Fantom crypto staking: Fast, flexible investment
by Tom Nyarunda
While it's not entirely watertight, staking crypto can be a great way to use idle cryptocurrencies and a good source of passive income. That's because there are cryptocurrencies that offer high-interest rates for staking. If you're new to the cryptocurrency world and want to understand how crypto staking works, our Fantom crypto staking guide explains everything you need to know.
What is Fantom crypto (FTM)?
According to its website, Fantom is “a high-performance, scalable, and secure smart-contract platform” encompassing unique components. Built on the Fantom Opera Blockchain, the open-source Directed Acrylic Graph (DAG) network is compatible with the EVM (Ethereum Virtual Machine). It can run smart contracts besides creating new contracts that interact with Ethereum-based contracts.
The Fantom utility token (FTM) is used for executing financial transactions, rewarding validators, paying network fees, and securing governance and is available in leading cryptocurrency exchanges. FTM transactions are authenticated by a leaderless Proof of Stake system dubbed Lachesis that utilizes a custom asynchronous byzantine fault-tolerant consensus mechanism (ABFT). Using ABFT for validation facilitates faster and more affordable transactions compared to those using Proof of Stake (PoS) or Proof of Work (PoW) mechanisms. It finalizes transactions in a matter of seconds.
## How does Fantom (FTM) work?
While some cryptocurrencies exist predominantly as investments, utility tokens for digital economies, or a replacement for fiat currencies, Fantom crypto (FTM) deviates slightly and sees itself as a decentralized app. Fantom focuses on DApps – the combination of tools and technologies supporting the collection of smart contracts into apps. The platform is designed to run smart contracts cheaply and affordably so DApps can reach their full potential.
The Fantom blockchain's high speed can be attributed to DAG, where a network's transaction history is displayed as a "Hashgraph," just like the technology that powers Hedera Hashgraph.
Additionally, the platform uses Lachesis, a leaderless consensus mechanism that can run without a hitch, even if a third of transaction data is falsified. As a result, the platform can validate transactions independently without necessarily working through a queue of transactions, often in less than two seconds.
Fantom is compatible with the EVM (Ethereum virtual machine), which makes it possible to anchor decentralized applications built on Ethereum to Fantom without much ado. As a result, FTM is available as a BEP-20 token and an ERC-20 token and therefore conforms to Binance Smart Chain (BSC) and Ethereum token standards.
Fantom crypto DeFi
The Fantom development team has displayed its proof of flexibility by creating a token that features Decentralized Finance (DeFi) capabilities. The platform’s Opera Mainnet supports EVM-compatible smart contracts, allowing users to execute smart contracts on the network and making DeFi ideal on Fantom. The dashboard features an all-in-one DeFi suite for all users. Since it’s EVM compatible, users can mint, trade, lend and borrow cryptocurrencies directly from their digital wallets. Moreover, these functionalities are available almost instantly and at near-zero fees, meaning the DeFi function is open to all and sundry.
When it comes to DeFi applications, Fantom crypto currently supports the following:
Liquid staking: All FTM delegations are liquid within the platform’s ecosystem, meaning you can utilize your staked FTM tokens as collateral for DeFi applications.
fMint: Users can mind numerous synthetic digital assets, including cryptocurrencies, commodities, and fiat currencies, on Fantom.
fLend: You can borrow and lend cryptocurrencies to trade and earn passive income while holding your FTM tokens.
fTrade: The Trade Fantom feature allows users to trade Fantom-based cryptos through their wallets, making it a fully decentralized and non-custodial Automated Market Maker (AMM) exchange.
As a matter of fact, users can use Fantom crypto (FTM) tokens as collateral to mint fUSD, which they can use to trade and swap fiat currencies and synthetic tokens, which is made possible via the platform’s progressive web app Fantom fWallet that facilitates storing, sending, receiving and staking FTM tokens.
## What is Fantom staking?
Fantom staking is a process that enables users to participate in securing the Fantom ecosystem by delegating their idle FTM tokens to validators or running validator nodes.
Previously, FTM stakers had to lock their tokens for long or short periods to earn rewards. However, investors voted to introduce a new flexible staking model that guarantees maximum profitability. Stakers can now decide whether or not to lock their tokens, and the returns depend on the maximum lock-up period they choose.
Fantom uses Lachesis, an improved PoS consensus mechanism specifically adapted to the network and designed to facilitate high-speed transactions. That's all made possible because the Lachesis protocol is designed to validate transactions independently without consensus from the rest of the blockchain.
This differs slightly from the traditional PoS mechanism, where validators determine the validity of transactions within the network. Since the Fantom Opera system is leaderless, stakers can still delegate their Fantom crypto tokens to trusted ones, but validators do not determine the validity of blocks.
How to stake Fantom (FTM)
Staking Fantom is an affordable, low-barrier investment open to anyone with as little as 1FTM token. Moreover, specialized equipment or expertise is only required if you intend to run a validator node.
Validators staking FTM can earn staking rewards plus a 14% fee from delegators' rewards. The only catch is the requirement to have at least 500,000 FTM tokens before you can run a validator node. This is designed to prevent Sybil attacks on the platform’s consensus mechanism.
The Fantom crypto architecture is out-and-out on the platform's Opera Core layer that retains consensus across the nodes running on the Lachesis protocol. All transactions made on the network by independent nodes are processed and saved on each node.
The DAG mechanism confirms and validates transactions and allows nodes to independently and asynchronously process transactions.
Here is the step-by-step guide on staking Fantom (FTM):
Step#1: Visit the Fantom Staking Page.
Go to https://fantom.foundation/ftm-staking/ and click on "Stake your FTM". You only need at least 1 FTM token in your digital wallet.
Step#2. Connect, Create, or Restore Your Wallet.
Once you click "Stake your FTM", you'll be provided three options: connect your wallet, create a wallet, and restore your wallet. The "Connect Wallet" option lets you connect your regular wallet, allowing you to open or connect a wallet from your PC or mobile device.
If you don't already have a wallet, click "Create Wallet" to create one and enter a password. After that, you'll be given your mnemonic phrase and private key. Once you enter the phrase correctly, you'll have access to your newly created wallet.
The third option, “Restore Wallet,” requires entering your private key or mnemonic phrase, uploading your keystone file, and entering your account password to revive an old wallet.
Step#3. Stake Your Desired Amount of FTM.
Once you can access your wallet, you can transfer the desired amount of FTM tokens you wish to stake to a crypto exchange or your Fantom Opera wallet address. Click on the "Staking" menu; choose a validator to a delegation and the amount you want to stake and set up your desired lock-up period. There's also a stake-as-you-go option with no lock-up period. Moreover, the Fantom staking page is designed to estimate the rewards you can expect – the calculations are done by considering the staked amount, the lock-up period, and the current APR.
## Why is Fantom Staking Popular?
The platform's decentralized nature is one of the reasons. Fantom crypto staking is popular among investors, besides the DeFi feature that enables users to borrow, lend, and trade leading cryptocurrencies.
FTM is also a decentralized governance tool allowing investors to be key decision-makers. Moreover, people enjoy staking Fantom because it employs blockchain technology's three main aspects: scalability, security, and decentralization.
Is Fantom staking a good idea?
Staking Fantom crypto can be a great way to receive passive income and profit from your FTM tokens as you contribute to the success of the blockchain economy. It's also relatively safe to stake FTM since there's no way a validator node can access your staked coins. You only need carefully safeguard your mnemonic phrase or private key.
Remember that just like all other proof-of-stake blockchains, there’s always a risk of losing a fraction of your stake if the validator misbehaves or during the bear market. Remember, your funds become illiquid when you stake and lock up your FTM tokens.
Tom is a freelance writer with over 15-years’ experience in content creation, blog writing, and SEO specializing in the blockchain and cryptocurrency niche. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.