Unlike other cryptocurrencies like Ethereum that represent a single decentralized machine, FTM is made up of an uncountable number of decentralized systems that interact with each other. The four fundamental principles that underpin Fantom are scalability, security, modularity, and open-source nature.
- Modularity: Fantom’s Lachesis is a modular consensus blockchain layer. It is the major reason why FTM has adopted the principle of modularity in its working mechanism. This layer is entirely decoupled and is flexible to be plugged into any distributed ledger.
- Security: Lachesis follows The leaderless Proof-of-stake consensus of Lachesis ensures high security by removing any trusted leaders
- Scalability: Every single network built on Fantom is independent of one another, it ensures that each blockchain-powered network works entirely independently of the other, scaling the network’s performance. It creates a new blockchain each time a user deploys a new project. Therefore, their performance and stability are completely unaffected by any traffic or congestion. Fantom thus solved the issue of scalability by providing each application its own blockchain, ,moreover, every blockchain can also have its custom tokens, tokenomics, and governance rules. However, since all are plugged into Lachesis, the blockchains can seamlessly interact and leverage the underlying technology’s speed and security.
- Open-sourced and community-driven: Fantom also operates in an open-source manner like other blockchain platforms. It expects to create modular building blocks for anyone to use and customize according to their needs.
History And Founding Team
The Fantom Foundation was founded by South Korean computer scientist Dr. Ahn Byung Ik, currently the crypto has an experienced team led by CEO Michael Kong. The Fantom blockchain mainnet went live in December 2019. The team behind Fantom has considerable experience in the field of full-stack blockchain development. Therefore, the purported goal of the network was to establish a network architecture that offers a viable solution to the blockchain trilemma by providing a firm balance of scalability, security, and decentralization.
According to the crypto’s official website, the team also includes specialist engineers, scientists, researchers, designers, and entrepreneurs worldwide, matching the ethos of a distributed platform.
What Makes Fantom Unique?
Fantom is an ultra-fast, scalable, smart contract-enabled blockchain that provides a robust environment for dApp development. It strives to use a new scratch-built consensus mechanism to facilitate DeFi and related services. Fantom offers users an all-in-one DeFi suite. Its EVM-compatible blockchain provides the ability to mint, and trade digital assets directly from their wallets.
The network’s bespoke aBFT consensus mechanism, the Lachesis, makes it unique from any other cryptocurrencies in the market. Since network data can be processed at different times, it can tolerate up to one-third of participants engaging in faulty or malicious behavior without causing undue harm or hampering network processes. Moreover, Lachesis also boasts near-instant finality. Therefore, transactions are confirmed and finalized in an average of just one second.
Additionally, FTM also intends to provide more scalability and lower costs than the first-mover smart contract platform is able to provide in its Ethereum 1.0 iteration. Since Fantom’s entire infrastructure is tied together through its Asynchronous Byzantine Fault Tolerant and Proof-of-Stake (PoS) consensus mechanism, the operational efficiency of the entire network is exceptional. The aBFT network structure also delivers unparalleled speed, security, and decentralization.
Fantom is one of the top choices in the market as companies can seamlessly build Fantom-based private/permissioned blockchain networks using its plug-and-play feature. Enterprise Fantom is a set of guidelines and technical specifications that aims to accelerate the adoption of blockchain technology among enterprises.
How Is FTM Secured?
Unlike other projects in the market, Fantom does not sacrifice security and decentralization in favor of scalability. Fantom uses a Proof-of-Stake protocol that offers exceptionally high security. Lachesis, the leaderless PoS mechanism, secures the Fantom network and ensures transactional speed and security.
Moreover, Fantom resists low-cost attack risks by removing leadership among network participants. On the other hand, staking adds user incentives to secure operations using FTM token holdings.
FTM Token And Supply Model
The native token of the Fantom network, FTM, powers the entire ecosystem. FTM has a total supply of 3.175 billion tokens, of which 2,134,638,448 FTM is currently in circulation, the rest of the tokens would be released on a schedule running through 2023. Holders of the FTM token have the right to vote on various governance activities within the ecosystem, such as block rewards, future upgrades, technical committees, and many more. The power of a vote completely depends on the amount of FTM held by a specific validator or delegator.
The FTM token is available as a native mainnet coin, an ERC-20 token in the Ethereum ecosystem, and a BEP-2 token in the Binance ecosystem. As the platform is compatible with Ethereum, users can purchase an ERC-20 standard FTM, which would be automatically converted to native FTM once received in their wallet.
Use cases Of FTM Token
The FTM token has several potential utilities, and some of them are,
- Payments - The primary utility of FTM is for sending payments on the Fantom network.
- Staking - Users can stake FTM to secure the Fantom network and further receive extra FTM as a reward, generating passive income. Anyone with a minimum stake of 1 FTM can participate in Fantom staking. Users can also operate a validator node on Fantom’s permissionless network after staking at least 1 million FTM.
- Compensating Validators - FTM token is also used as a reward for validators who participate in various FTM activities like preventing transaction spam and validating transactions.
- Governance - Since FTM is a governance token, token holders can vote on important decisions via the staking process.
- Provide network security - As FTM works on the Proof-of-Stake mechanism, validators need to hold FTM tokens. Every validator with at least 1,000,000 FTM tokens can earn rewards through their personalized validator node. Additionally, FTM holders can also delegate their tokens to other validators and receive staking rewards. Precisely, this whole process keeps the FTM network safe and secure.
Risks Associated With Fantom
Fantom is an open-source protocol allowing anyone to operate a node. However, to operate a node, a minimum of 500,000 FTM is required to be staked, which is a fairly significant amount. This means that the number of validators on the platform are relatively low, and the centralization has raised some concerns.
Fantom also faces competition from established players such as Cardano and Solana. With Ethereum switching to Proof-of-Stake soon, Fantom faces stiff competition. Another disadvantage for Fantom is that use cases are limited so far.
Prior to listing Fantom on the VirgoCX Platform, VirgoCX performed due diligence on Fantom and determined that Fantom is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:
- The creation, governance, and location of Fantom and/or its primary development team;
- The supply, demand, maturity and liquidity of Fantom; and
- Legal and regulatory risks associated with Fantom.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.