What is Fantom?

Fantom is an open-source, smart contract platform for digital assets built on top of the Ethereum blockchain. It provides decentralized finance (DeFi) services to developers by allowing them to write, compile, and deploy smart contracts through its own unique consensus mechanism called the Lachesis protocol.

Consensus mechanisms set conditions that need to be met by nodes and validators in distributed networks, like proof of work tasks (PoW). Platforms often struggle to balance speed, security, and decentralization in their solutions. Fantom has positioned their unique algorithm as having a better balance between those factors, using an asynchronous directed acyclic graph (DAG)-based algorithm and Byzantine Fault Tolerant (aBFT).

Founded by South Korean computer scientist Dr. Ahn Byung Ik, Fantom’s development entity, the Fantom Foundation, has employees and partners across the world. The platform is currently led by CEO Michael Kong,

Decisions on how the Fantom protocol operates and evolves over time are made by its community, defined as holders of the protocol’s governance token, FTM. Fantom possesses strong appeal in the developer community, particularly those intent on deploying decentralized solutions. Recently, Fantom reached over 1 million transactions on its network.

What is the FTM token?

FTM is a multi-chain asset that exists on the Ethereum network (ERC20), the Binance Chain (BEP2), and Fantom’s mainnet Opera Chain. FTM holders can earn rewards for staking, pay transaction or deployment fees, send and receive payments, and participate in governance-related activities like voting. Fantom uses a Proof-of-Stake (PoS) system that requires validators to hold FTM, thus creating a secure network. Voting power is proportional to the amount a validator has staked plus any delegations received from users who don’t run nodes.

Risk Statement

Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform. 

Wealthsimple has performed an assessment of whether FTM can be supported by Wealthsimple’s platform, including whether FTM is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.

We evaluated FTM based on publicly available information, including (but not limited to):

• The creation, governance, usage and design of FTM, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created FTM;
• The supply, demand, maturity, utility and liquidity of FTM;
• Material technical risks associated with FTM, including any code defects, security breaches and other threats concerning FTM and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
• Legal and regulatory risks associated with FTM, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of FTM; and
• Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether FTM, or generally about whether the type of crypto asset, is a security and/or a derivative.

Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to FTM may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support FTM.

Like all other crypto assets, there are some general risks to investing in FTM. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.

Additional Risks / Information

The Multichain hack, occurring in January 2022, was a notable security breach where attackers exploited vulnerabilities in Multichain's cross-chain router protocol, resulting in unauthorized access and theft of assets across various blockchain networks, including Fantom. Since the Multichain hack, there has been a significant decline in usage of the Fantom network, which may reflect a loss of confidence among users in the Fantom network and FTM.

Wealthsimple only supports the ERC-20 version of FTM and does not support the version of FTM available on the Fantom blockchain. Wealthsimple cannot bridge or convert the ERC-20 version of FTM to the token on the Fantom network. If you wish to bridge or convert your ERC-20 version of FTM, you must first withdraw it and then bridge or convert it using tools provided by the platform or protocol, which may subject you to additional risks.

We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading FTM. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.

Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision). 

The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.

 

Last updated: January 1, 2024