An Introduction to FANTOM Network Tokens

There will be two types of tokens on the FANTOM network: FTM and FTG. In this article, we will describe what they are and how they will be used.

FTM is the main Fantom network token that is listed on exchanges. Its price fluctuates based on supply and demand. Currently, this price reflects the anticipated success of the Fantom network. Once Fantom mainnet is launched, the FTM market price should be influenced by the actual growth of the Fantom network as measured, for example, by transaction volume.

FTG is the internal Fantom Gas token. All transaction fees on the Fantom network will be expressed in FTG. At the launch of mainnet, the price of FTG will be fixed against fiat at a level that is expected to make the system profitable for validators. The goal is for FTG to track cloud computing and storage costs. The FTG price is therefore expected to slowly decline over time, as the cost of cloud computing and storage declines, but this will be subject to on-chain voting and will therefore depend on Fantom token holders.

FTG can be purchased using FTM using an internal market-maker but will not be transferable between accounts and will also not be listed on any exchanges. FTG tokens can be exchanged back into FTM subject to a conversion penalty.

FTM tokens can be spent in several ways

  1. Paying for transactions: If a user does not have a sufficient FTG balance to pay for a transaction, FTM tokens will be used at the prevailing market rate.
  2. Buying FTG tokens (own account): Users can buy FTG tokens using FTM, giving them a small discount on transaction fees as well as certainty as to available gas. When a user account holds both FTG and FTM balances, FTG will be used first to pay for transactions.
  3. Buying FTG tokens (Dapps): Users can buy FTG tokens for Dapps, to allow certain accounts to use the Dapp without needing any FTM or FTG tokens. The Dapp developer will, of course, be able to precisely specify how much FTG is available for which account. This feature is expected to significantly ease adoption of Fantom Dapps by the general public.

FTG tokens can be spent as follows

  1. Paying for transactions: This is the main use of FTG tokens. As all transaction fees are expressed in FTG, a user will be able to know precisely how many transactions can be done with a given FTG balance.
  2. Buying back FTM: Users can choose to convert back their FTG to FTM. Such conversion will be subject to a minimum conversion penalty of 10%, also the system will not allow users to make a profit from such buybacks. That way there can be no speculation using FTG tokens.

Other FTM uses

FTM can also be used in the system in several other ways. In all of these, a user’s weight will be determined not only by the FTM tokens held, but also by his “importance” to the network which is measured by his activity in terms of gas spend and voting behaviour.

  1. Transaction staking: Users can stake all or part of their tokens to gain a percentage of guaranteed transaction volume on the network. Tokens thus staked cannot be used for validation staking or delegation.
  2. Validation delegation: Users can delegate all or part of their tokens to a validator to gain a percentage of transaction fees generated by the network. Users retain control of their delegated tokens and can decide to cancel the delegation at anytime.
  3. Validation staking: By staking a certain minimum amount of tokens, and by attracting sufficient token delegations from other users, users can become network validators. A validator can lose these tokens in case of malicious behaviour.
  4. On-chain voting: Users holding FTM tokens will be able to participate in on-chain voting.

Conclusion

We have seen that both FTM and FTG tokens have a rather wide range of uses on the Fantom network. In some cases, tokens held by users who are active in the network are also given a higher weight.

Contributors

Alex Kampa. CEO Sikoba Research: http://research.sikoba.com

George Samman. Sammantics: http://sammantics.com/