Canto is a permissionless general-purpose blockchain running the Ethereum Virtual Machine (EVM). It was built to deliver on the promise of DeFi that through a post-traditional financial movement, new systems will be made accessible, transparent, decentralized, and free. At launch, Canto provides secured by and an EVM execution layer via in addition to core financial primitives designed to support the

These primitives include:

— a zero-fee DEX for liquidity providers

— a pooled lending Compound v2 fork

— a fully collateralized unit of account token issued by the CLM which also serves the ecosystem as a USDC/USDT soft-pegged stablecoin

Over time we expect this stack to change significantly and new financial primitives to be added to best fulfill the Canto mission.

Core Tenets

Canto’s goal is to become the best execution layer for original work. Canto accomplishes this in three ways:

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.

Approach to Decentralization

Canto is designed to support free public infrastructure, while eliminating centralized incentives:

There is no official foundation.

There was no presale.

There is no vesting.

There are no venture backers.

Free Public Infrastructure (FPI)

Canto realizes the vision set out by the first builders that core primitives should exist as Free Public Infrastructure (FPI).

Having observed the growth of the DeFi space, from the launch of DAI in late 2017 to the emergence of many DeFi projects in 2021, three core primitives have emerged to anchor any healthy DeFi ecosystem:

Decentralized exchanges (DEXes) such as Uniswap and Sushiswap

Lending markets such as Compound and Aave

Decentralized unit of accounts such as DAI, USDC or USDT

As the ecosystem has grown, every core primitive has made the same decision: launch a governing protocol token that derives value from its ability to extract rent from future users.

Canto takes a different approach by choosing to launch these core DeFi primitives as public utility protocols, or Free Public Infrastructure (FPI).

Where existing protocols serve their community more similarly to a pay-by-hour private parking garage, Canto’s FPI intends to provide for its community in a manner more akin to free parking on a city street.

For Canto’s decentralized exchange, the protocol cannot be upgraded and will remain ungoverned. It will run in perpetuity on Canto without ever being able to launch a token or implement additional fees over time, preventing the possibility of a predatory evolution toward rent-seeking behaviors.

For $NOTE, the unit of account token, the interest charged to stabilize its price will be contributed toward funding public goods. The algorithm responsible for adjusting this interest rate is designed to change the interest rate in order to promote a less volatile value as opposed to maximizing revenue. All interest paid by borrowers will be distributed to lenders, with no fees extracted at the protocol layer.

By giving governance powers to the chain, we expect the operation of the primitives to naturally align with the public interest, resulting in a healthy and robust ecosystem free from zero-sum games that have since come to dominate the once egalitarian system of decentralized finance.

Canto Lending Market (CLM)

For the Canto Lending Market, governance is controlled by Canto stakers. Canto stakers have broad interests in the growth of the ecosystem and fostering the best environment for both developers and DeFi users. As such, they have no incentive to extract rent at the application layer. Canto Lending Market will allow LP tokens from Canto’s native decentralized exchange to be used as collateral. This collateral will be deposited in a lending market as supply but users will not be allowed to borrow LP tokens.

Canto Unit of Account ($NOTE)

$NOTE is the unit of account on Canto. $NOTE is an over-collateralized currency with a value perpetually rebalanced toward $1 through an algorithmic interest rate policy. It is:

Over-collateralized

Capital efficient

Fully decentralized

Automated

$NOTE cannot be created – it must be borrowed from the Accountant, a smart contract that implements the algorithmic interest rate policy, via the Canto Lending Market.

All interest charged by the Accountant is earmarked for funding public goods. It is held in the Community Treasury and ultimately governed by the Canto DAO.

Canto and Contract Secured Revenue Fee Sharing

CSR, or Contract Secured Revenue, is a fee splitting model for the Canto network that enables smart contract developers to earn from original work by claiming a percentage of the transaction fees paid to the network when users interact with their smart contracts.

Developers who register their smart contracts for CSR receive Non-Fungible Tokens (NFTs) that are used to claim contract fees. These same NFTs can be traded, fractionalized, and otherwise composed within community-created DApps.

As revenue accrues gradually and automatically to a ledger on the protocol layer, a smart contract’s associated CSR NFT can be utilized to withdraw these funds at any time, enabling unique use cases for Canto developers.

Because a CSR NFT is composable, a complementary protocol can allow for it to be traded, wrapped, staked, collateralized for loans, fractionalized, and more.

CSR as a Meaningful Source of Revenue

With these potential use cases in mind, a planned governance proposal will call to increase Canto gas fees significantly from their current incubation levels. This change will ensure CSR is a meaningful source of revenue for smart contract developers, while also discouraging low quality or spam transactions.

How to Bridge to Canto

The Canto Bridge allows you to bridge assets to Canto from Ethereum or Cosmos Hub. It also supports bridging back to Ethereum.

https://canto.io/bridge

The Synapse Bridge is a multichain bridge that enables on-chain asset swaps between Canto and 10+ other blockchains, including Ethereum, Polygon, Optimism, Arbitrum, Avalanche, BNB Chain, and others.

https://synapseprotocol.com