Fantom: Is this breakout legitimate or an apparition?

Top of Mind

Since the clock struck midnight on Dec. 31, 2022, Fantom has been the hottest Layer-1 (L1) in crypto. FTM (Fantom’s native token) is up ~180% year to date and up ~160% in the last 30 days. The return of popular developer Andre Cronje to the ecosystem at the end of 2022 breathed new life into the community.

To understand if this rise was predictable and, most importantly, is sustainable, we turn to the fundamentals. A closer analysis of user, application, and developer activity can help understand if this momentum is justifiable and sustainable. Despite user activity picking up on the announcement of Cronje’s return in November, analyzing recent user activity shows some concerning signs. Since Cronje’s return, user activity has only been down, and active addresses and transactions have fallen sharply in the past 30 days.

While developer stats can be quite hard to quantify commits, full-time developers and monthly active developers all seem to be trending down as well. Additionally, total value locked (TVL) has declined as have verified smart contracts on the network. All signs point to a lack of broader development activity. TVL and smart contract development did not see a bump from the Cronje announcement. In fact even when denominating TVL in FTM to control for the token price movement, TVL has been steadily declining since May 2022.

While existing fundamentals may not be able to explain the rise, the future outlook might. Cronje has shown the ability to build proven multiple novel innovations in the space, such as Yearn Finance and Keep3r, and Fantom may benefit from the innovation he may drive in the future.