Dump a 16 oz bag of mini marshmallows into a large microwave safe bowl. Add corn syrup and water. Microwave on high for one minute intervals, stirring in between, until the mixture is completely melted and smooth. (Usually only takes 2-3, 1 minute intervals)
Stir in the vanilla*.
Pour 3/4 of the 2lb bag of powdered sugar into the bowl of your mixer and make a well to pour the melted marshmallow mixture into. Attach the dough hook to your mixer and mix on low until most of the powdered sugar has been incorporated into the marshmallow mixture.
Grease a clean and sanitized flat surface with vegetable shortening and dump the contents of your mixer onto the greased area. **Add a bit more powdered sugar onto the prepared surface and grease your hands completely with shortening.
Knead the marshmallow mixture and powdered sugar together until it starts to come together and feel like fondant. It should get less sticky, to the point where you don't need to keep greasing your hands, but not dry, as that will mean you've added too much powdered sugar. The fondant should stop picking up the powdered sugar off your countertop when it has incorporated enough.
Once your fondant is ready, cover it with a layer of shortening and wrap in 2 layers of plastic wrap. Then place it into a Ziploc bag to store at room temperature until ready to use. When you are ready to use it: knead it lightly until it stretches' easily and the temperature of the fondant is workable.
Fondant can be stored tightly wrapped at room temperature for at least 3 months.