In this “Comparison: Fantom vs Avalanche” article, we’re going to explore the differences between two of the most prominent smart contract blockchains. We’ll explore the foundations of both Fantom and Avalanche. Also, we’ll compare how each platform functions on a technical level and discuss what makes each network unique.
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The Blockchain Trilemma
Bitcoin and Ethereum have paved the way for the blockchain industry. However, these legacy blockchains have found it challenging to scale in order to meet the demands of the user base.
The blockchain trilemma refers to the issue of scaling without compromising on security or decentralization. Fantom and Avalanche aim to solve the blockchain trilemma by establishing robust, scalable, and decentralized blockchain networks capable of processing high volumes of complex transactions.
What is Fantom?
Fantom is a highly-scalable, decentralized, smart contract-enabled blockchain protocol. The Fantom Opera mainnet is an Ethereum Virtual Machine (EVM)-compatible, asynchronous Byzantine fault tolerant (aBFT) layer-1 blockchain. It boasts fast, secure transaction confirmations with fees of around $0.0000001, making it ideal for developers of decentralized applications (dapps).
Using Fantom, developers can build and scale Ethereum apps without friction. Also, thanks to the novel directed acyclic graph (DAG)-based aBFT consensus algorithm, developers can build and scale dapps without creating their own network layer. In turn, this enables the Fantom network to process vast quantities of transactions with ease.
The FTM token is the native cryptocurrency of the Fantom network. It is the primary medium of exchange and unit of account throughout the Fantom ecosystem. The FTM token comes in the native Fantom FTM token standard, the Ethereum ERC-20 token standard, and the Binance BEP-20 standard. Also, FTM is available on the Moonbeam and Harmony One networks.
Furthermore, holders of the FTM token can participate in protocol governance by locking up their tokens and securing the network via the Proof-of-Stake (PoS) mechanism. At the time of writing, the FTM token is trading at around $1.26, with a market cap of $3.2 billion, according to CoinGecko. Also, the FTM token has a maximum supply of 3.175 billion, and a circulating supply of 2.5 billion.
Moreover, Fantom provides an EVM-compatible development environment for high-speed dapps with minuscule transaction fees and minimal congestion. Additionally, the network is extremely unprofitable to attack and is designed to become increasingly more secure as it grows.
What is Avalanche?
Avalanche is an open-source, smart contract-enabled blockchain network and EVM-compatible development ecosystem. The platform provides enterprise-grade public and private blockchain solutions. Plus, Avalanche has a thriving Web3 development community. Also, Avalanche supports common Ethereum tooling such as Truffle, Remix, and Solidity.
The average transaction on the Avalanche blockchain is around $0.000004, making it incredibly stable for the development of decentralized applications (dapps). Also, Avalanche is entirely interoperable with Ethereum, thanks to the Avalanche-Ethereum Bridge (AEB). Users can also choose from 10 different virtual machines and validator sets to create a bespoke development environment.
The native AVAX token is at the heart of the Avalanche ecosystem and plays a crucial role as a medium of exchange for the various protocols operating on the network. Also, the AVAX token incentivizes honest behavior among the validators throughout the network.
The novel Avalanche PoS mechanism enables validators to stake the AVAX token to secure the network and validate transactions. This mechanism requires validators to stake a minimum of 2,000 AXAX tokens and meet the minimum criteria for Proof-of-Correctness and Proof-of-Uptime. Also, rewards are proportionate to a validator’s stake.
Avalanche makes it incredibly simple for developers to deploy rich Web3 apps and services with bespoke parameters. Additionally, Avalanche is a provider of custom, enterprise-grade blockchain services for both public and private networks. These subnetworks can each have their own consensus and tokenomic architecture.
Furthermore, the AVAX token is trading at around $88.07, with a market cap of $23.5 billion, according to CoinGecko. The maximum supply of AVAX is 720 million, with a current circulating supply of 267 million tokens.
FTM vs AVAX
At the time of writing, the AVAX token ranks higher than the FTM token in terms of market cap. According to CoinGecko, the AVAX token is up 2,947.7% from its all low high of $2.80 on December 31, 2020, and down 41% from its all-time high of $144.96 on November 21, 2021. The FTM token ranks at number 44 by market cap. FTM is down 62.7% from its all-time high of $3.46 on October 28, 2021, and up 67,662.1% from the all-time low of $0.00190227 on March 13, 2020.
However, despite these differences, the two assets serve many of the same functions. Primarily, both assets help to secure the network through staking. Additionally, both assets are the primary medium of exchange and unit of account across each respective network. As each network is home to a broad range of decentralized applications (dapps) and protocols, both FTM and AVX have high utility. Also, each asset entitles holders to participate in protocol governance. Accordingly, both FTM and AVAX assist in the decentralization of their respective networks.
Fantom vs Avalanche - Similar but Different
While both Fantom and Avalanche are leading EVM-compatible smart contract blockchains, there are some crucial differences between them. For example, Avalanche has a more significant number of validators, making the network theoretically more decentralized. Also, Avalanche has a faster translation finality than Fantom. Also, 80% of the total FTM supply is in circulation, compared with 64% of the AVAX supply.
In the world of decentralized finance (DeFi), a common metric for measuring whether a token is undervalued or not is market cap by total value locked ratio (MC/TVL). At the time of writing, Avalanche has an MC/TVL ratio of 2.13, whereas Fantom has an MC/TVL ratio of 0.49, according to DeFi Llama. The lower the ratio, the higher the probability of the asset increasing in price. Accordingly, FTM wins on this metric.
Fantom and Avalanche are both compatible with popular wallets, including MetaMask and Ledger. Furthermore, both networks feature varying degrees of Ethereum compatibility. Avalanche and Fantom are both Solidity and EMV-compatible. As such, developers can deploy Ethereum smart contracts on both networks with minimal friction. Both teams consist of industry-leading experts. However, Avalanche has a larger team than Fantom, bringing more experience to the table across a broader range of subjects.
When it comes to scaling, both platforms aim to reduce bottlenecking by processing higher volumes of transactions at lower costs than legacy layer-1 blockchains. Both Fantom and Avalanche can process around 4,500 transactions per second (TPS). The average transaction finality on Fantom is around one second. However, Avalanche has an average of below two seconds, making it slightly slower. Also, Fantom takes a novel approach to scaling by giving each application its own self-contained blockchain and tokenomic structure. Moreover, both blockchain networks facilitate scalability more efficiently than legacy blockchains.
Fantom & Avalanche: Consensus, Governance, and Validation
Fantom uses an asynchronous Byzantine fault tolerant (aBFT) directed acyclic graph (DAG)-based consensus mechanism called Lachesis. Lachesis is a faster, more secure, and more scalable consensus mechanism than Proof-of-Work (PoW). Also, because Fantom is fault tolerant, it can operate with only two-thirds of the nodes in the network. Avalanche uses a DAG-based PoS consensus mechanism that is also highly scalable, decentralized, and resistant to attacks.
Furthermore, both networks benefit from on-chain governance. The FTM token enables holders to vote on proposals to make changes to the Fantom protocol. Likewise, the AVAX token grants holders governance rights. However, to vote on Fantom requires one FTM token, whereas holders must stake the AVAX token to participate in Avalanche governance.
To become a validator on the Fantom network, you’ll need to lock up at least 500,000 FTM, equating to around $650,000 at the time of writing. To become an Avalanche validator, you’ll need to lock up a minimum of 2,000 AVAX, worth approximately $176,000. Fantom validators require specialized hardware, whereas Avalanche nodes need a relatively basic setup. Accordingly, Avalanche nodes can get set up with much less starting capital.
Fantom Consensus
Fantom uses a directed graph (DAG)-based asynchronous Byzantine fault tolerant (aBFT) consensus mechanism called Lachesis. The aBFT consensus allows the network to continue processing computations when data is under dispute. A DAG is a type of distributed ledger technology (DLT) that structures data in a way that enables decentralized networks to scale without compromising on security.
Avalanche Consensus
The Avalanche mainnet comprises three separate blockchains, the X-Chain, C-Chain, and P-Chain. The X-Chain uses the Avalanche consensus protocol and is primarily for asset management. Furthermore, the C-Chain facilitates smart contract creation, while the P-Chain enables validator coordination. Both the C-Chain and P-Chain use the Snowman consensus protocol.
Avalanche achieves extremely high data optimization thanks to this three-chain approach. The Avalanche consensus protocol combines all of the best parts of classical consensus mechanisms, such as high speed and scalability, with the decentralization of Nakamoto consensus. This is the result of various stepping stones through different consensus models as the project has matured.
Staking
Both Fantom and Avalanche offer staking rewards that enable network participants to earn a passive income by locking up funds and securing the network. Fantom offers a flexible staking service whereby FTM holders can earn rewards proportional to the duration of their stake. Stakers can earn rewards from as little as 1 FTM without a lock-up at the base rate of 4% APY.
Alternatively, stakers can earn up to 13% APY for locking funds up for a year. Additionally, Fantom stakers can unlock the value of their stake by minting sFTM tokens at a 1:1 ratio. These sFTM tokens can then be used throughout the Fantom DeFi ecosystem. Conversely, Avalanche stakes are predetermined and irreversible. However, nodes can earn up to 11% APY on stakes. Also, Avalanche staking incurs no stake slashing for downtime.
Summary
Avalanche and Fantom are pretty evenly matched in terms of scalability and popularity. Also, both networks benefit from a DAG-based consensus mechanism. However, Avalanche emerges as a winner in terms of market cap and total value locked (TVL). That said, the Fantom development community has seen significant funding in recent months. As such, there are 205 protocols on Fantom at the time of writing, compared to only 186 on the Avalanche network. Also, the market cap/total value locked (MC/TVL) ratio of the FTM token suggests that it may be undervalued compared to the AVAX token. As such, we may see a continuation in the popularity of the FTM token and the Fantom DeFi ecosystem.
Despite the differences between the two platforms, both provide an efficient, cost-effective solution for developing smart contracts and scalable decentralized applications (dapps). If you want to learn how to build your own dapps using JavaScript, check out the JavaScript Programming for Blockchain Developers course at Moralis Academy! Here, we teach students how to build a decentralized exchange (DEX) from scratch! Following this, be sure to check out the Ethereum Smart Contract Programming 101 course. In this course, students learn how to write and deploy smart contracts on Ethereum using Solidity. This is the perfect way to start building your Web3 portfolio. Become blockchain certified and find your perfect career in Web3 with Moralis Academy!
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