Since Ethereum’s launch in 2015, every few years, crypto speculators shine a spotlight on new chains dubbed as “ETH killers”, which promise significantly higher performance than Ethereum. These monolithic blockchains are generally marketed as the be-all and end-all of smart contract blockchains integrating consensus, data availability, and transaction execution into a single layer. They claim to handle thousands to hundreds of thousands in transactions per second (TPS), a stark contrast to Ethereum’s base layer throughput of 15 TPS. Today, amid sentiments of a bull market, the Fantom blockchain emerges as a particularly notable example.

Launched in 2019, Fantom is a smart contract blockchain based on Directed Acyclic Graph (DAG) technology.  Launching in a brutal climate of a crypto bear market, Fantom experienced rapid growth, amassing almost $8B in total value locked (TVL) — capturing more than 5% of the aggregate TVL across all chains at its peak. Fantom’s growth in TVL, the predominant vanity metric to gauge and flex the activity of chains, can largely be attributed to the chain’s novel architecture and the influence of Andre Cronje. As Co-Founder of Fantom, the Founder of Yearn, and one of DeFi’s most prolific builders, Cronje’s involvement brought significant attention to the chain. However, just as quickly as it grew, a new bear market came, erasing much of the chain’s TVL which now sits at $156M, raising questions about its longevity. Is Fantom merely another 'ghost chain,’ with no activity as its name might ironically suggest, or is it poised for a resurgence? What exactly about Fantom makes it so unique?

Introduction to Fantom

Fantom achieves scalability through its DAG model, which diverges from the traditional blockchain approach of sequential block creation and confirmation, akin to single-threaded processing in computing. This allows for immediate linking and validation of transactions, enhancing the system's efficiency. Fantom’s DAG structure enables the use of unconfirmed transactions to expedite data inclusion, with transactions organized as vertices for collective, single-step validation. Despite Fantom's 2018 claim of potentially reaching 300K transactions per second (TPS), it wasn't until 2021 that the team achieved 10K TPS in a testing environment. Moreover, the network hasn’t experienced sufficient activity to fully test its theoretical limits, reaching a peak of just 20.8 TPS based on network activity in the same year.

The Sonic Upgrade

Despite Fantom’s decline in activity, the core development team of Fantom remains committed to achieving the network’s goal of becoming the industry’s leading high-throughput EVM (Ethereum Virtual Machine) compatible blockchain. In October 2023, the Fantom Foundation launched the testnet for ‘Fantom Sonic’, an ambitious network upgrade designed to enhance efficiency and scalability. Representing the next phase in Fantom's evolution, Sonic introduces a revamped technology stack while maintaining compatibility with the existing ecosystem of smart contracts, services, and tools on Fantom Opera, its mainnet. The upgrade is expected to deliver over 2,000 TPS at a time-to-finality of just 1.1 seconds without the need for sharding, rollups, or app-chains.

The Sonic Upgrade is distinguished by three primary components:

• Fantom Virtual Machine (FVM): A virtual machine that significantly increases transaction throughput while maintaining very short finality times, ensuring quick and efficient processing of transactions. It can process 65 times more transactions compared to the current EVM. Notably, the FVM retains EVM compatibility by converting EVM byte code from smart contracts.

• Carmen Database Storage: A new storage solution that reduces storage requirements by up to 90%, leading to cost reduction for validators and drastically speeding up the deployment of archive nodes from weeks to approximately 36 hours.

• Optimized Lachesis Consensus Mechanism: With an improved transaction pool, the existing Lachesis consensus mechanism ensures faster and more reliable transaction verifications.

Deployment and Testnets

Fantom Sonic is undergoing its testnet phase, with a mainnet launch scheduled in Spring 2024. Two separate testnets are being used to evaluate Sonic's capabilities:

• A closed testnet designed to test the maximum theoretical limits of Sonic, providing an insight into its full potential.

• An open testnet offering an interactive environment where any user or developer can directly experience Sonic's advancements or deploy decentralized applications (dApps).

Conclusion

Despite the obvious excitement technological upgrades bring, many are quick to learn that in crypto, the tech doesn’t always matter. It takes more than fast transaction times to drive activity and build a blockchain with a vibrant developer and user ecosystem. As such, Michael Kong of the Fantom Foundation has hinted at an airdrop to network participants to incentivize engagement. Additionally,  Andre Cronje stated on Twitter his plans to deploy new DeFi primitives to Fantom following the full launch of Sonic signaling an effort to attract more activity.

Since the announcement of Sonic’s testnet, Fantom’s price has increased by 317%, and its TVL has roughly tripled, growing from $46M to over $133M at the time of writing. This growth reflects growing optimism of the network’s revival and its ability to compete with giants like Ethereum, Solana, and Avalanche.

Since the announcement of Sonic’s testnet, Fantom’s price has increased by 317%, and its TVL has roughly tripled, growing from $46M to over $133M at the time of writing. This growth reflects growing optimism of the network’s revival and its ability to compete with giants like Ethereum, Solana, and Avalanche.

Many market participants have dismissed alternative Layer 1s (L1) as Ethereum has shifted toward scaling through a modular approach with Layer 2 (L2) solutions. These have been beneficial in addressing Ethereum's scalability challenges, albeit with drawbacks like compromised security due to reliance on centralized sequencers and fragmented liquidity stemming from the variety of L2s built atop Ethereum. In such cases, the advantages of a monolithic approach from a network like Fantom become increasingly apparent.

Monolithic blockchains like Fantom operate on a single layer, managing all critical functions—transaction execution, data availability, settlement, and consensus—within a unified architecture. Positioned as a scalable monolithic L1 chain that is EVM-compatible and adopts the prevalent tooling used by most smart contract developers, Fantom’s design allows for effective optimization and scaling of its ecosystem. It provides a cohesive environment that benefits both developers and users. With the integration of Sonic, Fantom’s path mirrors the broader trajectory of crypto, characterized by intense competition and rapid development. Fantom stands at a critical juncture where its upgrade and ecosystem developments enable it to rechallenge the dominance of established chains.