FTM is the Fantom Network’s native token, and like most crypto tokens, it is used for governance, compensation, and network security. Fantom Network is a decentralized, scalable, permissionless, secured, and open-source DAG (Direct Acyclic Graph) smart-contract platform used to build crypto dApps (Decentralized Applications). Fantom Network doesn’t handle data the way most blockchains do. So before we delve into FTM staking, let us first understand the data structure behind Fantom Network.
Direct Acyclic Graph
DAG is a data modeling or structuring tool that uses vertices to record transactions in a cryptocurrency network. The main difference of DAG from blockchains is that, while blockchains consist of blocks, DAG uses vertices and edges for every transaction added to the network. A chain will be formed as blocks are added to the blockchain network. However, in DAG, a graph is formed as more vertices are recorded on top of one another. Like in blockchains, DAG uses nodes to submit transactions to the network. Similarly, before a transaction is successfully accepted to the network, it must be referenced from a previous transaction, just like how new blocks are added to the blockchain.
Fantom’s use of DAG eliminates the problems encountered by blockchains in terms of decentralization, scalability, security, and speed. Fantom leverages its asynchronous Byzantine Fault Tolerance algorithm, Lachesis, which is more powerful, efficient, scalable, and secure than other models like Classical and Nakamoto. Lachesis is leaderless and asynchronous; participants need not be in sync with their peers when processing commands. Using the aBFT mechanism also means that consensus can still be achieved even if there are misbehaving nodes in the network. Since blocks are eliminated in DAG, transactions are confirmed much faster in 1–2 seconds.
Fantom protects its network from Sybil attacks by implementing the Proof-of-Stake consensus mechanism. Sybil attack is when a malicious node operates many active fake identities within the peer-to-peer network to gain influence over the network leading to corruption. Proof-of-Stake nominates validators to validate transactions with their staked tokens. If a validator adds an invalid transaction, it will be penalized by taking a portion of its staked tokens or the whole of it but will be rewarded with tokens for every valid transaction. Setting up a validator is also expensive to encourage the validators to be more cautious in validating transactions to earn back their investments faster. This makes the chances of adding invalid transactions slimmer providing the network with a higher level of security.
Apart from the other requirements, a minimum token amount is also required to become a validator, making it impossible for some token holders to do the setup. Fantom Network requires at least half a million FTM tokens for those who want to become a validator. However, crypto exchanges are offering staking services within their platform so that users can simply stake their desired amount of tokens, and they will do all the hard work for a fee. Fantom Network offers staking services for users to earn passive income through their platform. At the same time contribute to the network’s security and decentralization. Fantom currently offers a hefty 20% rewards rate per year.
How To Stake FTM
Users need at least one FTM to stake in Fantom’s platform, but they first need to follow a few steps to get started. The first thing that they need is a compatible wallet. Users with an existing wallet can simply import their wallets to the platform. Users with a MetaMask account can just link their account to the Fantom Network to connect their wallets. Those without a wallet should create one by downloading the FTM wallet from the progressive web app.
Users must create an account in the Fantom Network if they don’t have one yet. Those with an existing account must download their FTM Wallet on the platform. Once downloaded, they need to click the “Create New Wallet” button. After creating the wallet on the platform, they can send their FTM tokens to it. FTM tokens can be acquired in many ways, like buying the tokens from exchanges, receiving them as payments, or earning them through airdrops.
Once they have stored FTM tokens in their wallet, they can finally start staking. On the main page of the Fantom Network’s website, users need to select the Staking option. Next, they will be presented with a list of validators who will do the staking on their behalf. Once they have selected the validator, they will be asked for the FTM tokens they want to stake, the staking period or how long they want to lock up their tokens, and their FTM wallet. Once they have entered the required information, they just need to click the Stake button and confirm the transaction, and the staking process begins.
The rewards are distributed every week, but that will also depend on the validator. There is a History tab where users can check their staking details like the amount they have staked, their earned rewards, and the date and time when the staking details have been updated. The website also has a built-in calculator that users can use to compute their projected earnings.
Fantom’s utilization of DAG design, Lachesis algorithm, and the Proof-of-Stake mechanism has closed the gap in balancing security, speed, scalability, and decentralization. These are issues that most cryptocurrencies like the more popular Bitcoin and Ethereum continue struggling with. One remarkable feature of the network is its intuitive staking process. Fantom designed the staking process with users in mind; users can complete staking their tokens with just a few clicks if they already have the compatible wallet with FTM tokens. Fantom is an adequate place to stake FTM tokens. But since cryptocurrency is a volatile market and Fantom is not risk-free despite its robust security, it’s always good to research the protocols and validators before investing.