Canto Chain Review
Greetings Spiritors, we hope that you are all doing well!
The past week has been filled with positive developments in DeFi, as we have seen an upward trend in prices and an overall sense of optimism. Despite the challenges faced in 2022, the industry continues to push forward, and SpiritSwap is no exception. This month is particularly significant for SpiritSwap as we will be embarking on the development of a multichain platform. That’s right, SpiritSwap will be expanding to Canto! In this article, we will aim to provide insight into this development once again for the ones which might have missed our previous article about the expansion, and will also be reviewing the platform that we will be moving to: Canto.
TL;DR About The Expansion
The UpperOctave team responded to the long-awaited calls of the DAO by proposing a move to a new L1 blockchain, Canto Network. Canto is a young and emerging blockchain that has a unique feature that would allow SpiritSwap to receive 25% of the gas fees spent while using their product. By rebating the gas fees back to SpiritSwap, the DAO will receive a consistent incentive from the usage of the AMM and will be able to earn a steady revenue stream.
There would be some changes to the tokenomics when deploying to another chain. SpiritSwap will use a new token called SOUL when expanding to the Canto chain. The existing $SPIRIT token on Fantom will remain unchanged, and inSPIRIT holders will receive 50% of the lock drops that will occur on the Canto chain.
If you would like to read more about our expansion and its details, it’s highly advised that you read our previous article about the expansion to Canto, which also includes a transcript of the AMA we held with the UpperOctave team.
Does that sound good? Keep reading for more details!
Canto Chain Review
The decision for SpiritSwap to expand to Canto is not made lightly. We are not simply expanding to a new chain just for the sake of expansion, but rather, our goal is to take the DAO to the next level. Canto is a very promising layer 1 platform and is considered by many to have a promising future. And rather than making empty claims, we will provide some statistics to support this. Since the beginning of the year, the TVL in Canto has risen from $66 million to $105 million, indicating the positive sentiment of the market and the renewed interest in DeFi. And that TVL grew in the most credible way possible. As we know, the amount of stablecoins is a key indicator of a chain’s success, and Canto has a significant amount of them compared to its competitors. On January 8th alone, $26 million worth of stablecoins were bridged to Canto.
Where are those stablecoins going to then?
When looking at Canto, there are five protocols: CantoDEX, Canto Lending (a lending/borrowing protocol, as you’ll probably assume), Y2R (a yield aggregator), ForteSwap, and CantoSwap.
Three of these are decentralized exchanges, with CantoDEX’s main pairs being incentivized and rewarded by Canto itself. So, where does SpiritSwap fit in, and how can it compete with others? The answer is that SpiritSwap will join the game by allowing many more additional pairs that are not incentivized by the native DEX. The protocols that would like to build on Canto and are not incentivized by CantoDEX (as they only do so for the native pairs) can come to SpiritSwap and benefit from our services.
One of the incentives that Canto has for protocols that would like to build on it is the 25% gas rebate, which we have mentioned before. However, it is worth emphasizing again as it is hard-coded into the chain and will always be there. As Canto Chain grows and more revenue is generated through SpiritSwap, The DAO will benefit not only indirectly but directly as well. This is a fantastic incentive for protocols that want to bet on themselves. It is only logical for the DAO to vote to expand to the Canto chain with the technology, community, and potential that SpiritSwap has.
The Canto Chain is also unique in that it aims to end “rent-seeking” and increase decentralization at the same time. According to the founder and contributor Scott Lewis, Canto is different from other chains that may have a mentality of “only the strong survive” or “the bigger fish eat the little fish.” Instead, Canto offers contract-secured rebates for NFT deployers in addition to protocol rebates, which include a 20% base fee gas given to a deployer upon contract deployment. The goal is to support free public infrastructure while eliminating centralized incentives. To further this approach, the developers of Canto have chosen to remain anonymous and have no funding from venture capitalists.
To strengthen this approach, Canto has released its chain with three apps in use: a DEX, a lending and borrowing protocol, and a stable unit of account. The stable unit of account is called $NOTE, and it is an over-collateralized currency with a value that is perpetually rebalanced towards $1 through an algorithmic interest rate policy. It is backed by stables and other assets, and can only be borrowed from the Canto Lending Market, which means that the rates will only be controlled by the accountant contract. This allows for a self-sustaining system, and all the interest charged is put into the treasury, which is used to incentivize public goods.
We really appreciate that you’ve read this, and hope you’re as excited as we are. The development will start this month, and we’re hoping that we’ll be able to update you soon. For more information about Canto and SpiritSwap or if you have any questions in general, make sure to join our Discord server where you can get an answer to all of them!
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