Fantom — High performance Layer-1 Blockchain
This week, we focus on the following events: 1) DeFi Protocol Ankr to Reimburse Users Affected by $5M Exploit; 2) Galaxy Digital Wins Auction to Buy GK8 From Bankrupt Crypto Lender Celsius; 3) Fed Likely to Raise Rates by 50 Basis Points in December; Bitcoin Jumps.
Project Analysis: This week, fantom’s new addresses have seen explosive growth, and the number of new addresses every day is around 600,000, which is 200 times that of the past. This article comprehensively analyzes Fantom from the three perspectives of fantom tokens, performance, and ecosystem, for your reference.
1. Industry overview
I. Overall market trend
The global cryptocurrency market’s market cap this week changed a lot, currently with a market cap of $869,373,663,203. Bitcoin is currently trading at US$17,316, continuing weeks below $20,000, showing no signs of going back to $20,000. Meanwhile, Ethereum, the second largest cryptocurrency, is currently trading at US$1,296, was slowing increasing. Most of the other top 10 tokens, were new tokens that never entered the top 10 before but were recently in the news, like Ankr. Among them, all tokens are increasing with Fantom increasing the most at 37.63% in 7 days. Below is a graph for BTC and Inverted RRP, RRP is an instrument used by the Fed to suck out liquidity from the markets by attracting investments from the markets themselves. The Inverted RRP may indicate sell-offs in equity markets (SPX/IXIC/Bitcoin) when it decreases, and vice versa.
The NFT market last week saw a decrease of 9.52%, with a market cap of US $2,365,033,443.53 this week. This continues the decreasing trend of NFT market since the FTX collapse. The 7-day sales volume changed by 0.47% to $21,743,001.78 and total sales did not change very much at 5.36%, to 33,959. Overall, the sales declined a little bit. This week the top 10 NFT brands on Coinmarketcap are all familiar brands which has entered this list before, except the 9th and 10th, DEGEN TOONZ with the biggest change of 1.32% and The Potatoz with 0.13%; The Pudgy Penguins has the change at 0.38%, while all the other top 10 brands have a change less than 0.1%.
2. Market news (Source: Coindesk)
I. Industry news
DeFi Protocol Ankr to Reimburse Users Affected by $5M Exploit
Decentralized finance (DeFi) protocol Ankr said it will reimburse the users impacted by the $5 million exploit that occurred on its platform earlier Friday.
“We will take a snapshot and reissue ankrBNB to all valid aBNBc holders before the exploit. The ankrBNB token will continue to be redeemable, while aBNBc and aBNBb will no longer be redeemable,” Ankr said in a tweet after the exploit.
Ankr, which called itself the first “node-as-a-service” platform, had suffered the multimillion-dollar exploit due to a bug in its code that allowed for unlimited minting of its token.
After minting the quadrillions of aBNBc token, the attacker was able to swap 20 trillion of them for BNB, then move those to crypto mixer Tornado Cash. The attacker then swapped the BNB tokens for 5 million USDC.
Because the hacker almost completely drained the aBNBc liquidity pools on PancakeSwap and ApeSwap, the token lost nearly 99% of its value, according to CoinGecko data.
MakerDAO Community Votes to Hike DAI Rewards to 1%
The community of MakerDAO, one of the largest decentralized finance (DeFi) protocols, voted to increase the rewards rate for its DAI stablecoin to 1%.
Some 71% of voters favored a 1% hike, the highest available option, during the voting, which ended Thursday.
Increasing the rewards known as the DAI Savings Rate (DSR) means that investors can earn a 1% annualized return on their DAI holdings, giving an incentive for investors at a time when decent yields in crypto are scarce. The return is still much lower than what is available for traditional yield-generating assets such as U.S. government bonds.
MakerDAO issues the $5 billion DAI stablecoin, which is backed by more than $7 billion worth of assets in its reserves. The protocol is led by a decentralized autonomous organization (DAO), in which holders of the protocol’s governance token maker (MKR) can vote on proposals.
Huobi Token Surges After Crypto Exchange Discloses Airdrop of Dominica Coin
Huobi Global’s HT token jumped in digital-asset markets Tuesday after the cryptocurrency exchange said it would airdrop to users a new digital token to be issued by the Caribbean island of Dominica.
Huobi said the new “Dominica coin,” or DMC, will be issued “in due time” on Huobi Prime, the exchange’s exclusive token offering platform. Users can complete their identity verification on Huobi with Dominica digital identification documents, according to a statement.
The HT token is up 15% over the last 24 hours to $7.12. It’s up 40% over the past seven days.
The deal is noteworthy partly because of its connections to the crypto billionaire Justin Sun. The Dominica tokens are set to be launched on Sun’s Tron blockchain, and Sun recently acknowledged holding “tens of millions” of HT. Just last month, Huobi named Sun as the first member of a new global advisory board that is responsible for guiding the exchange’s strategic layout and development.
Sun tweeted Tuesday that the HT token would be the “only acceptable asset in the subscription of #DMC (Dominica Coin) and granted as the only token of accessing and using in the @HuobiGlobal ecosystem.”
II. Investment and Financing
Galaxy Digital Wins Auction to Buy GK8 From Bankrupt Crypto Lender Celsius
Mike Novogratz’s cryptocurrency-focused financial-services firm Galaxy Digital has won an auction to buy self-custody platform GK8 from bankrupt crypto lender Celsius Network, Galaxy said in a press release Friday.
Terms of the deal weren’t disclosed, but Galaxy spokesman Michael Wursthorn said the price was materially less than what Celsius paid a year ago. Celsius acquired GK8 in November 2021 for $115 million, as reported.
Bloomberg reported earlier on the Galaxy-GK8 deal.
Galaxy’s aim with the acquisition is to expand its prime brokerage offering. Around 40 people would be joining Galaxy’s team, including blockchain engineers and cryptographers.
The deal, which is subject to regulatory approval, would expand Galaxy’s global footprint with a new office in Tel Aviv, Israel, the firm said.
Crypto Trader Auros Global Misses Payment on DeFi Loan as FTX Contagion Spreads
Auros Global, a crypto trading firm, is the latest to face liquidity problems following the FTX collapse as it missed payment Wednesday on a decentralized-finance (DeFi) loan.
The firm borrowed 2,400 wrapped ether (wETH) worth about $3 million from a credit pool on Maple Finance, a DeFi lending platform.
“Auros is experiencing a short-term liquidity issue as a result of the FTX insolvency,” pseudonymous credit pool manager M11 Credit tweeted.
Auros joins other digital-asset firms, including BlockFi and Genesis Global Capital, that face financial difficulties as contagion spreads across the crypto industry. This phase of the now yearlong market rout started as crypto exchange FTX and its corporate sibling Alameda Research became insolvent and filed for bankruptcy protection earlier this month. Genesis is a unit of Digital Currency Group, which also owns CoinDesk.
CME Group Teaming With CF Benchmarks for 3 New DeFi Rates and Indices
Derivatives marketplace Chicago Mercantile Exchange (CME) and cryptocurrency index provider CF Benchmarks this month will introduce reference rates and real-time indices for aave (AAVE), curve (CRV) and aynthetix (SNX), the two said in Thursday.
The new rates will be calculated and published starting Dec. 19 and are currently not tradable futures products.
“These three new benchmarks, together with Uniswap launched earlier this year, will capture more than 40% of the total value locked in [decentralize finance] protocols on the Ethereum blockchain,” said CME Group’s head of cryptocurrency products, Giovanni Vicioso.
The launch comes as interest in decentralized finance (DeFi) and associated blockchain-based projects continues to grow and cryptocurrency traders are increasingly exploring DeFi protocols, Vicioso told CoinDesk, even as the industry recently took another hit with the collapse of crypto exchange FTX.
“We continue to take a cautious, careful approach to this market,” Vicious said. “Exactly how it will develop is yet to be seen.”
Fed Likely to Raise Rates by 50 Basis Points in December; Bitcoin Jumps
WASHINGTON, D.C. — In its eighth and final meeting of 2022, the Federal Reserve will likely raise interest rates by another 50 basis points, or 0.5 percentage point, Fed Chair Jerome Powell implied Wednesday. The previous four Fed rate hikes were for 75 basis points, or 0.75 percentage point.
“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said at an event at the Brookings Institute in Washington, D.C. “Time for moderating the pace of rate increases may come as soon as the December meeting.” A 50-basis point hike would lift short-term rates to a target range to 4.25 to 4.50%.
Bitcoin (BTC) jumped about 1% on the news to $16,982.
Speculation over a smaller rate hike mounted in recent weeks after two consecutive lower-than-expected inflation reports by the U.S. Labor Department gave central bankers some relief that price pressure is starting to cool.
The Fed chair also said that the terminal rate would be higher than previously forecast in the latest economic projections by the FOMC in September, which projected rates going as high as 5%.
S. Korean Judge Dismisses Arrest Warrant for Terra Co-Founder Shin
The arrest warrant for Daniel Shin, who founded stablecoin issuer Terraform Labs with Do Kwon, was dismissed by a South Korean court on Saturday local time, according to Yonhap News.
“Considering the attitude toward the investigation, the circumstances, process and contents of the statement, it is difficult to see that there is a risk of destroying evidence or escaping beyond the scope of exercising the right to legitimate defense,” Hong Jin-pyo, chief judge in charge of warrants at the Seoul Southern District Court, said, according to Yonhap.
An arrest warrant has also been issued for Do Kwon, but his location is unknown. Key personnel and former employees from Terraform Labs have been banned from leaving the country.
Arrest warrants for three early investors and four developers of Terra Luna, which were also requested together, were all dismissed for the same reason on Saturday, according to Yonhap.
FTX Japan Plans to Restart Local Customer Withdrawals
FTX Japan is looking to restart withdrawals after a plan to return deposits was approved by its parent, the failed FTX exchange.
If the plan works out, the collapsed crypto exchange’s users in Japan might be some of the first customers to get their money back.
Withdrawals from FTX Japan were halted on Nov. 8 after local financial regulators ordered the exchange to suspend services. Sam Bankman-Fried’s global enterprise, FTX Trading Ltd., filed for Chapter 11 bankruptcy protection in the U.S. three days later.
In a notice posted on its website, FTX Japan said it was able to confirm with the company’s bankruptcy lawyers in the U.S. that Japanese customers’ funds “should not be part of FTX Japan’s estate given how these assets are held and property interests under Japanese law.”
3. Project Analysis — Fantom
I. What is Fantom? What’s special about it?
Fantom is a scalable and decentralized smart contract platform that uses the PoS model to protect the network. The protocol was founded by the Fantom Foundation in 2018 and uses its proprietary Lachesis consensus mechanism to support multiple other blockchain layers. The foundation is composed of a group of dedicated engineers and researchers, aiming to introduce more scalable, safe and decentralized infrastructure through Fantom and promote its popularization. Experimental data from the Foundation show that the consensus engine can handle up to 10,000 transactions per second without considering the execution speed of confirmed transactions.
The Lachesis protocol allows the network to use asynchronous Byzantine fault tolerance (aBFT) to achieve consensus. In other words, it is similar to a Byzantine fault-tolerant network. Even if one-third of the nodes are malicious, the network can still be trusted to verify and generate blocks in the right order and time.
The Asynchronous section means that nodes can process and deliver information at different times. Therefore, the aBFT network allows some information to be lost or delayed indefinitely. Although it is more challenging to identify bad actors if information can be delayed indefinitely, it demonstrates the reliability and practicability of the network in a more realistic environment.
As mentioned earlier, many different networks and implementation layers can be built on Fantom with Lachesis as the core to providing consensus and security. The first layer, called Opera, was launched on December 27, 2019. It is the first-tier smart contract platform compatible with Ethereum Virtual Machine (EVM). It allows developers to create various decentralized applications or port them from Ethereum or other EVM-compatible networks (such as Polygon or Binance Smart Chain). As of February 9, Opera’s main network has more than $8.7 billion and hosts more than 150 different applications.
II. What is the purpose of Fantom token?
Like most Layer-1 blockchains, Fantom has its own FTM tokens, which have multiple uses in the ecosystem. For example, every transaction on the Opera main network, whether casting NFT or deploying smart contracts, requires users to pay network fees in the form of FTM. However, these costs are usually very low, and the cost of a simple exchange transaction may be as low as 0.02 FTM. So, what else can we do with FTM tokens?
1. Protect network security
FTM token holders can choose to entrust their tokens to the verifier or become a verifier to protect network security. Before entrusting your token, you need to pledge it. To start the pledge, you need at least 1 FTM, and you can choose to lock your token for a fixed period of time, ranging from 2 weeks to 365 days. The longer the lock-up period, the higher the rate of return. The pledger can then choose which verifier to entrust their token, but there is a fixed commission fee of 15%, to be paid to a specific verifier.
To become a verifier, you need to pledge at least 500,000 FTM tokens and have the necessary hardware to run the verifier node. To be precise, you need at least 4 virtual CPUs running 3.1GHz and 3TB of storage space. However, there is an ongoing proposal to reduce the number of FTM tokens required. In addition to getting rewards based on their pledge, verifiers will also receive an additional 15% return from their clients.
Even after FTM tokens are pledged, users can still make full use of their assets on the network through Fantom’s Liquid Staking solution. FTM planders can cast an equal amount of pledged FTM (sFTM), which can be used in other applications that support it on Fantom. In addition, coinage and redemption costs are no longer required.
2. Vote for change
Like most native tokens of decentralized protocols, FTM is an important part of the governance process, and FTM holders can propose and vote on changes to the blockchain network. However, unlike other applications, voting is entirely on the chain. One FTM is equivalent to one vote and is only open to clients and validators. The pledger can also submit a chain proposal at a cost of 100FTM, which will be destroyed at the time of submission.
Fantom provides a more flexible way for voters to answer with a simple yes or no, or choose the degree of agreement to each solution in the proposal. In other words, voters can choose to agree to all proposed proposals, but the degree of consent varies, based on the criteria of 0 to 4. 0 means complete disagreement, and “4” means full agreement.
FTM can be traded on most major centralized and decentralized exchanges, such as Binance and Uniswap. In addition, FTM can also be used in Ethereum and currency chains as ERC-20 and BEP-2 tokens respectively. Therefore, it is highly mobile and is widely supported by Fantom blockchain and many local applications on other blockchains.
For example, token holders can over-mortgage their FTM tokens on Geist to borrow other assets. In addition, FTM is also used as the basic asset of different liquidity pools of many native Fantom exchanges. Holders can provide liquidity in combination with another asset and get token rewards from these platforms.
III. Fantom Ecosystem
Fantom’s compatibility with EVM helps developers quickly port their existing Ethereum-based dApps to the Fantom Opera mainnet, which will greatly improve dApp performance and reduce costs. In Q2 2022, Fantom’s dApp ecosystem continues to thrive with Automated Market Maker SpookySwap, Balancer fork Beethoven X, and even games like Andre Cronje’s Rarity, which continues to attract players on a daily basis, with Q2’s The transaction volume is about 95,000.
Fantom’s growth plateaued during the quarter as there was no single protocol driving hyper-growth like Solidly did in Q1 2022. In addition to this, the overall downturn in the cryptocurrency market may have reduced user enthusiasm and affected Fantom’s growth. Nonetheless, Fantom’s efforts to improve the protocol this quarter are starting to show tangible results through lower gas fees and faster transaction completion times. In the next quarter, users may find it more beneficial to take advantage of Fantom’s low gas fees, fast transactions, and a wider range of products integrated with Fantom.
About Huobi Research Institute
Huobi Blockchain Application Research Institute (referred to as “Huobi Research Institute”) was established in April 2016. Since March 2018, it has been committed to comprehensively expanding the research and exploration of various fields of blockchain. As the research object, the research goal is to accelerate the research and development of blockchain technology, promote the application of the blockchain industry, and promote the ecological optimization of the blockchain industry. The main research content includes industry trends, technology paths, application innovations in the blockchain field, Model exploration, etc. Based on the principles of public welfare, rigor and innovation, Huobi Research Institute will carry out extensive and in-depth cooperation with governments, enterprises, universities and other institutions through various forms to build a research platform covering the complete industrial chain of the blockchain. Industry professionals provide a solid theoretical basis and trend judgments to promote the healthy and sustainable development of the entire blockchain industry.
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