Introduction
Speed, Security and Decentralization. These are the three key elements surrounding blockchain. It is known as the blockchain trilemma where there are trade-offs between the three and attaining all of them at once is deemed impossible. However, everything changed when Fantom arrived. Fantom, built to master all 3 elements, has been taking DeFi by storm as it works towards the impossible.
What is Fantom?
Fantom is a highly scalable blockchain platform for DeFi, crypto dApps and enterprise solutions. It was designed to overcome limitations set by the older blockchains by making use of Lachesis, a bespoke Asynchronous Byzantine Fault Tolerance (aBFT) consensus mechanism that enables Fantom to be faster, more scalable and more secure than other blockchains functioning on previous consensus algorithms.
In line with the multi-chain future, Fantom has incorporated various chains to its network through its bridges, such as Ethereum, BSC, Polygon and Avalanche. Major Ethereum projects such as SushiSwap and Curve have already migrated to Fantom, driving traffic into its chain. However, it is SpookySwap, Fantom’s first native farm and AMM DEX that has been gaining immense popularity, being second to AnySwap in the TVL leaderboards, ahead of Curve and Beefy Finance.
Transactions & Gas
Ever since the boom during DeFi summer 2020, we have witnessed how high gas prices on Ethereum can fluctuate due to the congestion on the base layer. This increased demand forces users to take on expensive transaction fees and makes it difficult for developers to encourage participation. From the graph, we can witness that median gas prices have risen over the last 2 years, resulting in a much needed scalable and Ethereum compatible solution.
Built to scale, each network on Fantom is independent from one another, functioning as a network of networks which enhances performance and reduces congestion. Moreover, Fantom’s mainnet uses the Ethereum Virtual Machine (EVM), making it compatible with Ethereum. These compatibility allow developers to move over quickly to experience the improved performance and lower cost.
As seen in the graph below, it is fascinating to see that the number of transactions on Fantom flipped Ethereum in September 2021, after the announcement of its incentivised US$370mm liquidity mining program in late August. However, daily gas paid on Fantom still remains much less than that of the Ethereum network as it was built for lower transactional cost.
Contract Deployment Activity
Contract deployment activity is a good indicator for the development of projects on a blockchain. These levels of activity are generally higher on the Ethereum blockchain in comparison to the Fantom blockchain as there are more projects building on Ethereum at the moment.
This phenomenon can be seen in the graph below, which shows the number of contract deployments on Ethereum and Fantom. In early June, Ethereum peaked with over 240k contracts deployed in a single day. However, deployment activity has since dropped and stabilized below 20k per day. On the other hand, Fantom experienced spikes in its contract deployment activity in the beginning of September 2021 after announcing its incentivised liquidity mining program, peaking at around 12.8k contracts deployed per day. During this time, it is important to note that Fantom’s contract deployment activity was higher than that of Ethereum.
The contract deployment ratio is calculated by taking the amount of contract deployments on Fantom and dividing it by the amount of contract deployments on Ethereum. We can see that the deployment ratio has been increasing with certain spikes over time. During the time when Fantom’s contract deployment activity flipped Ethereum, the ratio was 1.26. This means that for every 1 Ethereum contract deployed, 1.26 contracts are deployed on Fantom. However, the main takeaway from this data is that the overall deployment ratio is following a gradual uptrend against Ethereum, with recent numbers hovering around 0.1.
Smart Money
If you are familiar with Nansen, you should be familiar with our Smart Money labels by now. Smart Money is a label by Nansen which includes Smart LP, Flash Boys, Whales, Funds and others. See our definitions of wallet labels here.
Smart money interaction is one of the possible positive indicators of a certain project/protocol as it indicates interest from seasoned investors. To no surprise, with Fantom gaining popularity and having big names such as SushiSwap, Beefy Finance and Curve migrating over, data shows that quite a sizable amount of smart money addresses have dabbled in both Fantom and Ethereum.
Want to see what Smart Money is buying on Fantom? Sign up for a Nansen plan here!
From the graph, we see that Flash Boys (Wallets that have made multiple dex trades in a single transaction that are profitable in nature) have the biggest overlap (24.2%) on both Fantom and Ethereum. Not to mention the 13.3%, 7.1% and 0.9% overlap for Smart LPs, Others and Funds respectively.
If we compare the numbers to that of the Binance Smart Chain, we can see that smart money overlaps are much lower on Fantom. Could this allude to the possibility that Fantom is still in the early stages of smart money adoption?
Stablecoins
On the Ethereum network, Tether ($USDT) is the top stablecoin in terms of market capitalization. It dominates stablecoin circulation by a huge margin, where it is transacted almost twice as much as $USDC and $DAI combined in terms of volume. However, on the Fantom network, the stablecoins that dominate are none other than $USDC and $DAI, with $USDT being a close third. This shows that there is no dominant market leader in the space yet, and would be interesting to see how it plays out in the future.
Even though both $USDC and $DAI top the Fantom chains with respect to volume, $USDC is far ahead in terms of number of transactions and daily active senders as seen in the graphs below. This would suggest that $USDC is the preferred stablecoin on the Fantom blockchain.
The surging momentum for stablecoin activity on the Fantom blockchain suggests that adoption is gradually increasing, with September being an explosive month due to the announcement of the incentivised liquidity mining program.
The increased stablecoin volumes are a positive indicator as it would mean that there is ample liquidity on the chain, allowing users to take on more complicated strategies that they have been doing on Ethereum mainnet but at a fraction of the cost and significantly quicker in speed. However, in the later part of September, when the crypto market as a whole experienced a decline, stablecoin activity on Fantom similarly followed the down-trend.
Value Distribution of Volume of Stablecoin Transactions
The average value of stablecoin transactions is a good indicator of the general capital/wallet size of Fantom users. Found on Nansen’s stablecoin master dashboard, the value distribution by transaction size over time paints an interesting picture.
In September, volume and transactions were massive for stablecoins on Fantom. What's interesting is that the percentage of large ticket sizes of over US$100k have been rising post announcement. Moreover, transactions over US$1 million have consistently accounted for over 90% of all the volume traded on the blockchain, possibly indicating that deep pockets were drawn in due to the incentives of the liquidity mining program.
Conclusion
With DeFi’s meteoric growth in the last 12 months, the question now is whether the current infrastructure can keep up with the ever growing demand. Many Layer 1 and 2s solutions have come up with innovative ways to solve various problems set by blockchains functioning on previous consensus algorithms, and are heavily competing with each other for market dominance.
Liquidity mining incentives are often used to stimulate usage in the early releases of these solutions, but as these incentives dry out, it is interesting to see which player(s) in the market will emerge on top. Would Fantom be one of the more popular Layer 1s going forward?
Does this sort of data interest you? All the data used in this article is readily available on the various dashboards on Nansen.
New to Nansen? Sign up for our 7-day trial today!
Want to see what Smart Money is buying on Fantom? Sign up for a Nansen plan here!
About Nansen
Nansen is a blockchain analytics platform that enriches on-chain data with millions of wallet labels. Crypto investors use Nansen to discover opportunities, perform due diligence, and defend their portfolios with real-time alerts.
For more information:
- Twitter: https://twitter.com/nansen_ai
- Discord: https://nansen.ai/discord
- YouTube: https://nansen.ai/youtube
