What is Canto ($CANTO)?
Canto is an EVM compatible Layer-1 blockchain built using the Cosmos SDK and Tendermint core that aims to provide popular DeFi services such as DEX and lending in an accessible and free manner for every one.
The first iteration of Canto is a permissionless general-purpose blockchain running the Ethereum Virtual Machine (EVM). The main tenet of Canto is that DeFi services should be made accessible, transparent, decentralized, and free.
*Learn more in our report discussing in details Canto ($CANTO) and other emerging new layer blockchain projects - Beyond Aptos, Sui & Canto | An in-Depth Guide to the Emerging Alt-L1s
What are the key features of Canto ($CANTO)？
For Canto, their core goal is to become the “best execution layer for original work”, by providing three key features:
- Zero fees for liquidity providers (LPs): making liquidity free for protocols, traders, and arbitrageurs.
- Rent extraction resistance: in order to provide free public infrastructure, core defi primitives such as the decentralized exchange (DEX) and lending market will have no governance tokens.
- Minimal viable user capture: core public infrastructure will have no public interfaces, thus users will have to trade on third-party aggregators, to facilitate user acquisition for protocols building on Canto.
At launch, Canto provides Tendermint consensus secured by Canto validator nodes and an EVM execution layer via Cosmos SDK in addition to core financial primitives designed to support the Free Public Infrastructure (FPI). These primitives include:
- Canto DEX: a zero-fee DEX for liquidity providers
- Canto Lending Market (CLM): a pooled lending Compound v2 fork
- $NOTE: a fully collateralized unit of account token issued by the CLM which also serves the ecosystem as a USDC/USDT soft-pegged stablecoins.
Who created Canto ($CANTO)?
The team behind Canto operate anonymously and refer to themselves as a “loosely organized collective of chain-native builders”, and call themselves “contributors”. The team oversaw the launch of the network from testnet to mainnet, and continue to run both the Twitter account and Discord community.
- @scott_lew_is: Co-founder of DeFi Pulse and Slingshot
- @RobinWhitney_: Formerly of Acala and Karura
- @rxwald: DeFi Pulse, Slingshot
- @0xzak: Co-founder of Slingshot, Advisor: DeFi Pulse
What is the tokenomics of $CANTO?
The Canto utility token ($CANTO) is the native token of Canto and is used to pay for transactions on the network and can also be staked with validators to help secure the network.
Liquidity Mining Incentives
In order to compensate LPs for providing capital to Canto’s zero LP fee DEX and to help distribute CANTO in a fair manner, a liquidity mining program will release tokens linearly per block to LP token holders. We ensure that there will be suitable liquidity at launch by partitioning the genesis block into two sets of liquidity mining incentives. The first block of tokens will provide incentives for LPs for the first six months after Canto launches and the second block will provide incentives for a longer term multi-year period. We make the incentives sufficiently large enough to ensure that liquidity is freely available for the vast majority of trading activity while accounting for high expected volatility in the initial phases of Canto’s launch.
Liquidity Mining Emissions
Medium-Term Liquidity Mining is expected to consist of six month-long epochs. The first epoch will start at launch and will distribute 5.83% of the token supply. The Canto DAO has onchain control over all liquidity mining schedules. As the first epoch concludes, the DAO may choose to pass a proposal to begin a second epoch.
Long-Term Liquidity Mining is expected to continue liquidity mining after the Medium-Term Liquidity Mining allocation is emitted. The Long-Term Liquidity Mining reserves may be emitted over the course of 10 years, or any other schedule the DAO chooses.
Staking Incentives
Canto aims to bootstrap network security through a policy of minimum viable issuance of new tokens to stakers. We achieve this objective initially by issuing a flat amount of tokens linearly per block to stakers in a manner similar to LM incentives. Canto’s high inflation allows market participants to effectively price the excess returns on liquidity mining relative to the expected impermanent loss. As Canto’s financial primitives become more liquid over time, we expect that this premium converges rapidly to its fair value as new information enters the market.
Security Emissions
Network security emissions will start around an inflation rate of 200M Canto per year for the first 30-day period, minting ~16m new CANTO tokens. The LM reward per block mined will be ~37 CANTO. Every subsequent period will face exponentially decaying security emissions.
Grants for Settlers of Canto
We are grateful to all those who have participated in the Settlers of Canto testnet event, and have decided to distribute 20M tokens to Settlers.
Filtering Criteria
In order to identify real, active Settlers, we subjected participants to a selection of examinations aimed to determine both the likelihood of them being a real human and becoming a Canto contributor. Settlers were scored and granted based on the following:
- Feedback: All feedback responses that were viewed relevant, coherent and original were counted.
- Chain Score: Wallet addresses that had activity across Ethereum and its L2s received higher scores. We accounted for transaction history across ETH, Polygon, Optimism, and Arbitrum. NFT ownership, ENS ownership and other signals were included. The greater the activity, the higher a Settler’s chain score.
- Twitter Score: We took metrics from the Twitter accounts of each Settler, such as the Twitter activity and followers, and issued a significant penalty for accounts focused on giveaway promotions and airdrops.
- Canto Score: Every address was assigned a Canto score based on the number of transactions an address made on the Canto Testnet, along with if they completed the Settler’s Goals (lending LP tokens in the Canto Lending Market, etc.)
At genesis, CANTO was directly sent to the eligible wallet addresses used to participate in Settlers of Canto. In total, 9364 Settlers were eligible to receive Canto from the event.