Interoperability emerged as a hot topic in February as platforms like Binance Smart Chain and Polkadot work to build Ethereum network bridges that allow users to avoid high transaction costs and network congestion.
Fantom (FTM) is the latest project getting a boost by providing cross-chain functionality with Ethereum. Data from Cointelegraph Markets and TradingView show FTM price increased 1,570% from $ 0.025 on Jan 23 to a new high of $ 0.43 on Feb 21.
Three basic reasons for Fantom’s current rally are the release of a cross-chain bridge between Ethereum and Fantom, the introduction of on-chain governance functions and the ability to store tokens on the network while accessing their value for use in the decentralized system Fund the ecosystem.
Yearn.finance facilitates a cross-chain bridge to Ethereum
On February 21, Fantom, with the help of Andre Cronje of Yearn.finance, announced the development of a cross-chain bridge with Ethereum that would allow users to transfer ERC-20 tokens to Fantom for “enjoying fast and inexpensive transactions”.
According to the team, transactions on Fantom are “confirmed in 1-2 seconds” and “cost a fraction of a penny”. The team also promised that cross-chain functionality with other chains will follow soon.
VORTECS ™ data from Cointelegraph Markets Pro identified an optimistic outlook for FTM on February 21 ahead of the recent price hike.
The VORTECS ™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points such as market sentiment, trading volume, recent price movements and Twitter activity.
As can be seen from the graph above, VORTECS ™ for FTM hit a high of 74 on early February 21st, just before the price hit a new all-time high.
On-chain governance encourages community engagement
Another popular topic of the current bull market is the ability of token holders to participate in the development of the ecosystem through a governance mechanism.
On January 12th, the Fantom Foundation presented the publication of on-chain governance for the Fantom network, making it one of the first chains to support this function for a fully decentralized blockchain.
Through the governance mechanism, each FTM token corresponds to one vote, and each token holder can submit a proposal to improve the ecosystem as well as vote on a pending proposal.
Proposals cost 100 FTM to submit, which are incinerated during the process, and voting costs a fraction of 1 FTM.
The Fantom voting system differs from other governance platforms in that it offers a wide variety of proposal templates and the ability to express the level of agreement with the proposal rather than simply casting a “yes” or “no” vote.
Fantom plans to integrate stakeout and DeFi functions
A third motivating factor for FTM’s recent price hike is the introduction of liquid staking or the ability to store tokens on the network while accessing the token’s value for use in DeFi.
In most proof-of-stake networks, token holders have to choose whether to use their tokens to secure the network and receive rewards, or to give up those rewards to access the token’s value for security or trading purposes .
FTM holders can store their tokens in the network and mint a corresponding amount of sFTM, which can then be used as security for the Fantom Finance DeFi platform.
It has proven to be an attractive incentive to offer token holders an additional opportunity to generate a return. After FTM was listed on SushiSwap and 1 inch on January 25, the price skyrocketed from $ 0.05 to $ 0.26 over the next three days.
Since then, FTM has been added to Coinbase Custody and the Ledger hardware wallet and has been selected by the Ukrainian Ministry of Digital Transformation as a platform for the exchange of intellectual property.
Each of these developments support the strong breakout in the FTM price, and the upcoming release of the Ethereum cross-chain bridge has placed Fantom in a good position to receive new levels of DeFi commitment. Additionally, the prospect of transaction fees as low as $ 0.01 can prove to be a tempting incentive for crypto traders and lead to liquidity migration.
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