What is Fantom (FTM) Used For?
In the official documentation, Fantom is self described as "a high-performance, scalable, and secure smart-contract platform.
It is designed to overcome the limitations of previous generation blockchain platforms. Fantom is permissionless, decentralized, and open-source. Lachesis, its revolutionary aBFT consensus mechanism, allows Fantom to be much faster and cheaper than older technologies, yet extremely secure." [Fantom. Intro to Fantom. (Accessed October 17, 2021)].
FTM is the native utility token of the Fantom network. In this subsection of the Fantom Coin Guide let's investigate what the purpose and use is for the FTM token in this ecosystem.
WHAT IS FANTOM (FTM) USED FOR?
The FTM token is the main utility token on the Fantom platform. On the network, its uses include: governance; payments; fees; and, to secure the network through staking mechanisms.
In that the Fantom network is fully decentralized (permissionless and leaderless), the FTM token when staked allows for the stakers to propose any necessary changes or improvements to the Fantom network.
By utilizing this procedure, governance in the Fantom ecosystem is accomplished on-chain. And accordingly, it is the FTM token which is required for participation in the voting process to affect this governance mechanism.
As the mechanics of the Fantom network produce high throughput, quick finality, and very low fees, the network is perfectly structured to be utilized for the sending and/or receiving of payments. The Fantom network boasts of money transfers taking only around one second.
And the best part, for the average network user, are the very low transaction fees charged for these transfers. Typically, these fees only cost around $0.0000001, very low indeed.
The FTM token is used on the network for the payment of transaction fees, smart contract deployment fees, and new network creation fees.
While it is true that fees on the Fantom network are very cheap (respectively), the fees charged are adequate though to make it very expensive for a nefarious actor to carry out a network attack. Furthermore, in the absence of this minimum fee barrier, the network would be open to a multitude of spam thereby inhibiting network performance and a loading of the network ledger with a ton of useless data.
Fantom's Proof of Stake mechanism uses the FTM token (it's main use) to provide network security. To qualify, each validator node must lock a minimum of 3,175,000 FTM tokens, and ordinary users must stake to participate. In return for using the tokens as security, the participants receive epoch rewards as well as a share of the fees collected.
Users may stake their tokens using the following directions:
- Open your Opera wallet. If necessary create a new wallet or restore one using the keystore function or mnemonic. Click here to be directed to the proper page.
- Transfer the desired amount of FTM token you wish to stake from your Exchange wallet to the Opera wallet.
- Select a validator if you wish the option of 'stake as you go' earning 4% APY, or, in the alternative, you can choose to lock your tokens for a period ranging from two weeks to one year for higher returns. These fluid rewards are depicted on the following graph.
And as the Fantom network is EVM compatible, you can easily deploy and run your Ethereum based decentralized applications on the Fantom network to earn further rewards.
Aside from being an investment vehicle, the FTM token has important utility within the Fantom network. Fantom already has real-world applications which make this token an interesting investment play. Should Fantom be able to secure a place in the crowded smart contract DeFi arena, potential price appreciation coupled with rewards earned from staking could prove lucrative to the ordinary investor.
- Your author holds a long position in Fantom (FTM).
- The content herein is presented for educational purposes only and should not be construed as investment advice. Any loss incurred as a result of investing in Fantom (FTM) is yours and yours alone and may not be imputed to this author. Any foregone gain by not investing in Fantom (FTM) is yours and yours alone and may not be imputed to this author.
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