Currently, the crypto market is worth a collective $1.7 trillion. While impressive, that figure is actually down 43% from its high of $3 trillion in November 2021. In other words, the market has lost $1.3 trillion in just a few short months, so risk-averse investors should stay far away from cryptocurrencies. But for those who can handle wild price fluctuations without panicking, the recent sell-off creates a buying opportunity.
With that in mind, there are dozens of interesting blockchain projects, many of which could be rewarding long-term investments. But I think Polkadot (DOT -1.62%) and Fantom (FTM -6.95%) are two of the most exciting. Like Ethereum, they aim to create a decentralized ecosystem of applications and financial services, and both are executing on strong growth strategies that could drive substantial price appreciation in 2022 (and beyond).
Here's what you should know.
Image source: Getty Images.
1. Polkadot
Polkadot is an ambitious project started by Gavin Wood, a co-founder of Ethereum and the founder of the Web3 Foundation. Looking to improve upon Ethereum, Wood designed Polkadot as a highly scalable smart contracts platform comprising an ecosystem of interoperable blockchains. Put another way, Polkadot is a network of networks, each of which can share data and assets both internally and externally.
At Polkadot's core is the relay chain, a blockchain secured by Proof of Stake (PoS) consensus and tasked with orchestrating the entire platform. Connected to the relay chain are numerous programmable blockchains, known as parachains, each of which is capable of supporting decentralized applications (dApps) and decentralized finance (DeFi) services. Certain parachains can even bridge with external blockchains like Ethereum.
In November, Polkadot began auctioning parachain slots to developers. The process is far from complete -- only five parachains have been attached to the relay chain, though that number will reach 11 by March 11, 2022 -- but Polkadot aims to support 100 parachains in time. At that point, the network throughput could exceed 1 million transactions per second (TPS), and those transactions would be finalized in less than 60 seconds. By comparison, Ethereum currently handles 14 TPS, and the platform often requires up to six minutes to finalize transactions.
Of particular note, Moonbeam was one of the first parachain projects to be onboarded, and it could supercharge Polkadot's growth in the coming months. Specifically, Moonbeam is compatible with Solidity, the programming language used to build smart contracts on Ethereum. That means developers can now deploy Ethereum-based dApps and DeFi products on Polkadot.
Since onboarding the first parachains in December, Polkadot has seen encouraging momentum. It already ranks as the thirteenth-most-popular DeFi ecosystem, with over $800 million invested on the platform. Going forward, as more parachains are onboarded and Polkadot's ecosystem continues to grow, more people should adopt products on the platform. In turn, that will create demand for the DOT token -- Polkadot's native cryptocurrency -- driving its price higher. And with DOT's price 66% below its all-time high, this digital asset could be gearing up for a bull run in 2022 (and beyond).
2. Fantom
Fantom is smart contracts platform designed for scalability and interoperability, two features that most blockchains lack. Fantom's PoS consensus protocol, known as Lachesis, allows validator nodes (computers) to verify transactions independently, which accelerates throughput by eliminating the need for each node to confirm every transaction with every other node. To that end, Fantom can handle thousands of transactions per second, and it finalizes those transactions in approximately one second.
Of course, that speed makes Fantom far more scalable than Ethereum, but it also keeps transaction fees low, because consumers aren't competing for limited resources. In fact, whereas transactions on Ethereum typically cost about $3, transactions on Fantom usually cost a fraction of a cent.
Likewise, Fantom is compatible with the Solidity programming language, meaning developers can easily port Ethereum dApps to the Fantom blockchain, and some have already done just that. Of particular note, DeFi protocol Yearn Finance went live on Fantom last October. Yearn is a yield aggregator, a platform that automatically moves investors' funds between other DeFi platforms to maximize returns. For instance, you could earn 10.5% APY right now by lending USD Coin to Yearn Finance.
Also noteworthy, fintech company Fireblocks added support for Fantom in September, meaning over 500 financial institutions can now safely store, stake, and transfer FTM tokens. That's particularly important, because research from Fidelity suggests that institutional investors are warming to the idea of crypto, and if those big-money movers start diversifying into FTM, the token's price could soar.
More broadly, Fantom's high-speed, low-cost value proposition has made it the fourth-largest DeFi ecosystem, with $9.4 billion currently invested on the platform. That figure has nearly doubled since the beginning of the year, even as the broader DeFi industry has declined in value during the ongoing crypto sell-off. Looking ahead, as more people adopt products on the Fantom blockchain, demand for the FTM token should rise, driving its price higher.
