Understanding the Canto Economic Model and Operational Mechanism

Original Title: “Understanding the Canto Economic Model and Operational Mechanism in One Article”

Original Author: @FishMarketAcad

Original Translation: Kate, Marsbit

$CANTO has recently received a lot of attention, but I haven't seen an integrated thread yet.

So I decided to explore their ecosystem to help you understand what @CantoPublic is, how it works, and whether it is a Ponzi scheme.

Everything you need to know about $CANTO.

The first thing I noticed is that their website has a hacker vibe, which might attract degens but could deter tradfi onlookers.

Technically, Canto is fully EVM-compatible, making it easy to fork solidity dapps to Canto. Canto's speed is twice that of Ethereum (6 seconds vs 12 seconds block time).

Canto was originally a branch of $EVMOS, using the Cosmos SDK with Tendermint consensus and EVM execution layer (but using Metamask).

They are a DEFI-centric L1, similar to @seinetwork and @0xcarbon, as they have built-in DeFi modules, making it easier for developers to build DeFi applications on top.

What makes them unique is that there is no official foundation, no presale, no equity allocation, and no venture capitalists.

This makes them a completely decentralized chain.

However, they often host hackathons online, all community-led, which sounds fun.

Canto believes that core primitives should exist in the form of free public infrastructure (FPI):

Free DEXs (like Uniswap)

Free lending markets (like AAVE)

Decentralized currency (like DAI)

Canto hopes users can use these core primitives for free, just like free parking.

Interestingly, its DEX cannot be upgraded, will remain governance-free, and will never charge fees.

LPs also do not earn fees, so I think LPs purely earn $CANTO rewards from inflation.

The Canto lending market (CLM) is managed by Canto stakeholders who aim to provide the best service for developers and DeFi users.

Currently, depositing into Canto LPs gives you crazy three-digit APRs! But they cannot be used as collateral to borrow assets, nor can they be borrowed, so this feels a bit like a Ponzi scheme.

$NOTE is a decentralized currency pegged to $1, using interest charged for stable pricing to fund public goods.

The interest rate adjustment mechanism also prioritizes stability over yield maximization, with the interest paid by borrowers going to lenders, not the protocol.

I see a lot of misunderstandings about $NOTE, so TLDR:

1) NOTE is an over-collateralized stablecoin, not an algorithmic stablecoin.

2) NOTE is only minted against NOTE/USDC/USDT collateral.

3) NOTE cannot currently be minted against any unstable LPs.

You can bridge assets to Canto via http://synapseprotocol.com or http://bridge.blockscape.network to start your journey!

Make sure you have some WETH in your wallet, as well as ETH for gas and bridging fees. USDC/USDT tokens can also be bridged to Canto.

On Canto, you need 0.5 $Canto to generate a public key. If you need it, please follow and DM me (FCFS)!

Once on Canto, you can go to http://app.slingshot.finance/swap/CANTO to start buying memecoins like CMOON (JOJO ANYONE?) or even CINU (Canto inu). They also have NFTs!

If the infrastructure is free, how do developers make money?

They build cool dapps on it! Using Contract-Secured Revenue (CSR lol), a portion of the gas fees spent on smart contracts can be collected in CSR NFTs specified by smart contract developers, redeemable for $CANTO as income.

Digging deeper into these numbers, things look a bit suspicious.

Canto's market cap is $270 million, calculated at $0.64 per token. There are over 80,000 wallets on Canto.

But is this price increase sustainable? Isn't the release of $CANTO a Ponzi incentive through inflation?

Source: https://analytics.neobase.one/home/

This guy dug into the numbers, and the top 5 wallets actually account for nearly 50% of CANTO liquidity!

They are likely insiders, and if they don't sell, the price won't crash, the confidence (scam) game continues.

https://twitter.com/0xNick/status/1621560669794406401

What about token economics?

Look here!

$CANTO Token Economics

Used as a gas token, can be locked for 21 days.

Circulating supply is 42%.

Distribution is as follows:

13% initial contributors (no lock-up)

2% airdrop

45% liquidity mining (next 5-10 years)

35% liquidity mining (6mo-1y)

5% for future grants

https://twitter.com/UnlocksCalendar/status/1618227472130248708

So is this a Ponzi scheme?

Yes. At least in its current form, $CANTO looks like a Ponzi scheme, but that doesn't mean it will always be a Ponzi scheme.

Almost everything starts as a Ponzi scheme (including Bitcoin).

With enough development, use cases, and adoption, it can become a real ecosystem!