AC reveals Fantom’s history of success: How to grow from $2 million to $1.5 billion with the help of DeFi?

PANews · 2022-11-29T02:40:05.000Z
Original text: "Fantom: an inside financial peek at being a “crypto company"" by Andre Cronje Compiled by: Azuma On November 28, Andre Cronje published a new article on his personal Medium, "Fantom: Financial Insider as a "Crypto Company"". The article details the financial status of the Fantom Foundation in the past few years, from less than 2 million at the bottom. US dollars, reaching nearly US$1.5 billion at its peak. AC personally described how the Fantom Foundation adjusted its strategies when facing different situations, and finally got out of the "financial crisis". At the end of the article, AC also summarized some of his personal experiences and lessons learned from the changes in the Fantom Foundation’s financial situation, which may be worthy of reference for every decentralized project.
原文：《Fantom: an inside financial peek at being a “crypto company”》by Andre Cronje
Compiled by: Azuma
On November 28, Andre Cronje published a new article on his personal Medium titled "Fantom: The Financial Insider of a Crypto Company". The article details the financial situation of the Fantom Foundation over the past few years, from less than $2 million at the bottom to nearly $1.5 billion at the peak. AC personally recounted how the Fantom Foundation adjusted its strategy in the face of different situations and eventually got out of the "financial crisis".
At the end of the article, AC also summarized some of his personal lessons learned from the changes in the financial situation of the Fantom Foundation, which may be worth referring to for every decentralized project.
Fantom's historical financial information On June 16, 2018, Fantom raised about $40 million. Most of the funds were in ETH, and the price during the fundraising period was about $450-700. In December 2018, Fantom sold all the ETH for US dollars at a price significantly lower than the fundraising price, leaving less than $5 million in the treasury account.
The main expenses during this period included over $3 million in exchange listing fees and over $500,000 in KOL promotion commissions and sponsorship fees. At this point, Fantom decided not to spend money on exchanges or KOLs anymore. We started to be very frugal, completely suspending the marketing budget, only hiring necessary employees, and reducing the salaries of C-level employees, some even working for free... We reduced the annual expenditure budget to less than $500,000, which can last for about 4 years.
As of May 7, 2019, the non-FTM assets in Fantom’s treasury account were less than $2 million, and the value of the 100 million FTM was only about $900,000.
We started selling FTMs regularly to have more funds available for unplanned expenses.
As of February 2, 2020, the non-FTM assets on the Fantom treasury account were approximately US$3 million, and 45 million FTM were worth approximately US$400,000.
After that, Fantom began to actively participate in DeFi and use the profits to repurchase FTM.
On February 28, 2020, we set a goal of growing the treasury to $8 million by the end of the year, which would help us raise our budget to $1.5 million per year. We needed to scale up. In March 2020, our annual expenses were about $600,000, and our annual return on the $3 million we had was about 20%, which meant we could make $600,000 per year. We were excited and started to seriously consider scaling up. In June 2020, COMP liquidity mining started. We are currently mining $20,320 per week with sUSD and $39,071 per week with COMP. The treasury has grown from about $2 million to $6 million (including FTM). On July 12, 2020, we have repurchased 57,933,544 FTM from the market. The funds in the account have reached 8 million US dollars, and the income mainly comes from the liquidity mining of COMP and SNX (Odaily Planet Daily: Mining supports the team, just ask if you accept it). On July 13, 2020, our FTM holdings have reached 207,378,636 FTM, which means that we have repurchased more than 150 million FTM. On August 20, 2020, the treasury funds have reached 18 million US dollars (including FTM), including 11 million US dollars in stablecoins and 7 million US dollars in FTM. At this time, an RPC service provider asked us for 8 million US dollars for integration, but we refused. On October 30, 2020, we had 27,114,975 US dollars in our account, and if the locked tokens are counted, it has reached 39,687,104 US dollars, which is basically back to the situation at the beginning of our fundraising. On January 1, 2021, the treasury funds reached $51,684,378 (including FTM), and the annual revenue reached $2,009,849. On February 2, 2021, the treasury funds reached $146,792,798, of which stablecoins were about $20 million, FTM was about $50 million, and CRV was about $50 million. On February 15, 2021, our weekly revenue exceeded $1 million. On February 23, 2021, we announced the sale of 81.5 million FTM to Alameda at an average price of $0.428831, totaling $34,949,726.5. On February 24, 2021, we sold 10,384,165 FTM to Blocktower for a total price of $5 million. As of May 3, 2021, our treasury funds, including FTM, have reached US$1,478,471,641 (yes, that’s right, close to US$1.5 billion), and we have US$300 million in liquidity.We further expanded and increased our budget. On September 30, 2021, we had $263 million in funds on the books, excluding FTM. On January 5, 2022, Alameda requested further cooperation, which we declined. On January 14, 2022, an exchange asked for a listing fee of $300 million when listing a coin, which we declined. In May 2022, the treasury lost about $50 million in BOO, CRV, YFI, CVX, and ETH positions, but we still had $100 million in stablecoins. In October 2022, an NFT exchange asked for a deployment fee of $100 million, which we also declined. In November 2022, we now have more than 450 million FTM, $100 million in stablecoins, $100 million in crypto assets, and $50 million in non-crypto assets. Our salary expenses are about $7 million per year, and the treasury funds are enough to support us for 30 years without using FTM.
 
Treasury income composition Validation node income - Fantom runs 9 validation nodes and invests a total of 60,708,615 FTMs, which means we can get 4,182,823 FTMs per year. Delegator income - Fantom has delegated about 60 million FTMs to the validation nodes on the network, which can bring us about 4.1 million FTMs per year. Network income - The Fantom ecosystem earns 10% of all transaction fees. Based on an average transaction fee of 30,000 FTMs per day, we can earn $1 million per year, and the average fee per transaction is less than $0.005. DeFi income - Fantom can earn about $5.98 million per year through DeFi operations in itself and other ecosystems (Odaily Planet Daily: accounting for more than half of the total income, let's see what a DeFi master is...).
Fantom currently has annual revenues of more than $10 million, not including any investment income.
We are cash flow positive. We are continuing to scale.
Some lessons learned
Never try to compete with competitors in terms of numbers such as "integration", "listing", "cooperation", etc. Unlike most competitors, the Fantom Foundation owns relatively few FTMs. Some other Layer1s may own 50% - 80% of the token supply, but Fantom's share at the beginning of the issuance was less than 3%, and now our holdings are over 14%. We prefer to buy our tokens, and we will not sell our tokens for so-called "partners".
"Blockchain companies" don't make money, and running validation nodes is not the job of the Fantom Foundation. We do this just to support the network we believe in and earn fees for it. However, this is not our core business. Fantom's core business has always been to build the most scalable and robust Layer1.
Network revenue is a point that distinguishes Fantom from other projects, but it is not designed for the foundation. It is the platform revenue of all Dapps deployed on Fantom. Any Dapp deployed on Fantom can obtain this part of the revenue. Although the Fantom Foundation has successfully implemented decentralized treasury management, it is not our core business.
In reality, “blockchain companies” can generally only make money by selling tokens, and such a model has limited development potential.
We spend a lot of time comparing finite and infinite models. We ask ourselves "what impact will a collaboration have over a 10-year period", "how can we sustain this collaboration for 10 years", and "if we pay for a collaboration, will they deploy it on other chains soon?" We make decisions based on the answers to these questions.
Apart from Ethereum, Fantom is the oldest non-forked Layer1 with real TVL. We have been operating for more than 4 years and we plan to continue operating for at least 30 years. You can track our technical progress and delivery progress at any time.
If your entire revenue model is selling tokens, you are doing a disservice to yourself, your blockchain, and your supporters.
If DeFi didn’t exist, we probably wouldn’t be here today. I’m sure the same is true for a lot of companies.
Crypto is dead, long live crypto.