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