In Jan and Feb 2019, Fantom Foundation released 2 articles about their proposed staking model, Fantom Improvement Proposal (FIP) #1 and #2. The FIPs give a sneak peek at the FTM staking model and go into surprising detail. I have been staking Ontology and the release of these FIPs got me interested in the Fantom model, so I digged into it.

Node Types

There will be 2 types of nodes in the FTM model: Validator and Listener nodes:

Validator nodes "actively participate in the consensus of the network to validate transactions". You have to stake a certain number of FTM to be a validator node.

Listener nodes however do not participate in consensus. They "connect to other nodes in the network and synchronize the entire ledger". No minimum stake is required.

At a glance this is very similar to Ontology's staking model, which has 2 types of nodes as well, consensus nodes and candidate nodes. Consensus nodes helps "consensus by meeting performance requirements" while candidate nodes work on "[the] blockchain’s decentralized functions". It looks like FTM's Validator nodes and Listener nodes are the counterparts of ONT's Consensus and Candidate nodes respectively, in terms of function at least.

Network Fees

In Fantom's model, network users (you and I) can "pay per transaction to be confirmed by the network" similar to Ethereum. Fantom will be on its own chain so it is likely the "gas" fee will be paid by FTM tokens (it is currently an ERC20 token with network gas being ETH just like other ERC20 tokens). This would be different from Ontology's model which has a main token (ONT) and a gas token (ONG) where gas is paid using ONG. It'll be interesting to see how this difference affects the staking model and participation rate.

I note that there is a mention of "Fantom Gas (FTG)" in the article, but this is mentioned in relation to an "internal accounting system" and to ETH's gas model, which likely means that FTG will just be an gas calculation and storage mechanism within the chain, rather than an actual tradable token like ONG.

Node Application

"Any individual or organisation can run a node", according to the Fantom FIP, as long as they meet the minimum FTM token requirements. This is in stark contrast to Ontology's model where node applicants "must submit a candidate application to the Ontology Foundation [who] will evaluate after receiving the application [and determine] if the applicant passes the audit"

The minumum token requirement for Fantom Validator nodes is 3,175,000 FTM. Ontology Candidate nodes need 100,000 ONT stake and 500 ONG. However, to be a Ontology Consensus node, the applicant will need to be within the top 7 rank in terms of ONT assets. So the "minimum" for a Ontology Consensus node varies and can be a lot higher.

Using the Circulating Supply from CoinMarketCap, that means Fantom Validator nodes will need to own 0.25% of supply, while Ontology candidate nodes will need to own about 0.03% of supply. In the Fantom staking model, the there can currently only be 50 Validator nodes, whereas in the Ontology staking model, there can currently only be 49 Candidate nodes (of which 7 are Consensus nodes).

Note that in FIP#1, there is this line "In the single-shard model, a validator must stake at least 0.2% of the total FTM supply (6,350,000 FTM) of their own token" which I believe is superceeded by this line in FIP#2, which is what I'm using here "a validator must, at all times, maintain a minimum stake of 3,175,000 FTM (0.1% of the total supply)."

Stake Delegation

In Fantom's model, there is the concept of the stake delegation. That is the process of regular users (non-nodes) "delegating" their holdings to a staking node. The delegating user will have their tokens locked but does not have to run dedicated staking software. This concept is also in Ontology, called Node Authorization.

There are differences though. In Fantom's model, the minimum for stake delegation is very low; at 1 FTM. There is also no minimum lock period. This is unlike in Ontology where the mininum stake is 500 ONT and there is a lock up period.

The Fantom model also has a concept of delegated fees, where a Validator node can charge a fee to the delegating user. This fee is not present in the Ontology staking model.

Staking Rewards

This is the exciting part. Fantom Validator nodes get 3 staking reward components: Block Rewards, Transaction Fee and Delegated Fee. Fantom delegating users get Block Rewards, Transaction Fee, less Delegated Fee. It is unclear yet how Block Rewards and Transaction Fee components are shared between the Validator node and the delegating user.

In the Ontology staking model, Consensus nodes get 3 staking reward components as well: Network usage fees, ONT Foundation Reward, and regular ONG generation. Network usage fee sounds like the counterpart of Fantom's Transaction Fee. The ONT Foundation Reward looks like Fantom's Block Reward. The Delegated Fee in Fantom's model is new and does not exist in Ontology's staking model. In Ontology's model, the staking rewards are shared with the delegating user via a proportion determined by the node.

Notably, the Ontology staking model gives rewards in ONG (Ontology Gas token) rather than the main token, which is different from the Fantom model which can be assumed to give reward in FTM token.

Another difference is that the Fantom team will guarantee that Validator nodes breaks even, at least for the start. "After the launch of the mainnet, the foundation will guarantee a floor (measured in USD) in FTM equal to the operational cost of a validator using foundation-approved hardware."

Parting Thoughts

Fantom's proposed staking model currently looks very similar to the Ontology staking model in terms of the node types, token minimums for nodes, the concept of stake delegation as well as rewards. Ontology stakers (whether you're a node or a delegating user) will likely find the model familiar.

Both Fantom and Ontology are exciting projects; they're both on its own chain with its own consensus model (Fantom on a DAG model, Ontology using VBFT), both have "Very High Interest" IcoDrops score.

Fantom is still early in the making though; its token sale was in mid-2018 and staking is scheduled to arrive with its mainnet, which is not due until late 2019 (it is currently in testnet). Between now and then, a lot could change about the model so stay tuned in this space for more updates in the future!

Fantom's FTM token is currently listed on Bibox exchange, along with Ontology's ONT and ONG tokens.



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Also do check out my other articles on Ontology and BIX Staking. Have a good day!