Canto Network Review: Layer-1 Based On Cosmos SDK Promises New Future For Defi
Since Ethereum and Ethereum’s Layer 2 still occupy the entire market spotlight, other Layer 1 projects will receive less attention, especially the newly launched Layer 1. However, this also allows investors to have more space to search for gems – a potential ecosystem that has yet to be discovered to many people, like Canto Network. In this Canto Network review, let’s find out through the article below.
Compared to other emerging EVM chains, Canto pursues a high degree of decentralization, no investors, no foundation establishment, and is more community-based, while providing accessible public infrastructure ( FPI) and contract revenue distribution (CSR) to developers). So what is Canto Network?
What is Canto Network?
Canto Network is a permissionless Layer 1 blockchain compatible with the Ethereum Virtual Machine (EVM). It is designed to deliver on the promise of decentralized finance (DeFi) – that new models will be easily accessible, completely transparent, decentralized, and free through a post-traditional economic dynamic. Canto launches without a core platform, presale, empowerment, or venture backer to be fully decentralized. As of press time, Canto’s total locked value (TVL) is $124,805,999, with most of this value locked in its DEX and lending protocols.
At its core, Canto leverages Tendermint Consensus and the Cosmos Software Development Kit (SDK) and is secured by Canto’s validators. It achieves EVM compatibility through the Ethermint system, enabling an EVM execution environment and further facilitating the deployment of Ethereum smart contracts. These tools include the Canto Decentralized Exchange (DEX), the Canto Lending Market (CLM), and the NOTE. Canto aims to be the “best execution layer for the original work” by implementing the following:
- Liquidity as a Free Public Good: Zero fees for Liquidity Providers (LPs). Canto makes liquidity free for protocols, arbitrageurs and traders.
- Rent Extraction Resistant: Canto aims to establish Free Public Infrastructure. Core DeFi primitives will not have sovereign governance tokens, nor the capacity to extract rent in the future.
- Minimal Viable User Capture: Where possible, Canto avoids interface-driven user ownership. Public infrastructure DEXes will have no swapping interface, so all users must trade on third-party aggregators. This will facilitate user acquisition for new protocols.
Canto Network review is designed to support free public infrastructure while reducing centralized incentives:
- There is no official foundation.
- There was no presale.
- There is no vesting.
- There are no venture backers.
How does Canto Network work?
Canto Network advocates DeFi principles such as decentralized exchanges, lending protocols, and units of account as public utilities. That’s why they are offered for free in Canto Network. In other words, Canto DEX, Canto Lending Market, and a fully collateralized stablecoin are all built-in into Canto.
Canto Network extraction aims to pioneer the concept of rent resistance. As part of its policy of providing public infrastructure for free, Canto Network has designed its smart contracts in a revenue-sharing manner. More precisely, smart contract creators receive a 20% share of all transaction fees generated from users who interact with a project. The aim is to provide a new platform for economic experiments in web3, where DeFi builders and NFT creators can benefit together from a growing blockchain ecosystem.
Canto Network Review: Highlight
To start with Canto Network review realizes the vision set forth by the early builders that the core principles should exist as Free Public Infrastructure (FPI).
After observing the evolution of the DeFi space, from the launch of DAI in late 2017 to multiple DeFi projects in 2021, three core principles have emerged to anchor any ecosystem. What a healthy DeFi attitude:
- Decentralized exchanges (DEXes) like Uniswap and Sushiswap
- Lending marketplaces like Compound and Aave
- Decentralized account units like DAI, USDC or USDT
As the ecosystem has grown, every core primitive makes the same decision: launch a management protocol token that derives value from the ability to extract rents from future users.
As existing protocols serving their communities are similar to private pay-by-the-hour garages, Canto’s FPI intends to offer its community a way akin to free street parking.
As for Canto’s decentralized exchange, the protocol cannot be upgraded and will not be regulated. It will run forever on Canto without being able to launch tokens or make additional fees over time, preventing the possibility of predatory evolution towards predatory practices.
For $NOTE, the unit of account token, the interest charged for stabilizing its price will be contributed to the funding of public goods. The algorithm is responsible for adjusting this interest rate is designed to change interest rates to promote less volatile value instead of maximizing revenue. All interest the borrower pays will be distributed to the lender with no fees deducted at the protocol layer.
Canto Network Review: The ecosystem
Canto DEX
Canto Network wants to prevent the possibility of predatory evolution into predatory behaviors. As a result, its native DEX cannot be upgraded, has no official interface, and runs forever at no cost. Users can interact with it through Slingshot, a DEX aggregation platform.
The mechanism of Canto DEX is similar to other DEXs. Automated Market Makers (AMMs) provide asset prices and derive liquidity from a user-provided liquidity pool. Canto follows the example of Uniswap, with a full liquidity pool and a centralized liquidity pool for more liquidity for stablecoins and other units of account.
Users can provide liquidity and get LP tokens to borrow. There are no fees for liquidity providers on Canto Network. Protocol users, traders, and arbitrageurs benefit from free liquidity access. Canto has five recommended liquidity pools:
- USDC/NOTE (centralized liquidity)
- USDT/NOTE (centralized)
- NOTE/CANTO (full range liquidity)
- CANTO/ETH (full)
- CANTO/ATOM (full)
Canto Lending Market (CLM)
For the Canto Lending Market, governance is controlled by Canto investors. Canto stakers have a great interest in the development of the ecosystem and promote the best environment for developers and DeFi users. As such, they have no incentive to deduct rent at the application layer.
CLM will allow LP tokens from Canto’s native decentralized exchange as collateral. This collateral will be deposited into the lending market as a supply, but users cannot borrow LP tokens.
CLM is an adaptation of Compound V2. It works with an AMM, allowing users to make borrowing and lending transactions using the underlying liquidity pool. This is in contrast to the alternative of forcing peer-to-peer transactions. Using underlying liquidity reduces waiting times and makes the system self-sustaining.
CLM will always be available as long as liquidity mining incentives are offered to Canto investors.
NOTE (Canto Unit of Account)
NOTE is an ERC20 token that acts as Canto’s unit of account. The entire supply of NOTE was initially issued and locked in the CLM’s Accountant contract. NOTE is fully backed by collateral lent to CLM, and you can use CANTO, ETH, ATOM, or Canto LP tokens as collateral to borrow NOTE. Besides, automated smart contracts (such as CLM’s Accountant contract) regulate the supply of NOTE by lending the collateral (assets that users deposit when minting NOTE) to other borrowers.
This is also how NOTE maintains its value, which is centered around $1. NOTE is not a stablecoin as it is not pegged to the dollar and can have its own volatility.
Canto Network Review: Tokenomics
$CANTO is the native token of the Canto network. It is used to pay gas fees for transactions and can be staked with validators to help secure the Canto network.
At genesis, the initial total supply of $CANTO is 1,000,000,000 (one billion) tokens. The initial circulating supply of $CANTO is 150,000,000 tokens.
The uses of $CANTO are similar to other blockchains’ native cryptocurrency use cases. You can use it to pay for gas fees on the blockchain. Additionally, you can also stake $CANTO with validators. This will allow you to participate in governance, and earn additional tokens, all while securing the network.
Token Distribution
The initial circulating supply of $CANTO tokens is allocated as follows:
- 130,000,000 $CANTO (13%) for initial contributors
- 20,000,000 $CANTO (2%) for Settlers of Canto who took part in the launch of the testnet
The remaining total supply of $CANTO is allocated as follows regarding governance to votes by the Canto DAO:
- 450,000,000 $CANTO (45%) for long-term liquidity mining to be distributed over the next 5-10 years
- 350,000,000 $CANTO (35%) for medium-term liquidity mining to be distributed over the upcoming months and years
- 50,000,000 $CANTO (5%) for future public goods grants
Canto Network Review: Opportunity and challenge
Opportunity
Canto Network has a lot of aspirations. While we often write poetry on the web3 about how aspects of cryptocurrencies are fairer than traditional finance, the rich get more prosperous. As a result, power always builds on wealth. Canto is working on fixing this problem.
Free Public Infrastructure is an excellent attempt to solve this problem. For now, however, profiteering (e.g., MEV) is an unavoidable aspect of blockchains, and prototypes alone cannot be solved. If that were possible now, there would be no need to use aggregators as an alternative to Ethereum.
Canto Network has a unique approach to users through its free DeFi services. Not only is it free on applications developed by the project team, Canto also develops a mechanism called Contract Secured Revenue – CSR Fee Sharing.
This mechanism allows projects to share a percentage of gas fees when users interact with the network through smart contracts. From there, encourage other projects to build on Canto with free user transaction fees.
Challenge
Although the project developers do not classify $NOTE as a stable currency, it has similar risks. $NOTE is both an algorithm and over-collateralized. Currently, the only margin assets are USDC and USDT. If the price of USDC and USDT falls, it will create a contagion risk.
As for the CSR Fee Sharing idea, although the purpose is similar to Canto’s operating criteria, it would be impossible for projects with a lot of creativity to give up transaction fees in exchange for a part of gas fees to the project activity model. Projects can also write unoptimized code to receive more gas fees from users, negatively impacting user experience.
DeFi protocols provided by Canto are free, but there are also minus points. Canto DEX has only one version, cannot be updated, and is not administrated. All protocols have no tokens and cannot perform liquidity mining programs to attract liquidity. This responsibility falls on the L1 token, which is CANTO.
CANTO is used to pay staking rewards to validators and as reward for liquidity mining (LM) programs on protocols. This causes CANTO to have high inflation, so there have been several governance proposals to reduce CANTO emissions and rewards from LM.
Finally, Canto Network has a few points that show that project resources are somewhat limited. Twitter project is only run by one contributor, so the content is mainly retweeted. Canto also does not use an official logo throughout the media channels, showing that the project has yet to invest in branding. There were even members of the community who satirized this.
Join us to keep track of news:Â https://linktr.ee/coincu
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
Author
Other Reviews
Canto Network Review: Layer-1 Based On Cosmos SDK Promises New Future For Defi
Since Ethereum and Ethereum’s Layer 2 still occupy the entire market spotlight, other Layer 1 projects will receive less attention, especially the newly launched Layer 1. However, this also allows investors to have more space to search for gems – a potential ecosystem that has yet to be discovered to many people, like Canto Network. In this Canto Network review, let’s find out through the article below.
Compared to other emerging EVM chains, Canto pursues a high degree of decentralization, no investors, no foundation establishment, and is more community-based, while providing accessible public infrastructure ( FPI) and contract revenue distribution (CSR) to developers). So what is Canto Network?
What is Canto Network?
Canto Network is a permissionless Layer 1 blockchain compatible with the Ethereum Virtual Machine (EVM). It is designed to deliver on the promise of decentralized finance (DeFi) – that new models will be easily accessible, completely transparent, decentralized, and free through a post-traditional economic dynamic. Canto launches without a core platform, presale, empowerment, or venture backer to be fully decentralized. As of press time, Canto’s total locked value (TVL) is $124,805,999, with most of this value locked in its DEX and lending protocols.
At its core, Canto leverages Tendermint Consensus and the Cosmos Software Development Kit (SDK) and is secured by Canto’s validators. It achieves EVM compatibility through the Ethermint system, enabling an EVM execution environment and further facilitating the deployment of Ethereum smart contracts. These tools include the Canto Decentralized Exchange (DEX), the Canto Lending Market (CLM), and the NOTE. Canto aims to be the “best execution layer for the original work” by implementing the following:
- Liquidity as a Free Public Good: Zero fees for Liquidity Providers (LPs). Canto makes liquidity free for protocols, arbitrageurs and traders.
- Rent Extraction Resistant: Canto aims to establish Free Public Infrastructure. Core DeFi primitives will not have sovereign governance tokens, nor the capacity to extract rent in the future.
- Minimal Viable User Capture: Where possible, Canto avoids interface-driven user ownership. Public infrastructure DEXes will have no swapping interface, so all users must trade on third-party aggregators. This will facilitate user acquisition for new protocols.
Canto Network review is designed to support free public infrastructure while reducing centralized incentives:
- There is no official foundation.
- There was no presale.
- There is no vesting.
- There are no venture backers.
How does Canto Network work?
Canto Network advocates DeFi principles such as decentralized exchanges, lending protocols, and units of account as public utilities. That’s why they are offered for free in Canto Network. In other words, Canto DEX, Canto Lending Market, and a fully collateralized stablecoin are all built-in into Canto.
Canto Network extraction aims to pioneer the concept of rent resistance. As part of its policy of providing public infrastructure for free, Canto Network has designed its smart contracts in a revenue-sharing manner. More precisely, smart contract creators receive a 20% share of all transaction fees generated from users who interact with a project. The aim is to provide a new platform for economic experiments in web3, where DeFi builders and NFT creators can benefit together from a growing blockchain ecosystem.
Canto Network Review: Highlight
To start with Canto Network review realizes the vision set forth by the early builders that the core principles should exist as Free Public Infrastructure (FPI).
After observing the evolution of the DeFi space, from the launch of DAI in late 2017 to multiple DeFi projects in 2021, three core principles have emerged to anchor any ecosystem. What a healthy DeFi attitude:
- Decentralized exchanges (DEXes) like Uniswap and Sushiswap
- Lending marketplaces like Compound and Aave
- Decentralized account units like DAI, USDC or USDT
As the ecosystem has grown, every core primitive makes the same decision: launch a management protocol token that derives value from the ability to extract rents from future users.
As existing protocols serving their communities are similar to private pay-by-the-hour garages, Canto’s FPI intends to offer its community a way akin to free street parking.
As for Canto’s decentralized exchange, the protocol cannot be upgraded and will not be regulated. It will run forever on Canto without being able to launch tokens or make additional fees over time, preventing the possibility of predatory evolution towards predatory practices.
For $NOTE, the unit of account token, the interest charged for stabilizing its price will be contributed to the funding of public goods. The algorithm is responsible for adjusting this interest rate is designed to change interest rates to promote less volatile value instead of maximizing revenue. All interest the borrower pays will be distributed to the lender with no fees deducted at the protocol layer.
Canto Network Review: The ecosystem
Canto DEX
Canto Network wants to prevent the possibility of predatory evolution into predatory behaviors. As a result, its native DEX cannot be upgraded, has no official interface, and runs forever at no cost. Users can interact with it through Slingshot, a DEX aggregation platform.
The mechanism of Canto DEX is similar to other DEXs. Automated Market Makers (AMMs) provide asset prices and derive liquidity from a user-provided liquidity pool. Canto follows the example of Uniswap, with a full liquidity pool and a centralized liquidity pool for more liquidity for stablecoins and other units of account.
Users can provide liquidity and get LP tokens to borrow. There are no fees for liquidity providers on Canto Network. Protocol users, traders, and arbitrageurs benefit from free liquidity access. Canto has five recommended liquidity pools:
- USDC/NOTE (centralized liquidity)
- USDT/NOTE (centralized)
- NOTE/CANTO (full range liquidity)
- CANTO/ETH (full)
- CANTO/ATOM (full)
Canto Lending Market (CLM)
For the Canto Lending Market, governance is controlled by Canto investors. Canto stakers have a great interest in the development of the ecosystem and promote the best environment for developers and DeFi users. As such, they have no incentive to deduct rent at the application layer.
CLM will allow LP tokens from Canto’s native decentralized exchange as collateral. This collateral will be deposited into the lending market as a supply, but users cannot borrow LP tokens.
CLM is an adaptation of Compound V2. It works with an AMM, allowing users to make borrowing and lending transactions using the underlying liquidity pool. This is in contrast to the alternative of forcing peer-to-peer transactions. Using underlying liquidity reduces waiting times and makes the system self-sustaining.
CLM will always be available as long as liquidity mining incentives are offered to Canto investors.
NOTE (Canto Unit of Account)
NOTE is an ERC20 token that acts as Canto’s unit of account. The entire supply of NOTE was initially issued and locked in the CLM’s Accountant contract. NOTE is fully backed by collateral lent to CLM, and you can use CANTO, ETH, ATOM, or Canto LP tokens as collateral to borrow NOTE. Besides, automated smart contracts (such as CLM’s Accountant contract) regulate the supply of NOTE by lending the collateral (assets that users deposit when minting NOTE) to other borrowers.
This is also how NOTE maintains its value, which is centered around $1. NOTE is not a stablecoin as it is not pegged to the dollar and can have its own volatility.
Canto Network Review: Tokenomics
$CANTO is the native token of the Canto network. It is used to pay gas fees for transactions and can be staked with validators to help secure the Canto network.
At genesis, the initial total supply of $CANTO is 1,000,000,000 (one billion) tokens. The initial circulating supply of $CANTO is 150,000,000 tokens.
The uses of $CANTO are similar to other blockchains’ native cryptocurrency use cases. You can use it to pay for gas fees on the blockchain. Additionally, you can also stake $CANTO with validators. This will allow you to participate in governance, and earn additional tokens, all while securing the network.
Token Distribution
The initial circulating supply of $CANTO tokens is allocated as follows:
- 130,000,000 $CANTO (13%) for initial contributors
- 20,000,000 $CANTO (2%) for Settlers of Canto who took part in the launch of the testnet
The remaining total supply of $CANTO is allocated as follows regarding governance to votes by the Canto DAO:
- 450,000,000 $CANTO (45%) for long-term liquidity mining to be distributed over the next 5-10 years
- 350,000,000 $CANTO (35%) for medium-term liquidity mining to be distributed over the upcoming months and years
- 50,000,000 $CANTO (5%) for future public goods grants
Canto Network Review: Opportunity and challenge
Opportunity
Canto Network has a lot of aspirations. While we often write poetry on the web3 about how aspects of cryptocurrencies are fairer than traditional finance, the rich get more prosperous. As a result, power always builds on wealth. Canto is working on fixing this problem.
Free Public Infrastructure is an excellent attempt to solve this problem. For now, however, profiteering (e.g., MEV) is an unavoidable aspect of blockchains, and prototypes alone cannot be solved. If that were possible now, there would be no need to use aggregators as an alternative to Ethereum.
Canto Network has a unique approach to users through its free DeFi services. Not only is it free on applications developed by the project team, Canto also develops a mechanism called Contract Secured Revenue – CSR Fee Sharing.
This mechanism allows projects to share a percentage of gas fees when users interact with the network through smart contracts. From there, encourage other projects to build on Canto with free user transaction fees.
Challenge
Although the project developers do not classify $NOTE as a stable currency, it has similar risks. $NOTE is both an algorithm and over-collateralized. Currently, the only margin assets are USDC and USDT. If the price of USDC and USDT falls, it will create a contagion risk.
As for the CSR Fee Sharing idea, although the purpose is similar to Canto’s operating criteria, it would be impossible for projects with a lot of creativity to give up transaction fees in exchange for a part of gas fees to the project activity model. Projects can also write unoptimized code to receive more gas fees from users, negatively impacting user experience.
DeFi protocols provided by Canto are free, but there are also minus points. Canto DEX has only one version, cannot be updated, and is not administrated. All protocols have no tokens and cannot perform liquidity mining programs to attract liquidity. This responsibility falls on the L1 token, which is CANTO.
CANTO is used to pay staking rewards to validators and as reward for liquidity mining (LM) programs on protocols. This causes CANTO to have high inflation, so there have been several governance proposals to reduce CANTO emissions and rewards from LM.
Finally, Canto Network has a few points that show that project resources are somewhat limited. Twitter project is only run by one contributor, so the content is mainly retweeted. Canto also does not use an official logo throughout the media channels, showing that the project has yet to invest in branding. There were even members of the community who satirized this.
Join us to keep track of news:Â https://linktr.ee/coincu
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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