Foundations of Fantom Vol. 5.pdf - Benjamin Cowen

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“Consensus-as-a- service” Foun˚tion‘ of Fantom VOL.II. . . No.2 JUNE 6, 2020 BC ANALYTICS Abstract in contributing to the decentralized finance applications of to- morrow, by ensuring they have the appropriate infrastructure By BENJAMIN J. COWEN, PHD behind Fantom today. The partnership with Chainlink is also in combination with Fantom’s decentralized finance (DeFi) suite. In liue of this, You have jumped into the cryptoverse! Welcome to the stablecoins can be minted on top of FTM (fUSD). This will give fifth edition of "Foundations of Fantom," a report published the Fantom ecosystem the capacity to have synthetic assets that for those who want to dive deep into the metrics of Fantom can be traded, as well as a decentralized application to power tokens. This report is strictly not financial advice and should it. This decentralized application is called "Fantom Finance," a not be treated as such. It has been a while since the last edition platform launching soon that simplifies trading, lending, and so we certainly have some catching up to do! This report is borrowing of synthetic assets. Traders can access their wallets independent of the Fantom Foundation, and does not necessarily and deposit tokens, and begin earning interest immediately. represent their views. The main objectives of this report are Thus, Fantom is positioning itself to play an important role to help you understand Fantom, discuss important events and within the world of deFi and will have the necessary infrastruc- partnerships that have recently transpired, inform you of recent ture to support a general surge of interest in the cryptocurrency developments in Fantom technology, graph key metrics, identify markets. any trends or correlations, and package the data in an easily consumable way. On-Chain Analysis Let us jump straight into various coin metrics so we can This report is also useful to those who do not keep up with catch up from the last report! It is important to note that these daily/weekly events, and enjoy reading a single report which figures and discussion are only in reference to ERC-20 Fantom will catch you up on all things Fantom. It is important to note token transactions. Fig. 1 shows the number of transactions per that the reports in and of themselves are not meant to encourage day. This is the same figure as the prior report, but now the data you to buy or sell any specific cryptocurrency. Instead, we extends out a few more months. hope that you can use this analysis, in addition to doing your own research, to build a portfolio that matches your risk/reward goals. Partnerships Fantom recently announced one of its more important part- nerships yet with Chainlink. The partnership provides Fantom with an oracle solution connecting real-world data with the blockchain. The infrastructure behind Chainlink will provide reliable market prices, as well as access to other credible API data. By using Chainlink technology, Fantom developers will have an easier time building scalable products, and thus fully building out the Fantom ecosystem. As we move into this decade, there is little doubt that decen- tralized finance will play a pivotal role. Fantom has certainly Figure 1: Number of transactions per day. been focusing on the development of decentralized finance ap- plications the last few months, as they recognize that this niche The figure shows that transactions per day were initially area will only grow in the coming years. Thus, this partnership decreasing, from the launch, until early 2019. From there, the will help Fantom leverage plenty of opportunities for assisting number of transactions per day entered an uptrend throughout VOL.II. . . No.2 Foundations of Fantom JUNE 6, 2020 2 the first half of 2019, commensurate with the movement of the hand, if the ratio is less than 1, then more unique addresses overall cryptocurrency asset class. Since then the number of were sending rather than receiving. Since October 2018, we can daily transactions has moved between approximately 40-300, see that the trend was mainly down, with the ratio stabilizing which also tends to move in general with the overall health around 1. Since October 2019, the trend has started moving of the entire cryptocurrency market. A breakout to the prior upwards. highs in the summer of 2019 would need to be accompanied Perhaps one way to think of this is that more people could by a general healthy cryptocurrency market. If the market as be starting to accumulate Fantom tokens, since we know the a whole gains more attention, then Fantom activity will also number of unique addresses receiving is approximately 1.5x likely increase. the number of unique senders. Of course, this only accounts for on-chain data and not transactions that takes place on centralized exchanges. Regardless, if the unique addresses can generally be associated with new people obtaining some Fantom tokens, then it could be that we are simply in an accumulation phase in anticipation of prices moving higher once the overall health of the cryptocurrency asset class improves. Figure 2: Daily ratio of unique receivers to unique senders (of just the ERC-20 Fantom). Fig. 2 shows the daily ratio of unique receivers and unique senders. If the ratio is above 1, then that means there were Fig. 3 shows the running total number of transactions as more unique addresses receiving than sending. On the other a function of time. While there is a general ebb and flow, the VOL.II. . . No.2 Foundations of Fantom JUNE 6, 2020 3 figure shows we crossed 100,000 transactions earlier this year, Fig. 5 shows the 50 day and 100 day moving averages marking a significant milestone for the Fantom network. The (MAs) of the number of transactions per day. This helps to move upwards in the second quarter of 2019 was likely inspired reduce the overall noise in data granulated daily. The local by the general move upwards of the entire cryptocurrency mar- bottom in both moving averages appears to be approximately ket. A move by Bitcoin above $10k and onwards to $14k may 70-80 transactions per day, indicating that there is still a decent rejuvenate the rest of the asset class, and lead to a short-term amount of activity on the Fantom network. uptick in the number of transactions. 500 50 Day MA 120,000 450 100 Day MA 400 100,000 350 80,000 300 Transactions 60,000 250 200 40,000 150 20,000 100 50 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 0 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Figure 5: Monthly ERC-20 Fantom token transactions. Figure 3: Running total of the number of daily ERC-20 Fantom transactions as a function time Of course, we know there is an ebb and flow to the number Price and Volume of transactions, so let us break it down by month to better identify when Fantom tokens have been moving around more frequently. Macroscopic figures like these can help show how In this section we will discuss the price and volume of Fan- quickly the market can move. For instance, back in the first tom tokens, but again this is not financial advice. Fig. 6 shows quarter of 2019, monthly transactions were around 2,000-4,000. the number of tokens traded versus price, with a color-coded However, the summer of 2019 was marked with a huge increase time dimension. It is important to note that the y-axis is on a in transactions, with a peak at almost 18,000 transactions in a logarithmic scale. The data is granulated daily. single month! In recent months, the number of monthly transac- tions has retraced back to between approximately 2,000-4,000. 1010 Apr 20 Thus, while the market can be slow for a while, history has Mar 20 shown us how quickly things can change. Jan 20 18000 Dec 19 Tokens Traded 16000 Oct 19 109 Aug 19 14000 Jul 19 12000 May 19 10000 Mar 19 8000 Feb 19 108 Dec 18 6000 4000 0 0.005 0.01 0.015 0.02 0.025 0.03 0.035 Price ($) 2000 0 Figure 6: Tokens traded versus price, with a color-coded time Jul 2018 Jan 2019 Jul 2019 Jan 2020 Jul 2020 dimension. Figure 4: The 50 and 100 day MAs of the number of Fantom While the price of Fantom tokens has retraced from the ERC-20 transactions per day. highs of summer 2019, the figure shows that the number of VOL.II. . . No.2 Foundations of Fantom JUNE 6, 2020 4 tokens traded at these prices has increased considerably. The will likely print a golden cross (a crossover of the 50 day MA color-coded data points move from blue to red as we move up over the 200 day MA) in the coming months. This could forward through time. This shows that even though price has help establish a general shift in price momentum as investors not moved as much recently, there is more and more volume notice the shift in sentiment. coming into the market. This is especially important for cryp- tocurrency projects, because establishing liquidity helps to 108 establish confidence. 1010 Apr 20 107 Mar 20 Volume ($) Jan 20 Dec 19 Tokens Traded Oct 19 109 106 Aug 19 Jul 19 May 19 Mar 19 105 Feb 19 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 108 Dec 18 Figure 9: Daily volume of Fantom tokens vs. time. 10-2 Price ($) The daily volume of Fantom tokens has been fairly steady the last few months at approximately $1-$3M per day. This is Figure 7: Tokens traded versus price, with a color-coded time actually a fairly healthy trade volume and shows there is a decent dimension. amount of liquidity in the market. Liquidity is something that is certainly needed for confidence to build in a project. After Fig. 7 also shows the number of tokens traded versus price, all, who would want to buy a token if they are not sure if they with a color-coded time dimension. However, this time both can ever sell it? Thus a daily volume of a few million dollars the y-axis and x-axis are on a logarithmic scale. The discussion can at least help provide this level of confidence. does not really change from the first figure, but is provided just for another visual representation of the data. 10-6 4.5 10-1 4 3.5 3 2.5 2 Price ($) 10-2 1.5 1 0.5 Price 50 Day MA 0 100 Day MA Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 200 Day MA 10-3 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020 Apr 2020 Jul 2020 Figure 10: Fantom price with respect to BTC. Figure 8: Price vs. time with the 50, 100, and 200 day moving The price of Fantom with respect to BTC has been moving averages. down the last few months, but this is typical for a lot of coins during this phase of the market cycle. Usually once Bitcoin Fig. 8 shows the price of Fantom tokens, as well as the 50, establishes itself above the 20 week moving average and holds 100, and 200 day MAs. The price over the last few months has it as support, other coins tend to come to life. During the last been steadily increasing since the lows of mid-March, which is market cycle, BTC was above the 20 week MA in late 2015 for certainly a healthy sign. If the price trend continues, Fantom 3 months or so before a lot of altcoins started to make their own VOL.II. . . No.2 Foundations of Fantom JUNE 6, 2020 5 moves. Obviously there are no guarantees with any coin, but can establish a bottom around its current level and look to build the dominance of BTC has gone up significantly over the entire from there. market since 2018. Hopefully, the BTC valuation of Fantom