Since the beginning of 2023, Canto has made its presence felt in the cryptocurrency industry with the impressive rise in the price of its namesake token, which went from $0.07 on January 1 to over $0.46 a month later.
But what is Canto, first released in August 2022, and what is behind its astronomical rise?
What is Canto?
Canto is a layer-1, permission less (no licenses needed) blockchain that runs on the Ethereum Virtual Machine. It is part of the Cosmos network of blockchains, apps and services and offers its own stablecoin called NOTE.
Canto’s developers point out that the ecosystem was “built to fulfill the promise of DeFi”, which it aims to achieve by positioning itself as an execution layer of choice for original development work and offering unique incentives for developing DeFi protocols.
It was built through an effort by a community of DeFi supporters – who wanted to work on the fundamentals of the industry – including Slingshot Crypto co-founder Scott Lewis.
The fundamentals
Aiming to become a key blockchain in the DeFi industry, Canto’s main stated goals are as follows:
- To offer free services to liquidity providers and free liquidity to traders, protocols and other participants.
- Deploy free public infrastructure, without the use of dominance points or rent.
- Bypass user ownership based on the interface as a way of encouraging users to engage with new protocols.
- One of Canto’s primary goals is to provide the tools used by DeFi proponents – decentralized exchanges, stablecoin, lending protocol, etc. – as free public utilities.
- It secures its network by using Tendermint Core as a lower-power substitute for a proof-of-work algorithm like the one used by Bitcoin.
Avoids core features
Canto attempts to differentiate itself from some other decentralized platforms by working to get rid of centralized features that distinguish them. For example, it has no formal foundation behind it, unlike some other Level-1 Blockchains.
In addition, Canto did not follow the process of making its coins available for pre-sale.
Furthermore, Canto’s developers have avoided venture capital backing for the development of the project.
However, possibly most importantly is the fact that protocols that operate on the Blockchain, such as decentralized exchanges, lending protocols, etc., do not use other governance tokens.
How does Governance work?
The decentralized exchange, Canto, is designed to have no entities governing it and will not impose additional fees or create another token.
Stakers are responsible for governance, developing the lending market and incentivizing future developer work.
The algorithm behind NOTE predicts that it has the ability to self-adjust the interest rate in order to minimize volatility.
Rapid development and criticisms
Canto grew rapidly in early 2023 after news that cryptocurrency venture fund, Variant, had invested by buying Canto coins, although the amount of coins was not disclosed.
Between December 2022 and the end of January 2023, the number of Canto users more than doubled.
Also, total value locked in Canto (TVL) more than doubled, from $66 million to $138 million in this time frame and alongside a rapid increase in transactional activity.
With this performance it entered the top four layer-1 blockchains in the Cosmos ecosystem.
Canto’s growth, during this period, was fueled by a surge in transaction volume on the decentralized exchange as well as an increase in assets sent from bridges to Ethereum.
However, some investors criticized the system for a high inflation rate, as the circulating supply of the token, Canto, more than doubled within months of its launch.
However, others pointed out that this increase in the quantity of tokens could possibly be due to the increase in the price of Canto and at the same time a coincidental increase in the volume of NOTE.
In summary
Canto is a Level-1 blockchain, based on the Cosmos ecosystem, that aims to be a central part of the DeFi movement.
It was launched in August 2022 and saw rapid growth in transaction volume, value and other metrics from December 2022 to January 2023. During this period, the total value locked on its blockchain increased from $66 million to $138 million, while the number of Canto users more than doubled.
Canto’s key features include its focus on developing Free Public Infrastructure, with no central features such as a foundation behind it and pre-sale tokens.
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