Interoperability has emerged as the hot topic in February as platforms like Binance Smart Chain and Polkadot work on building Ethereum network bridges that allow users to escape high transaction costs and network congestion.
Fantom (FTM) is the latest project to receive a boost by offering cross-chain functionality with Ethereum, and data from Cointelegraph Markets and TradingView shows a 1,570% increase in FTM price from $0.025 on Jan. 23 to a new high of $0.43 on Feb. 21.
Three fundamental reasons for Fantom’s current rally are the release of a cross-chain bridge between Ethereum and Fantom, the roll-out of on-chain governance features and the ability to stake tokens on the network while still accessing their value for use in the decentralized finance ecosystem.
Yearn.finance helps facilitate a cross-chain bridge to Ethereum
On Feb. 21, Fantom, with the help of Andre Cronje of Yearn.finance, announced the development of a cross-chain bridge with Ethereum that allows users to transfer ERC-20 tokens to Fantom to “enjoy fast and cheap transactions.”
According to the team, transactions on Fantom “are confirmed in 1-2 seconds” and “cost a fraction of a cent.” The team also promised that cross-chain functionality with other chains will be soon to follow.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for FTM on Feb. 21, prior to the recent price rise.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen on the chart above, the VORTECS™ score for FTM reached a high of 82 on Feb. 16, several days before the recent price rally began. On Feb. 17, Cronje posted a tweet mentioning the benefits of deploying new cross-chain assets to Fantom.
Users won’t even know they are on another chain, things will just suddenly become cheap and fast.
One day after the tweet, FTM price increased from $0.154 to $0.218 and the altcoin surged again on Feb. 19 as it rallied to a new 2021 high at $0.277.
The VORTECS™ score for Fantom then proceeded to increase from a low of 56 on Feb. 19 to a high of 74 on Feb. 21, shortly before the price broke out to a new all-time high.
On-chain governance boosts community involvement
Another one of the popular themes of the current bull market is the ability of tokenholders to participate in the development of the ecosystem via a governance mechanism.
On Jan. 12, the Fantom Foundation unveiled the release of on-chain governance for the Fantom network, becoming one of the first chains to support such functioning for a fully decentralized blockchain.
Through the governance mechanism, each FTM token equals one vote, and any tokenholder can submit a proposal on ways to improve the ecosystem, as well as vote on any pending proposal.
Proposal submissions cost 100 FTM, which is burned during the operation, and voting costs a fraction of 1 FTM.
The Fantom voting system differs from other governance platforms, as it offers a variety of proposal templates and the ability to express the degree of agreement with the proposal as opposed to casting a simple “yes” or “no” vote.
Fantom plans to integrate staking and DeFi features
A third motivating factor behind the recent price rise of FTM is the introduction of liquid staking, or the ability to stake tokens on the network and simultaneously access the value of the token for use in DeFi.
On most proof-of-stake networks, tokenholders have to choose between staking their tokens to secure the network and earn rewards or give up those rewards to access the value of the token as collateral or for trading purposes.
FTM holders are able to stake their tokens on the network and mint an equivalent amount of sFTM, which can then be used as collateral on the Fantom Finance DeFi platform.
Providing tokenholders with an extra way to earn a yield has proved to be an attractive incentive, and after FTM was listed on SushiSwap and 1inch on Jan. 25, its price exploded 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, as well as being chosen by the Ministry of Digital Transformation of Ukraine as the platform for the exchange of intellectual property.
Each of these developments supports the strong breakout in FTM price, and the upcoming public release of its Ethereum cross-chain bridge has placed Fantom in a good position to receive a new level of DeFi engagement. Furthermore, the prospect of transaction fees that cost less than $0.01 may prove to be an enticing incentive for crypto traders and could lead to liquidity migration.
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