Ever heard of Canto? This layer-1 blockchain has been grabbing the attention of traders in recent months, as evidenced by its growing DEX trading volume. Our guide focuses on the aspects that separate Canto from other L1s, but first, let’s define it.
Canto Defined
Canto is a public blockchain that allows developers to build decentralized applications (dApps) and smart contracts. It aims to fulfil the promise of Decentralized Finance by giving easy access to decentralized, transparent financial systems.
The blockchain uses the proof-of-stake consensus mechanism to validate transactions.
Origin
The DeFi-focused blockchain employs the Cosmos software development kit and is powered by a consensus engine known as Tendermint. Moreover, Canto uses Ethermint in deploying the Ethereum Virtual Machine (EVM). Therefore, as an EVM-compatible network, Canto has built a bridge between ERC-20 and CosmWasm tokens.
Team Behind Canto
Canto developers have chosen to remain anonymous. However, there are several well-known crypto players that are contributors to Canto. Among them is Scott Lewis, the founder of Slingshot, DeFi Pulse, Code4arena, Atrium, and Hyype. The Plea team, comprising dApp developers, has also contributed massively to Canto’s development.
Did Canto Receive Funding?
Although Canto didn’t receive seeding funding in its early days, the blockchain project has started attracting venture capitalists. In May, Variant Fund announced it had invested an undisclosed amount of funds in Canto.
Canto’s Roadmap
Canto has already actualized some of its goals in the roadmap. At the moment, there is a decentralized exchange and a lending protocol running on the blockchain. The developers are looking to create a decentralized autonomous organization (DAO) to decentralize Canto’s governance.
How Canto Works
As an EVM-compatible network, dApp developers on Ethereum can easily migrate their projects to Canto. The blockchain also uses an Ethereum execution client called Geth to manage transactions. This means Canto feels and behaves like the Ethereum network. The biggest difference is that its developers used the Cosmos software development kit to build it.
Canto Features Explained
Here are Canto features that DeFi users will find useful:
Canto Decentralized Exchange (DEX)
As mentioned earlier, there is a DEX built on the Canto blockchain, letting anyone become a liquidity provider. The Canto DEX offers concentrated liquidity pools, which include USDC/NOTE and USDT/NOTE and full-range liquidity pools, which include CANTO/ETH, CANTO/ATOM, and NOTE/CANTO.
Canto Lending Protocol
Canto allows users to secure loans by depositing liquidity pool tokens to its lending protocol. This platform draws inspiration from the popular Ethereum-based lending app Compound. The only difference is that it does not have a lending token.
The CANTO Token
The Canto blockchain is powered by its native token, CANTO. Here are its tokenomics: The token’s maximum supply is 1 billion, and the circulating supply stands at 150 million. One hundred thirty million Canto tokens, which are currently in circulation, were airdropped to initial contributors, while 20 million tokens were distributed to participators of the testnet launch.
The remaining tokens will be added to the circulating supply over the next ten years.
Where Can You Purchase CANTO?
Besides Canto DEX, you can buy CANTO tokens on several centralized exchanges, including BKEX, Gate.io, MEXC, Crypto.com, Bitget, and Bitmart.
Is There a Canto Wallet?
The Canto blockchain has several useful features but lacks a native wallet for storing CANTO. Nonetheless, there are multiple non-custodial crypto wallets that are compatible with the Canto network, such as MetaMask. But if you prefer keeping your crypto assets offline, you can use hardware wallets like Trezor and Ledger to store your CANTO tokens.
Canto’s Weakness
Although the proof-of-stake consensus mechanism is a good method for validating transactions since it is considered environmentally friendly, it poses the risk of a Sybil attack when only a few parties stake the most tokens. A Sybil attack happens when one or a few individuals have a huge influence on a protocol by owning the largest number of tokens, which they can use to pass unfair proposals. As of this writing, six addresses account for 51% of the staked CANTO, making it easy for them to launch a Sybil attack.
Conclusion
It is clear that Cantos is contributing to the development of decentralized finance by allowing easy access to dApps. However, whether the project is here for the long term remains to be seen.
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