Brief Overview:
Canto is a permissionless proof-of-stake L1 blockchain built on the Cosmos SDK and EVM-compatible, launched in 2022. Rather than focusing on tech innovation, it is more of a social experiment that utilizes open-source code to test mechanisms for funding public goods and incentivizing developer activity on the network.
Company / Team:
Canto launched through a grassroots movement of DeFi builders with the effort spearheaded by Scott Lewis (https://twitter.com/scott_lew_is). Scott Lewis is known for DeFi Pulse and Slingshot Crypto. Other notable contributors include Plex (https://twitter.com/Plex_Official), b-Harvest (https://bharvest.io/) and NeoBase (https://twitter.com/neobase_studios). We have also seen early support from Foobar (https://twitter.com/0xfoobar) and Joseph Delong https://twitter.com/josephdelong).
There is no foundation, formal VC funding, nor any presale tokens.
Social Experiment:
The Canto DEX, Canto Lending Market (CLM) and $NOTE (overcollateralize currency).
It is focused on a “free-to-use” model built on three core pillars:
- Rent Extraction Resistant – Canto’s core DeFi services are built natively on-chain with no governance tokens or ability to charge fees (extract rent).
- Zero Fees for Liquidity Providers – Canto sees liquidity as a free public good, such that users, protocols and others can access it freely (no fees charged on trades)
- Minimal Viable User Capture – there is not front GUI for Canto services, rather, Canto prefers others to build the front-end interfaces with competition focused on user acquisition through positive user experiences
Canto is also working on a proposal called contract secured revenue (CSR) that incentivizes developers to build in the ecosystem where network generate fees are split between stakers and the protocols that drive volume and thus generate those fees. I am intrigued on how this works long-term but is quite synergistic and mutually beneficial between developers that drive volume and stakers that support a chain.
Canto DEX:
A fork of Solidly (by veDAO) and removes the governance token, fee mechanisms, and the ability to update the core logic (i.e., can’t charge fees in the future). This means that liquidity providers (LPs) receive no revenue from trading and exchange volume and solely rely on liquidity mining rewards (via $CANTO).
I am skeptical on how this plays out longer-term as emissions of Canto decrease. LPs need an incentive to lock up capital for trading pairs and hedge impermanent loss. With no ability to earn through trading volume, either a foundation will have to “donate” LP or the Canto ecosystem will have to update Canto’s inflation schedule and rewards to LPs for this service.
SlingShot seems to be the preferred front-end for the Canto DEX – https://slingshot.finance/
Canto Lending Market and $NOTE
Canto Lending Market (CLM) is a fork of Compound V2 and creates pooled debt market for the ecosystem. Unlike the DEX, users will need to pay fees to lenders to compensate for risk. Furthermore, there is governance to oversee the risk management and ensure long-term viability of the protocol. The governance is delegate to those that “stake” and support the Canto network.
$NOTE is a shared unit of account in the Canto ecosystem. It is an overcollateralized currency that is created only when it is borrowed on CLM and is programmed to trade near $1USD. It is important to note that it is not pegged to the dollar and thus cannot be called an algorithmic stablecoin (akin to DAI and others).
Canto Tokenomics and Stats:
Canto KPIs as of 2/17/23:
- Price: ~$0.47
- Circulating Supply: ~441M
- Market Cap: ~$210M
- Fully Dilute-Value: ~$470M
- YTD Performance: ~487.5%
- Total Value Locked: ~$190M
- Cosmos Ecosystem: 3rd Largest Chain behind Cronos and Osmosis, respectively
Token Supply and Vesting Schedule from Messari:
Summary:
The Canto blockchain is an EVM-compatible platform launched in 2022, which does not initially aim to innovate on tech but focuses on mechanisms for funding public goods and developer activity on the network. Canto’s core DeFi primitives are nationalized public goods, built without a fee or fee switch and liquidity subsidized by the protocol’s on-chain treasury to attract LPs.
Canto is a fresh take on an L1 but that isn’t without concern.
- According to ByBit, 15% of the supply has no lock-up (settlers and contributors) and furthermore 12.88% of the supply (~128.8M tokens) were given to 29 contributor addresses (source: https://blog.bybit.com/en-US/post/canto-free-public-infrastructure-bltd8a36c287a3720db/)
- Liquidity Mining has a bad track-record, if you were here for DeFi summer, you know its exciting early on and then as incentives fade away so does the protocol. It will be interesting to see how Canto adapts.