Michael Kong / Fantom
Michael Kong on Fantom's ecosystem growth and half-billion dollar grants
In this episode
Ashton Addison speaks with Michael Kong, CEO of Fantom, on their growing blockchain ecosystem, the scalability and development advantages for Fantom, their new grants program of almost half a billion dollars, liquid staking and stablecoins on Fantom, and how developers and investors can get involved!
- Fantom processes transactions asynchronously, enabling multiple blocks to be validated simultaneously rather than sequentially, achieving block finality in 0.8-0.9 seconds.
- Smart contracts on Fantom cost significantly less than Ethereum, with complex operations costing around 50 cents to a dollar compared to $50-100 on Ethereum.
- Fantom maintains EVM compatibility, allowing Ethereum developers to deploy on Fantom without learning new programming languages or tools.
- Fantom processes 700,000 to over one million transactions daily and has processed over 230 million transactions since launching on December 27, 2019.
- The blockchain trilemma trade-off can be reduced through asynchronous transaction processing, allowing Fantom to support hundreds of validators without significant performance degradation.
Transcript
Read the full transcript
i'm ashton addison from block west capital for investment pitch media and the Crypto Coin Show and today on blockchain interviews with michael kong ceo of phantom michael welcome to the show and thank you for taking the time to come on yeah thanks ashton really appreciate the opportunity likewise i'm really excited to dive into phantom your protocol is working on
so many different things there's so many things we could be talking about but let's start out for the newer crypto users and people who don't know about the intricacies of phantom of just you know what is phantom all about what is your team working on and then we'll dive into those details yeah sure so phantom is essentially what is like the phantom foundation and
there's a phantom ecosystem so just like how it is like the ethereum ecosystem and the ethereum foundation so you know with the with regards to the ethereum ecosystem of the base technology is one plus it processes transactions asynchronously meaning that you can process multiple transactions simultaneously in contrast to say bitcoin or
ethereum so with bitcoin and ethereum of new processes like block by block so each block gets mine with phantom that's entirely not the case what happens is transactions get packed packed into blocks and then those blocks are paid are passed around the validating nodes in the network and you need two versions of the consensus to confirm that block but multiple
blocks get passed around simultaneously to the validators to get that two first consensus and once you have two first consensus or just over two first consensus of the network that's when a block is definitely finalized so it's added to the chain and it's final so you only need one block confirmation you don't need five or six there's no longest chain rule
so you have fast finality usually blocks have been processed currently on the network about every 0.8 to 0.9 seconds and because you're processing blocks simultaneously your network throughput goes up which means that you can handle more transactions per second and it also means that your transaction fees go down accordingly so for example you can
perform complicated smart contracts on ethereum that can cost you know 50 100 and you're paying you know maybe like 50 cents a dollar on phantom in comparison so you know i think we have a good baseline of technology there's still a lot of improvements to be made that you know perhaps i can go into on the call but that's the base technology and
that's connected to the ethereum virtual machine which means that the way that you write component and deploy smart contracts on ethereum works pretty much the same way as on phantom and on top of that you've got you know your usual api suites what we call like restful based api so you know being able to read and write data on chains so you know for example like web3.js you have
on ethereum you also have on phantom so it's a very familiar smart contract development environment it's just the consensus is very different which means that you know you can submit transactions faster and cheaper than say alternatives that are out there amazing great intro michael thank you for that explanation on you know a little bit of the intricacies of the
technology and from you know studying blockchain at a high level i first saw this blockchain trilemma and i'm not sure if it's really the case in all blockchains but sometimes there is a trade-off between the scalability and the decentralization and the security as well and it sounds like you've solved that scalability issue you know when compared to
ethereum and bitcoin trying to fit all the transactions into one block and lower the amount of confirmations did you see a trade-off between the security and the decentralization to get this or maybe you can walk me through that well we haven't really like solved the blockchain challenge so to speak but we don't kind of like optimize it so the blockchain trilemma for people that
aren't there is basically this theory that of like three categories of like features that you want in a chain that are beneficial decentralization security and life performance that you can only really pick between like the three of them right and so i'm sorry you're going to pick two of the three of them right and you're gonna optimize for two of them and you kind of
have to let one like not really be that optimized what happens with the founder technology is that we're basically like reduce the trade-off so for example you can still get like a lot of decentralization by having like a lot of validator nodes you know from from our analysis like i think we can have like three or four times the amount of validating nodes so we have network
right now we have 66 processing transactions so you can get like a few hundred validators and you know the performance won't degrade that much it will still be a lot more performant than say like bitcoin and ethereum but it would be a lot more decentralized and so but if you want to continuously add nodes to network and get like say a thousand you probably would see a
significant decrease in performance so i guess my point being here is that you know generally in programming when you process things asynchronously in other words when you process transactions simultaneously rather than one at a time you know just about it logically you would be able to process more transactions right without having to give up other things
so you know it's not really a solution to blockchain transfer there are other solutions that were actually like looking into i know other projects that have actively looking into it as well such as for example sharding such as for example replacing the efferent smart contract execution staff with our own smart contract execution staff that consoles a lot of
scalability problems associated with like ethereum smart contract technology and like a whole bunch of other ideas so i just want to be clear that like what we have right now at phantom in terms of the baseline technology is very solid it works it basically never goes offline it is like quite scalable so it's a great baseline to work off of but it's
not like the ultimate solution to the blockchain trilemma it's not the ultimate solution to infinite scalability we can't start with admins current technology or any other blockchain technology out there you're not gonna be able to host like a billion users right you're not gonna be able to host the same number of users that exist on the internet which
is where we want to be in the end and i think we'll get there in the end but there's a lot of technology improvements that need to be made along the way and i do think that there are coming though including on phantom amazing humble and informative thank you michael and earlier on you also mentioned about the evm compatibility i feel like that's really important for
growing the development ecosystem on phantom so that more daps that are already built in blockchain can move to phantom and i'm also curious about you know the developer ecosystem and just making it easier for people to build daps and defy and smart contracts on phantom yeah so we do have like a very like strong development environment you know just
give you some numbers out there on average we process you know anywhere from seven hundred thousand to like over a million transactions on a daily basis so this is like very competitive towards like ethereum and other chains that are out there we processed over 220 or maybe it's now even more than 230 million transactions since the network first went live
which was on the 27th of december 2019. We also have like more than two million unique wallet addresses and you know we have a lot of smart contracts supported on chain i think the total number is like in the thousands and of those thousands you know we probably have a few hundred applications that are kind of like widely used varying degrees so
as i mentioned before at the beginning of the conversation the way that you kind of like write and compile and deploy smart contracts on ethereum works the same way as in phantom that means that if you're a smart contract developer who's familiar with say solidity who's familiar with the fear and development environment with the ethereum pooling of deploying on phantom doesn't require you
to learn new things i mean or all that it requires you to learn is like how to connect to the network and how to basically like you know point your application to the phantom network as opposed to a theorem network and the documentation that's me later you know for you know like more than a year more than two years now so it's very very straightforward stuff if you're already
familiar with developing on ethereum and i think that strategy has kind of got us you know has been a big reason why we have a lot of traction that we do right now because we've seen a lot of projects that have forked from ethereum department phantom we see like the usual like dexes decentralized swaps you know lending and borrowing protocols of synthetic
tokens like you see on ethereum they're deployed on phantom because they're taking advantage of basically like a different faster consensus engine so you know when we first launched the chain which was the end of 2019 we sort of like had a decision make you know did we want to integrate directly with the evm or did we want to be working on our own like middleware
and kind of pushed in our main launch a bit later and we can we quickly came to solution we wanted to integrate with the evm because even though there are inefficiencies of the evm which were working a lot on including at the university of sydney well we did a lot of research in the evm long before phantom back in 2016. The evm is something that does work
you know despite like kind of its you know performance issues you know it does work it does process smart contracts you know it's proven to work on ethereum as well as like on phantom and also you know it was just something that kind of like works out of the box that we could integrate quickly on change and basically get the market quickly and it's also something that
people were very familiar with in terms of like development so you know it was very much for commercial reasons that we decided to integrate with the evm even though you know for example the solidity programming languages for any programmers that are out there they would know it's it's a bad language it's not a good language for multiple reasons multiple technical reasons
but you know we kind of made a commercial decision to go that route and i think was the right route because otherwise you know we still would be developing and we wouldn't really have as many users as we do right now yeah great point michael and i think that was totally the right decision but i've also seen with the phantom foundation creating grants and
incentives and opportunities for more projects to start building on phantom and i'm also curious you know what how is that grants program going and also are you like incubating projects yourself on phantom yeah so that grounds program is actually completely overhauled a previous grants program that we had that we announced in september 2021 and the reason why
that we had to completely overhaul the grants program is that when we first launched the grants program a few months ago about what was it now like six or seven months ago you know our vision was kind of like well you know we want a grants program out there that's based on objective metrics you know where it's not going to be seen as like buyers from the foundation that's
like who the grants go to or anything like that and make it very easy to like you know distribute the grants right and that's why we had you know metrics most notably like the total value locked metric right the problem with that sort of metric though is that as was proven in several articles that came out actually a couple of weeks ago the system was like kind of flawed
because people were able to like game the system not really run like i guess you can call like legitimate applications you know just like holding tvl and basically collecting the rewards which you know well some projects totaled you know the current marketplace the phantom like over like a million dollars every single month right and so some projects were taking that money
and basically just like selling it and you know and that wasn't the intention the intention of the rewards was to help grow the individual project by by giving it like back to the users right and that wasn't like really happening and so we had like and we also had these kind of like bad projects basically like getting the system as i mentioned
and so you know we had to completely overhaul the project because it was just basically like a waste of money and a lot of money was wasted and you know largely the incentive program was not very successful i have to admit but this new incentive program i think will be more successful because you know it's it's taking away you know the subject of the from the
foundation to a certain extent it's using the bitcoin grounds it's letting people vote on via these bitcoin grants where like you know phantom matches like the contributions and therefore you know we have a lot more community input as like which projects want to get funding in addition to that naturally with like nationally with incentive program like
the way we structured before where it's based on these metrics and you know the higher the metrics the more rewards you get then of course creates a buyer's smart incumbency in other words like the projects that are already big on phantom will keep getting will keep staying big on phantom even though there may be other projects out there that might be
wanting to try and compete against them they'll be at a big disadvantage because you know in order for them to get like a higher tv they have to be may have to compete against project they already have that high tvo but the projects that have the high tvo are getting enormous funding from the foundation to the tune of like more than a million dollars sometimes more than
that right and so you know when we take away you know those sorts of metrics and we put in the bitcoin grant it means that a lot more people can apply for it and a lot more people across different projects so another issue was that for example like you know if you had a project in particular like on the nft space you know what sort of metrics you
use to kind of analyze to see you know whether you get grants or not or how much the grants you get in the end right it's very very hard to measure this data and the data is kind of like a bit fuzzy right whereas with bitcoin you know you don't have to look at that sort of data necessarily you just leave it the community kind of decide you know is
this project legit based on maybe some more subjective factors about the team about the background about the application you know the ui the user experience of the application as to whether it should get funny or not for the phantom system so a number of reasons why with the completed overflow i know that there are some existing projects that were receiving a lot of brands that you know
obviously no longer receiving that were very upset with us you know i even heard some strong language about like betrayal and that sort of thing i completely disagree with that because these projects were getting you know free money from the foundation where the foundation did not require them to perform any services for the foundation or anyone in particular we didn't ask
them to do anything in return we didn't ask them it wasn't you know we didn't ask them for anything in particular always said was you know based on the incentive program here's like a million dollars every single month right and you know fought for a verdict to say oh this is betrayal we're going back on our work you know i completely disagree with that
you know because if someone's if all organizations giving you free money and you know the free money stops well you know i think you should appreciate that you know they've been giving you free money this entire time asking for nothing in return and so you know it's it's very ironic it's kind of like you know have we not distributed incentives at all or everybody would be
a lot more happier it seems like right but the moment you start just reading a sentence and people think that they're kind of like entitled to it and then you remove that and people get really upset because you've turned off the tap you know i guess this is kind of like human psychology right but i think this is absolutely the right decision is the right decision in long run for phantom
it sends the runway tremendously and it solves a lot of those problems where you know a lot of money was just being you know taken away by by essentially bad projects right it just gave me the system so you know i think overall this is very very positive for the phantom ecosystem and i think we've learned a lot of our lessons from the mistakes
that we made amazing yeah thank you for that story michael and yeah i'm glad that you guys revamped it and it looks like it is better than ever and with that said from the previous program in this program as you mentioned there's a lot of defy based applications that are moving onto phantom more tvl you know more lending and borrowing i'd like to know a little bit more about
you know the phantom ecosystem directly tied to you know the base protocol and the phantom network token i recently saw that there was a liquid staking program maybe you can talk about you know the d5 and the staking of phantom and how that's working on the protocol yeah sure so liquid taking is definitely like a very a great idea it's an idea that you
know we've had at the foundation for a while now and i know other chains for example such as aperium excuse me our most notably with lido you know has embraced liquid staking and liquid staking is all based on the concept of you know without liquid seeking say you have like phantom right you basically have two choices in terms of life well you have
more than two choices but like let's say you're deciding between you know i have phantom i want to use it right yeah you kind of have two choices in terms of like how do i get returns right i can stake it and get returns which is like open rewards plus transaction fees but then the tokens locked up so i can't use that for other things right i
can't use that to pay for transactional visa network i can still use apple governance but i can't use the participating entities i can't use that as medium exchange i can't use that in terms of participating in d5 protocols right you know for example like categorizing it you know to generate a stable coin and do all sorts of lending and borrowing with it
With liquid staking you can basically it allows you to do two things because what happens is you save your ftm and then there's another token contract that can kind of see how much ftm you're staking there an issue like a derivative ftm so to speak where it's a one-to-one token representation so in order for you to unstack your token you basically have to burn your
derivative token to be able to unstake your ftm from like a validator right but while at stake you have this derivative token and with this derivative token you must have utility for it right so for example you could participate in you know exchange of people accepted you participate in defy and like all the things that you could participated and
participate as if you had the original ftm if you know on the other party or the small because we need to accept it right so in other words like you know you can keep using your ftm while it's being locked up so you own the second rewards and you can earn like the d5 rewards and all the other utility that goes to it so you know originally like the foundation had its
own like liquid staking mechanism which was not that successful because we didn't have auctions and liquidations for fusc which we now have an implementation of working in the test set so we have to test that out but beforehand we had like ftm that you would categorize sfdm and then s sorry you could stake ftm to generate sftm one to one ratio and with sftm you would
categorize at about a 300 ratio to generate fusd which is going to be this native stable point on the phantom network but fortunately there are people in the community that are on that are now running silver coin are those native stable coins on phantom right and so you have other providers in there some just anchor such as beefy i'm just a state of networks that are coming
just to name free where they're devising different liquid staking solutions and some of them such as anchor and beefy have already been implemented and they're getting like adoption over time and so i think this isn't that positive for the phantom ecosystem you know for the men for the reasons i mentioned before that being said you know people have asked you know i think
very important questions about you the degree of centralization as a result of liquid staking and you know your voting power when participating in liquid staking and i think those are all like valid concerns and kind of my response to that is you know i think it's really up to the individuals to decide you know which staking provider they want out there and ultimately it's kind of like a
free market right so if somebody doesn't like a particular staking liquid staking provider you know they can go with other alternatives out there they can make their own own alternatives or they can decide not to participate in liquid staking in and of itself so that's kind of like liquid staking that's happening on phantom so there is like adoption starting to
emerge and all of it has been community driven which is i'm great to see that is great to see and thank you also for explaining about the stablecoin ecosystem i've been curious about that as we've been hearing other stable coins being released on you know on cardano and the tara is in the news all the time about their stable coin and just you know the fight of tether and usdc
and people are always looking for different alternatives so it's great that people can also look through stable coins on the phantom ecosystem now michael we don't have a lot of time left but i would love for you to explain you know if there are new projects that are looking to move to phantom or if there are just individuals and crypto traders and investors that are looking to learn
more about the ecosystem as well what is the best way for those parties to learn more and to get involved into phantom yeah sure so like the website that or the link that has the most information is our website which is phantom.foundation so on there you can see more of a description about phantom the phantom ecosystem you can see a whole list of like pretty popular
applications across different categories such as dexes such as bridges on entities gaming etc on the phantom main page you can also see more technical detail with like papers that we've written and published online as well as like links to my github our socials of telegram discord twitter where like we do like our announcements across social media
and just more about the team there as well so really like phantom.foundation is your go to source but also twitter which is at phantom fdn so ad phantom fdn is where we also share the latest updates as soon as they basically come out publicly so there's more people can kind of go out to find more and docs.phantom.foundation there's a series of docs on gitbook that basically
outlines how you can connect to the phantom network so it has your all information about you know connecting to the testnet connected to the mainnet running your read-only node running a validator node deploying contracts to phantom sample contracts that sort of thing so there's a lot of documentation out there that if you want a few developers it should be pretty
straightforward to follow it's not really that different from deploying on ethereum amazing thank you so much michael for coming on to talk about phantom i will leave the phantom foundation and the social links and the docs all in the description box below all the best with everything moving forward i know there's a lot to work on i'm impressed with the
rate that your team and the ecosystem that is growing so all the best to you moving forward and let's follow up in the near future thanks ashton really appreciate opportunity again you
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