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Nansen: Why did Fantom hit an all-time high?

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Speed, security and decentralization. These are the three key factors surrounding blockchain, and Fantom was built to grasp them.

Fantom: Solving the Blockchain Trilemma

Source: Nansen

Mike Jin & Amp; Iris Dong, Crypto Valley Live

Introduction to the

Speed, security and decentralization. These are the three key factors surrounding blockchain. This is known as blockchain's trilemma, where there are trade-offs between the three, and achieving all of them at once is considered impossible. However, when Fantom arrived, everything changed. Fantom was built to master all three elements, and it has taken DeFi by storm as it strives to achieve the impossible.

What is Fantom?

Fantom is a highly scalable blockchain platform for DeFi, cryptocurrency DApps and enterprise solutions. It is designed to overcome the limitations of older blockchains by leveraging Lachesis, a custom asynchronous Byzantine fault-tolerant (aBFT) consensus mechanism that makes Fantom faster, more scalable, and more secure than other blockchains that operate on previous consensus algorithms.

In keeping with the multi-chain future, Fantom has incorporated various chains into its network through its Bridges, such as Ethereum, BSC, Polygon, and Avalanche. Major Ethereum projects like SushiSwap and Curve have migrated to Fantom, driving traffic into its chain. However, it's SpookySwap, Fantom's first native farm and AMM DEX that has gained huge popularity, ranking second only to AnySwap in the TVL charts and ahead of Curve and Beefy Finance.

Trading and Gas

Since the DeFi summer boom of 2020, we've seen how high Gas prices on Ethereum can fluctuate due to congestion in the base tier. This increased demand forces users to shoulder expensive transaction costs and makes it difficult for developers to encourage participation. As you can see from the figure, the median Gas price has increased over the past two years, resulting in a much needed solution that is scalable and ethereum-compatible.

Ethereum Gas fee median price

Built to scale, each network on Fantom is independent of each other and operates as a network of networks, improving performance and reducing congestion. In addition, Fantom's main net uses the Ethereum Virtual Machine (EVM), making it Ethereum compatible. These compatibilities allow developers to quickly move on and experience performance improvements and cost reductions.

As the chart below shows, fascinatingly, the number of transactions on Fantom topped Ethereum in September 2021, after announcing its incentive $370 million liquidity mining plan at the end of August. However, the Gas paid per day on Fantom is still much less than on the Ethereum network because it is built for lower transaction costs.

Number of Transactions (Ethereum VS Fantom)

Daily Gas fee (Ethereum VS Fantom)

Contract deployment activities

Contract deployment activity is a good indicator of project development on the blockchain. These levels of activity are typically higher on the Ethereum blockchain compared to the Fantom blockchain, as more projects are currently being built on Ethereum.

This phenomenon can be seen in the figure below, which shows the number of contracts deployed on Ethereum and Fantom. In early June, Ethereum peaked with more than 240,000 contracts deployed in a single day. Since then, however, deployment activity has declined and stabilized at less than 20,000 per day. Fantom, on the other hand, saw a spike in contract deployment activity after it announced its incentive liquidity mining plan in early September 2021, with approximately 128,000 contracts being deployed per day. During this time, it's important to note that contract deployment activity for Fantom is higher than for Ethereum.

The contract deployment rate is calculated by dividing the number of contract deployments on Fantom by the number of contract deployments on Ethereum. We can see that over time, the deployment rate has been increasing, with a certain spike. The ratio was 1.26 when Fantom's contract deployment activity flipped Ethereum. This means that for every one Ethereum contract deployed, 1.26 contracts are deployed on Fantom. However, the main takeaway from this data is that the overall deployment ratio for Ethereum is following a gradual upward trend, with recent numbers hovering around 0.1.

Contract Deployment volume (Ethereum VS Fantom)

Contract Deployment Rate (Ethereum VS Fantom)

Smart money & NBSP;

If you're familiar with Nansen, you should be familiar with our Smart Money label by now. Smart Money is a label of Nansen that includes Smart LP, Flash Boys, Whales, Funds, and others. Take a look at our definition of a wallet label.

Smart money interaction is one of the possible positive indicators of a project/agreement as it indicates the interest of experienced investors. Not surprisingly, as Fantom grows in popularity and big names like SushiSwap, Beefy Finance, and Curve migrate, the data shows that quite a few smart money addresses are already involved in Fantom and Ethereum.

From the chart, we can see that Flash Boys (wallets that make multiple DEX transactions in a single transaction and are essentially profitable) have the highest overlap (24.2%) on Fantom and Ethereum. Not to mention the overlap rates for smart LPs, other people and funds are 13.3%, 7.1% and 0.9%, respectively.

If we compare these numbers with those of the Binance Smart Chain, we can see that the smart money overlap rate on Fantom is much lower. Does this hint at the possibility that Fantom is still in the early stages of smart money adoption?

Smart Money segment (Ethereum VS Fantom)

Smart money market segments overlap

StableCoin

Tether (USDT $) is the most valuable StableCoin on the Ethereum network. It dominates StableCoin circulation by a huge margin, where it trades almost twice as much as USDC and DAI dollars combined. However, the dominant stablecoins on the Fantom network are USDC and DAI, with USDT coming in a close third. This shows that there is no dominant market leader in this area yet and it will be interesting to see how it develops in the future.

Although both $USDC and $DAI are at the top of the transaction volume on the Fantom chain, as you can see from the chart below, $USDC is far ahead in transaction volume and number of active sams per day. This would indicate that USDC is the preferred StableCoin on the Fantom blockchain.

The surge in StableCoin activity on the Fantom blockchain shows that adoption rates are gradually improving, and September was an explosive month due to the announcement of incentive liquidity mining plans.

The increase in StableCoin numbers is a positive indicator as it will mean there is plenty of liquidity on the chain, allowing users to take on the more complex strategies they have been doing on the Ethereum main net at a fraction of the cost and significantly faster. However, in late September, when the cryptocurrency market as a whole was experiencing a decline, StableCoin activity on Fantom followed the same downward trend.

StableCoin daily online volume

StableCoin daily active sender

Daily amount of StableCoin transfers

StableCoin volume value distribution

The average value of StableCoin transactions is a good indicator of the average capital/wallet size of Fantom users. Found on the main dashboard of Nansen's StableCoin, the value distribution of deal sizes over time paints an interesting picture.

StableCoin volume and volume on Fantom were high in September. Interestingly, since the announcement, the proportion of large bills over $100,000 has been rising. Moreover, transactions of more than $1 million have consistently accounted for more than 90 percent of all transactions on the blockchain, which could indicate that Orca was lured in by the incentive of liquid mining schemes.

StableCoin value distribution changes with volume

conclusion

With DeFi's rapid growth over the past 12 months, the question now is whether the current infrastructure can keep up with the growing demand. Many Tier 1 and Tier 2 solutions have come up with innovative ways to solve the various problems set up by blockchain operating on top of previous consensus algorithms, and are competing fiercely for market dominance.

Liquidity mining incentives were often used to stimulate use in earlier versions of these solutions, but it will be interesting to see which (some) players in the market will emerge at the top as these incentives dry up. Will Fantom be one of the more popular Layer 1 of the future?

About Nansen

Nansen is a blockchain analytics platform that enriches on-chain data with millions of wallet tags. Cryptocurrency investors use Nansen to spot opportunities, conduct due diligence, and defend their portfolios with real-time alerts.