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Delivering DeFi's Promise
Canto is a groundbreaking blockchain solution that operates on the Ethereum Virtual Machine. As a key player within the Cosmos network of blockchains, apps, and services, Canto offers a native stablecoin known as NOTE. The Canto ecosystem was developed to live up to the promise of decentralized finance (DeFi) by acting as a leading execution layer for original development and providing exclusive incentives for developing DeFi protocols. The project was initiated by a community of DeFi advocates, including Scott Lewis, the co-founder of Slingshot Crypto.
At the core of Canto's mission is to be a pivotal player in the DeFi movement. The blockchain prioritizes zero fees for liquidity providers and free liquidity for traders, protocols, and other participants. Additionally, it aims to develop free public infrastructure without relying on sovereign governance tokens or rent and bypasses interface-driven user ownership to encourage engagement with new protocols.
One of Canto's key goals is to provide the tools commonly used by DeFi enthusiasts, such as decentralized exchanges, a stablecoin, and a lending protocol, as free public utilities. The network is secured using Tendermint Core, a low-energy alternative to proof-of-work algorithms like the one utilized by Bitcoin.
Canto sets itself apart from other decentralized platforms by eliminating centralizing features commonly found in its peers. It has no official foundation, does not offer a presale, and does not allow holders to vest. The developers have also opted against venture capital backing for the project. Furthermore, the core primitives of the decentralized exchanges, units of account, and lending markets do not use governance tokens to extract rent from future users.
With the goal of being a key blockchain within the DeFi movement, Canto’s primary stated goals include:
Offering zero fees for liquidity providers and enabling free liquidity for traders, protocols, and other participants.
Developing Free Public Infrastructure without the use of sovereign governance tokens or rent.
Bypassing interface-driven user ownership as a way of encouraging users to engage with new protocols.
Canto is trying a new economic idea called contract-secured revenue (CSR) to encourage developers to build tools similar to Canto's public goods without fees. If this idea is approved, developers can earn a share of the gas fees users pay when they use the developer's smart contract. This revenue will be stored in a special type of token called NFT that is created by the wallet that deployed the smart contract. This allows developers to start, maintain, and grow their protocols.
It also gives them a clearer idea of how well their products are doing instead of relying on token incentives. However, some people believe that rewarding developers is like indirectly taxing users. Canto is one of the first projects to attempt this idea in an automated way.
Regarding governance, Canto operates differently than other blockchains. It does not have a traditional governance mechanism, as the decentralized exchange is designed to be ungoverned and will not Impose additional fees or launch a token. Instead, stakers are responsible for governing and growing the lending market and incentivizing future developer work. NOTE is designed to self-adjust its interest rate.
Critics argue that rewarding developers is a roundabout tax on users. In an efficient market, competitors will take advantage of it or pass it on to the end users. While this may be true in a mature market, it doesn't consider the early stages of a market, where there can be room for inefficiency that benefits developers in building new and interesting products for users willing to pay for them.
The Canto project is in its early stage, and caution is advised because many meme coins in the market may collapse. To find new projects, it is recommended to join the Canto discord and check the "canto native projects" channel. The NOTE token is important for the Canto Layer1 blockchain, but Canto is not a stablecoin, and its price may fluctuate greatly. It is suggested that users not invest less money in Canto to manage risk.
Canto is a new Layer1 blockchain that has yet to show any technological innovation, but it has changed the traditional profit model by eliminating fees and offering free DeFi services. In the long term, Canto will settle like other normal EVM chains, but its price may be affected in the short term by high farming APR.
Although Canto's approach to funding developers and public-good DeFi protocols has attracted interest from the crypto community and investors, the long-term sustainability of the network's model is unclear due to its high inflation rate at the time of writing.