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Posted on Feb 05, 2023Read on Mirror.xyz

Exploring The Rise of Canto

This post was originally published on Cantowiki.com.

Canto has rocketed from a $0.10 coin to a $0.50 coin in a bear market that has caused even the most resolute traders to take a break.

Over $300 million in funds have been bridged from Ethereum to Canto since the chain launched in August and it isn’t slowing down.

Source: Smyyguy on Dune (https://dune.com/smyyguy/canto)

Before you join your fellow crypto explorers waiting patiently for their funds to arrive on the Canto blockchain, it would help if you understood what Canto is.

Let’s take a look.

What is Canto?

Canto is a Layer-1 Proof-of-Stake (PoS) blockchain built to "deliver on the promise of DeFi". It runs the Ethereum Virtual Machine (EVM) and is built on top of the Cosmos SDK.

Canto doesn't have an official foundation that oversees development, it had no VC investment to get started, no vesting period, and had no presale. There's also no official owners or founders. There is, however, a loosely organized group of core contributors who work to develop and improve the ecosystem.

At it’s core, Canto isn’t unique. It’s an EVMOS fork. But, there is a key differentiator that’s making the ecosystem so attractive to developers and users.

What makes Canto different to Competing Layer-1 blockchains?

The core contributors who launched Canto believe that DeFi primitives should exist as Free Public Infrastructure (FPI).

This belief exists to remove the likelihood of rent-seeking behaviours emerging on the chain. This benefits the end-user, as you don't need to pay fees to interact with these primitives dApps on Canto.

As an example of what this means in practice, let’s use a real-world example.

City A privatised all core infrastructure like utilities and public transport. Private companies come in and charge residents fees to use these. Due to lock-ins and monopoly behaviour, a few private companies will end up controlling most of the market.

City B offers the same core infrastructure, but for free. Companies can help distribute these services on behalf of City B, and in return, they’ll get a cut of the revenue generated by the service (now, make a mental note — this is what we’ll call Contract Secured Revenue later). There’s no barrier to entry in the market and any company is incentivised to create easy solutions for residents.

City A would be most L1 blockchains.

City B would be the Canto blockchain.

Residents of City B (Canto) are going to receive high quality services, but without rent-seeking actors who can lock-in consistent profits without offering constant improvements on their service quality to residents.

This is a radical change in approach to DeFi, and it's bringing in talented builders from all over the cryptosphere.

What is "Free Public Infrastructure"?

Canto's value proposition is the free DeFi primitives, which contributors also refer to as Canto's "free public infrastructure".The three DeFi primitives that the Canto blockchain has made free and public include:

  • A unit of account called $NOTE (as an alternative to DAI, USDT, or similar)

  • A DEX (which can be interacted with through Slingshot or other third-party tools)

  • A lending market, which is controlled by $canto stakers

If you're wondering "don't these things exist on other L1s already?", here's the difference: the dApps you use regularly on Ethereum such as Uniswap and Sushiswap are decentralized — but, they're designed to generate value for the holders of their respective governance tokens through fees.

On Canto, there are no fees to use these parts of the chain's free public infrastructure.

Incentivizing Builders with Contract Secured Revenue (CSR)

You can make millions building a successful product on top of Ethereum if you create a business model where users pay you transaction fees.However, there's always a risk that someone comes along who charges less fees for the same service and steals your market.

On Canto, a pioneering concept of Contract Secured Revenue (CSR) is in place. This concept takes a cut of the smart contract transaction fees generated on the network and gives them to the contract developers. CSR is delivered via a CST NFT that are used to claim fees.

CSR is novel because it means developers and projects compete on user-interface, ease of onboarding, and product stickiness. It's also a good use of fees that would typically be burned.

Smart contract developers don't need to charge extra fees to users on top of the basic Canto transaction fees, because CSR guarantees them a cut. It's a powerful incentive to encourage people to build useful, interesting products on Canto rather than a competing L1.

Ultimately, it aligns incentives with the ethos of the chain: cryptoeconomic primitives should be free to the public.

When Did Canto Launch?

Canto publicly launched on the 15th August 2022.

Early contributors and testers received an allocation of 15% of the initial $Canto supply of 1 billion tokens. The rest of the supply was sent to a community pool.

Bridging Funds to the Canto Blockchain

There are two main ways to bridge to Canto:

  • Use the Canto.io bridge to send USDC, USDT, or WETH to Canto. Then, convert to EVM.

  • Use Synapse Protocol to bridge directly from Ethereum to Canto

The bridge will take several minutes. As long as you've followed the steps correctly, don't worry — your funds will arrive.

Once you have funds on Canto, you'll use a DEX like Slingshot to swap your tokens to $CANTO.

Where to Start Experimenting on Canto

1. Join the Canto Open Hackathon

The Canto Online Hackathon is an excellent place to start building. Previous category winners include the now-blue chip NFT of the ecosystem, Canto Long Necks, as well as products like a Canto Name Service and the NFT marketplace, Provenant.

https://twitter.com/theCOH_/status/1584705934634328064?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1584705934634328064%7Ctwgr%5E1afaaba31b89a41d0d26a7a339cc6c814e7a115a%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fcantowiki.com%2F

The February hackathon has just kicked off, too. Category winners have an opportunity to get exposure to users in the ecosystem, as well as a prize paid in $CANTO.

2. Browse Canto NFTs

Canto NFTs are still in their very early stages, so proceed with caution. But, marketplaces like Alto are seeing growing numbers of daily users so it's changing by the day.

Canto Long Necks (meep meep) are the OG project, but there are interesting projects popping up daily. Please, don’t get rugged!

3. Stake $CANTO and Participate in Governance

Rather than spend your $CANTO on jpegs, you can consider staking it and participating in governance proposals to shape the evolution of the Canto ecosystem.

It's a good way to have an early influence on progress and stay up-to-date with the latest changes.

Summary

Canto is a relatively new L1 blockchain that’s focused on creating a rent-seeking-free DeFi ecosystem by offering core primitives for free.

The chain is incentivizing smart contract developers to build applications on Canto through an innovative Contract Secured Revenue Model that aligns incentives between contributors, developers, and users on the chain.

Naturally, new chains are always more interesting to the masses when the price is going up, so time will tell whether all of these new wallets on Canto will stick around.

Regardless, it’s refreshing to see an ecosystem doing something new and taking a shot at re-inventing how we look at a cryptoeconomic system.