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Tutorial: Fantom (Staking and Governance)

Overview

Fantom is an open-source, smart contract blockchain platform for decentralised applications (DApps) and digital assets. FTM is the native utility token of Fantom that powers the ecosystem. It’s used for payments, network fees, staking, and governance.

For a complete overview of Fantom and FTM, click here.

This tutorial will go through how to stake FTM and use FTM to vote on protocol proposals. However, before you do either of these things, you’ll need to set up an fWallet (the official wallet of the Fantom network) and acquire some FTM, which we’ve already covered in our Fantom beginner’s tutorial.

Tutorial

Staking FTM

An important point to note is that Fantom uses a type of proof of stake mechanism called Lachesis. There are certain weaknesses associated with this mechanism that stems from the fact that the group of validators responsible for securing the network and confirming transactions is quite small. 

Therefore, before you decide to stake FTM, we highly recommend giving our simply explained article on Fantom a read so that you are fully aware of the potential risks involved.

Now that we have that out of the way, let’s dive in! To begin, navigate to the ‘staking’ tab in your fWallet.

Next, click ‘add delegation’. On the following screen, you’ll need to enter the amount of FTM you would like to stake (Fantom allows you to stake as little as 1 FTM).

You will also need to choose the validator you would like to stake with. Click the dropdown menu to view the list of available validators.

Here, you’ll see the total amount of FTM a validator has staked themselves and the amount that other delegators have staked with each validator. 

You can click on a validator’s name for additional information.

It goes without saying that the validator you stake with should be active, online and have zero downtime! Although a validator does not have direct access to your funds, the amount of FTM you stake may be reduced if the validator you choose acts maliciously. Therefore as always, it’s really important that you do your own research before making any decisions.

Once you have chosen a validator, click ‘continue’ to finalise your stake. Note that you will have to pay a very small gas fee. Also, be aware that validators receive a 15% commission from delegator’s staking rewards.

Your staked tokens will now begin to earn yield at the base APR (currently at 3%). Delegators have the option to earn higher yields by locking their tokens for a set period of time. The longer you lock your tokens, the higher the APR.

To do this, click ‘lock delegation’.

Next, using the slider, specify the number of days you want to lock your tokens. After this, click ‘ok, lock’.

 

 

Claim Rewards

Claiming rewards is very straightforward. You have the option to ‘claim’ your rewards and withdraw them to your wallet, or you can ‘claim & restake’, where any rewards earned will be re-staked (which will compound your interest).

In the image below, you will notice a ‘minted sFTM’ section. sFTM is a synthetic asset that can be minted in a 1:1 ratio to your staked FTM. Fantom recently announced that this asset is being deprecated (i.e. phased out). Because of this, they’ve advised users to hold off using it for now.

 

Un-stake FTM

To withdraw your delegation, simply click ‘undelegate’. Your withdrawal can take up to 7 days to process.

Note that while you can withdraw your stake at any time, if you choose to unstake before your specified lock-up period has ended, you will receive a penalty. This penalty will slash any rewards accrued beyond half the base APR (i.e. 1.5% at present).

 

Governance

 If you stake your FTM, you will have the option to participate in Fantom on-chain governance. To vote for a proposal, select the ‘governance’ tab. Here you’ll be able to see the full list of past and current proposals.

Simply click on a proposal to cast your vote! 1 staked FTM equates to 1 vote. 

For the vast majority of decentralised networks, voting is operated via a Yes/No mechanism (i.e. if the majority say yes, the proposal is passed). Things work slightly differently on Fantom: instead of a simple yes/no, delegators express how much they agree AND disagree with the proposal. Votes are cast using a 0-4 scale, with 0 signifying no agreement and 4 signifying total agreement. 

This system adds a lot more depth to voting since it’s more reflective of how someone feels. To discuss a proposal with fellow FTM holders, you can head to the #governance channel on Fantom’s discord.

 

Disclaimer: THIS IS NOT FINANCIAL OR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make, and only you are accountable for the results.

 

Comment and share if you found this tutorial useful and let us know what tutorials you’d like to see next!

 

 

 

 

 

 

 

 

 

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Ali O'Meara

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Copy & Crypto School writer from Ireland. Recent neuroscience graduate who is fairly new to the crypto world!