Zero protocol fees, minimum user capture, is Canto going retrograde?
According to DeFiLlama data, the 24-hour transaction volume on the Canto chain reached 63 million US dollars, surpassing Solana's 56 million US dollars, ranking 7th among all included chains. If the three Layer 2 projects Polygon, Arbitrum, and Optimism are removed, it has become the fourth largest Layer 1 transaction volume. Vertically, Canto TVL has grown from US$66 million at the beginning of the year to US$125 million currently.
The price of Canto tokens has also risen by leaps and bounds. According to CoinGecko data, the price of Canto has risen by 48% in 24 hours, reaching US$0.32, while the price on January 1 this year was only US$0.08.
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CSR drives Canto up this round
On January 22, Canto announced Contract Secured Revenue (CSR).
CSR is a cost-sharing model of the Canto network, which allows contract developers to earn income by taking a certain percentage of the transaction fees paid to the network when users interact with the contract.
Contract developers who register as CSRs get some NFTs. As the income of the contract is accumulated, holding a CSR NFT can claim these income at any time. And NFT itself can be traded and combined in DApps. This composability enables a variety of use cases including trading, wrapping, investing, loan collateral, and more.
In order to meet the needs of protocol revenue and potential use cases, Canto's gas fee will be greatly increased. On January 25th, the part about burning and base fees will be live, and the CSR function will be deployed to the mainnet (but will not be turned on). After 24 hours, start a new governance proposal, the proposal content is:Increase the gas fee and enable the CSR function.
What is Canto?
Canto is a Layer 1 network based on the Cosmos SDK, but unlike other Cosmos ecological projects, it is an EVM-compatible network specially designed for DeFi. Under the protection of Canto validator nodes, the network will adopt Tendermint consensus, even if up to 1/3 of the machines fail in any way, Tendermint will still work normally. Tendermint is designed to be an easy-to-use, well-understood, high-performance network that supports a wide variety of dApp deployments.
And Canto's infrastructure support is also a step further than other public chains. The core primitives of this public chain are designed to support Free Public Infrastructure (FPI).
From the perspective of user perception, the new public chains (especially the new EVM public chains) may be quite similar.But from a narrative point of view, Canto is more attractive in terms of "decentralization".secondary title
FPI: Reject DeFi protocol to "collect rent" from users
The Canto team observed that there are some basic DeFi components in most Layer 1, such as DEX, Lending, Stablecoin. For these agreements, just issuing a governance token can be used to grasp the ability to obtain rent from future users of the agreement, and it contains huge value.
Canto has made some improvements at the application level:These infrastructure-level protocols were developed by Canto as utility protocols,That is Free Public Infrastructure (FPI).Specifically, the Canto public chain already has its own lending market forked from Compound, DEX forked from Solidly, and a stable currency called NOTE.
And these "public utilities" that have been built naturally also have to give play to their public attributes. Canto's DEX protocol cannot be upgraded and is not regulated. It will run permanently on the Canto,And there will be no future cost increases.Canto’s lending market is governed by Canto stakers. Canto holders pay more attention to the ecological value of the entire chain, and naturally they will not grab extra income from a single application. For the stablecoin NOTE, the protocol will also not charge any fees.
Most importantly, these core public infrastructure,There will be no governance tokens, eliminating the possibility of collecting rent from users in the future.In addition, the core protocol will also follow the principle of "minimum user capture", no user interface is set up, and users can only conduct transactions through third-party aggregators. This minimizes the impact of centralization.
Canto believes that the existing DeFi protocol is more like a paid private parking lot that only serves its own community, while Canto's FPI is more like free roadside parking that is open to everyone.
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NOTE: Will it follow the old path of UST?
NOTE is an over-collateralized stablecoin launched by Canto, backed by USDC and USDT that users lend to Canto Lending Market (CLM). The token cannot be created out of thin air and only supports borrowing from CLM. The circulation of NOTE is dynamically managed by the accounting contract according to the interest rate. NOTE The interest rate will be automatically adjusted every 6 hours based on the TWAP of the market price.
If NOTE transactions are below $1, interest rates rise, and people will buy more NOTE in the secondary market and deposit them in CLM to earn interest. If NOTEs trade above one dollar, interest rates fall, and people will borrow NOTEs from CLM and sell them on the secondary market.
Previously, UST used volatile assets as collateral to mint UST out of thin air. This mechanism allows UST to be completely reset to zero after the day's additional issuance. The mechanism of NOTE makes some repairs to the shortcomings of UST. For example, the collateral only supports two mainstream stablecoins, and NOTE cannot be minted out of thin air.
Similar to UST, NOTE also provides users with lucrative stablecoin benefits. Currently, the savings APR of NOTE-USDC LP in Canto Lending is as high as 14%, and that of NOTE-USDC LP is even higher at 19%.
