But, how can that be inferred? And if that’s true, where is the money staying? Let’s find out in this article.
Fantom Ecosystem Overview
Fantom price and TVL (Total Value Locked)
As mentioned above, recently the market witnessed a correction that has dragged down the price of the majority of tokens, and Fantom is not an exception.
After its strong price surge, having a correction is a healthy way for Fantom to continue the growth in the future. Hence, the price of FTM has gone from an ATH of $3.46 to currently $2.07, leading to the TVL of the ecosystem going from $6.15B to $5.46B.
But, let’s take a further look at these two. This is the price chart of FTM.
Combining with the above TVL chart, we can see that these two charts have a lot in common. If the price of FTM goes up, the TVL within the ecosystem will increase. And conversely, when the FTM goes down, the TVL of Fantom will also decrease.
What do these metrics indicate? First of all, it is the fact that the TVL is calculated in USD, so if the value of assets locked in the ecosystem decrease, the total TVL of the ecosystem will also decrease.
Second of all, it can be clearly seen that at the moment, most assets being kept in Fantom are FTM and its native tokens, such as BOO, SPIRIT, TOMB,... if the price of FTM decreases, the value of these native tokens will also decrease.
Concluding these 2 ideas, we can deduce that when the FTM price decreases (which is a healthy and optimal situation for Fantom), the prices of its native tokens will also decrease, resulting in the value locked in the ecosystem going down.
Now that we know it’s a good thing that the money is still staying in Fantom since the TVL is being changed simply because of the fluctuation in FTM price, the next question is: Where? This will be later addressed in this article.
Fantom node requirement
As the FTM price has increased dramatically, the amount needed to run a validator on Fantom has also increased drastically.
Understanding this situation, Fantom Foundation has reduced the number required to run a Fantom node from 1,000,000 FTM to 500,000 FTM (~$1M at the time of writing).
This action will incentivize more users to stake FTM and run a node on Fantom, hence growing and solidifying the Fantom blockchain.
Fantom Incentive Program
The Fantom Incentive program was announced earlier this year, which was worth 370M FTM. This Incentive Program will be used to support projects and developers on Fantom.
However, the situation seems similar to that above as the price of FTM increased. As a result, Fantom has also modified its requirements for projects to apply for this program. Further details can be found here.
Fantom Ecosystem Spotlight
Fantom Ecosystem Spotlight is a program created to allow different Fantom projects to discuss and interact directly with the Fantom Foundation, hence creating a close bond between the project and the Foundation as well as its community.
Since the beginning, 12 projects have been featured in the Fantom Ecosystem Spotlight, all of which are core protocols on Fantom, with the most recent being Tomb Finance. Tomb Finance is a name that you should pay attention to since it has had a massive impact on the Fantom ecosystem and will be mentioned later in this article.
Fantom Ecosystem Analysis
TUSD - one of the newest Stablecoins to arrive on Fantom, has been active in the ecosystem. By cooperating with core projects like SpookySwap (AMM) and Scream (Lending), more use cases for TUSD on Fantom have been created, which is one of the most important metrics when looking at Stablecoins.
UST - the famous Stablecoin from Terra, is now coming to Fantom via the Anyswap bridge. This is a huge addition to the ecosystem as UST is currently one of the biggest Stablecoins at the moment, meaning the ecosystem will be exposed to more DeFi users.
The AMM sector on Fantom has not seen any significant changes, whereas SpookySwap is still dominating the space while SpiritSwap is trying to catch up. The liquidity in SpookySwap is getting closer to $1B, while that in SpiritSwap is still attempting to reach $200M, showing how SpiritSwap is getting left further behind.
At the same time, we can see the comeback of an old veteran: Hyperjump. The project has recently released Version 2, aiming to bring a fresh experience to its users.
The lending sector on Fantom is showing a dramatic decrease, whereas the TVL in Geist Finance has been dropping steeply ever since its ATH 2 months ago. This is understandable since in an unstable market, users normally withdraw their funds out of lending protocols to avoid being liquidated.
Besides, 88mph - a protocol that allows lending at a fixed APR, has released MPH rewards on Fantom to incentivize more people to use their products.
There have been a variety of launchpads on Fantom. Nevertheless, none of them has been active. FantomStarter is the first to release IDOs on Fantom.
Being the pioneer in this niche, FantomStarter had its debut by releasing 3 IDOs at the same time, which are ModaDAO, WingSwap, and DexBrowser. Their ROI performances have been pretty decent when the price of WING (WingSwap) was 10x private price and 5x public price upon listing.
This is a promising sign for the Fantom ecosystem, as Launchpad is one of the most important DeFi Legos for a DeFi ecosystem, especially one in a growing wave. Launchpad is the place to attract both new investors and projects to get into the ecosystem, enriching and growing the ecosystem more rapidly.
However, with the current ROIs (5x-10x) and not 100% tokens being sold, FantomStarter has to do better in its next launches. If they can successfully improve this situation, it is highly likely that they can dominate this sector on Fantom.
This is where Tomb Finance comes into play. Being one of the best performers on Fantom at the moment, the TVL in Tomb Finance has grown tremendously for the past few months. From $24M 2 months ago, this number has just reached $800M (+3,233%).
How can this be possible? First of all, let’s talk about the project. Tomb Finance develops an algorithmic token. However, this token is not pegged to Fiats like other Stablecoins, but to FTM. Initially, the product was not successful due to the fact that the price of its TOMB token cannot be pegged, which is the top priority for an algorithmic token.
However, after receiving the help of Harry Yeh - a strong influencer and supporter of Fantom, the project has got back to its track. By keeping the price pegged to FTM, a lot of plays were made possible, one of which is farming.
By farming the FTM-TOMB pair (which is nearly similar to single staking FTM, considering the fact that TOMB is pegged to FTM), users can earn up to 1,660% APY via Grim Finance, a yield aggregator. This is massive compared to staking FTM anywhere else, which often offers about 9-20% APR (not APY).
This is currently the best way to earn on Fantom. With this profit rate, it can be evidently understood why Fantom can keep the cash flow staying in the ecosystem. This is an interesting way to earn in DeFi, especially when capital efficiency is now highly appreciated with the emergence of DeFi 2.0.
However, there are still risks involved if you want to earn this way since it all depends on the ability of TOMB to keep its peg. As an algorithmic token, its model may be efficient now but in the future, the situation can turn really quickly without users being capable of doing anything about it, similar to the case of Iron Finance even though the mechanism behind these two are different.
To address this problem, Tomb Finance has announced its plans to improve the product, which include the implementation of a new protocol that works just like OlympusDAO.
If this plan successfully comes out, LIFE will bring the model Protocol Owned Value (a DeFi 2.0 definition) to Tomb Finance, enriching its liquidity and bringing more utilities to the TOMB token. This will further fortify the peg of TOMB, which is the most imperial factor to keep the project going.
As mentioned in previous articles, the NFT landscape on Fantom is fertile but contains mostly collectibles. Whereas NFT collectibles are extremely difficult to be valued, it is hard for this segment to grow on smaller developing ecosystems like Fantom.
The P2E (Play-to-earn) trend has emerged and led the market recently, which many DeFi ecosystems have utilized by releasing myriads of P2E games. Even though this sector is not prominent on Fantom, there have been some signs showing that Fantom is paying attention.
Fantom Foundation has recently invested in Tank Wars Zone - a P2E game. If Fantom notices and develops this market segment on Fantom, the ecosystem will definitely grow even more tremendously. Along with the support of Fantom, some projects have also been developed on the blockchain platform and are expected to be released soon.
DeFi 2.0 has become a trend ever since the emergence of Olympus DAO - a project that pioneers this trend. On Fantom, there have been numerous forks of this project, with the 2 most prominent being Spartacus (SPA) and Hector DAO (HEC).
With the Protocol Controlled Value model arriving on Fantom, a lot more implementations may become possible, especially if projects on Fantom apply this model to their products. This will increase the capital efficiency in the ecosystem, hence drawing more users to Fantom.
To conclude, here are some highlights of the Fantom ecosystem recently:
- Both the FTM price and TVL are having a correction, parallel to the market condition.
- Fantom Foundation has made modifications to the requirements of running a node and applying to the Incentive Program.
- The Stablecoin, Launchpad, and Asset sectors are growing, while others have shown no significant changes. Among them, Tomb Finance has been the best performer and has had the biggest impact on the ecosystem.
- The NFT picture on Fantom may change really soon, with the possible arrival of P2E games.
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