In this episode of Edge Podcast, which took place on February 24, 2024, DeFi Dad, Nomatic, and Scott discuss Canto, its protocols, and future plans. Read our notes below to learn more.
Background
- DeFi Dad (Host) – investor at 4RC Capital
- Nomatic (Host) – investor at 4RC Capital
- Scott Lewis (Guest) – Core Contributor to Canto
- Canto – a layer-1 blockchain
Why build Canto
- Scott says that Canto envisions application layer primitives as public infrastructure, akin to essential services like street sweepers or subway systems. Canto integrates core DeFi primitives within its platform, streamlining processes such as lending markets and AMMs for user convenience.
- He adds that bundling essential features like lending markets and AMMs into Canto, it simplifies user experience and contributes to network success. Three core components of Canto include a stablecoin called $NOTE, the Canto lending market, and the Canto DEX.
$NOTE, Canto Lend, Canto DEX
- Scott says that $NOTE serves as an over-collateralized stablecoin backed by T-bills issued through the Canto lending market. $NOTE offers a unique feature where borrowing and lending rates are equal, promoting a fair system within the public infrastructure approach.
- He adds that the Canto lending market acts as a collateralization engine for $NOTE, facilitating borrowing against assets held within the platform. The Canto DEX differentiates itself by offering zero LP fees and incentivizing liquidity through layer-1 governance streaming rewards.
- Scott says that developers can build DEXs or lend/borrow platforms on top of protocols like Canto without directly competing with its existing lending market offerings. Assets such as $FBILL, $IFBILL, and $USYC are part of compliance RWA tokens issued by established entities like FortunaFi and Hashnote within Canto’s ecosystem.
Canto was early to RWAs
- Scott says that neofinance serves as a descriptive term emphasizing that RWA transactions differ from typical DeFi activities due to compliance needs beyond simple token transfers.
- He adds that RWA heavily relies on individuals seeking T-Bill yields on-chain, potentially unaffected by rate cuts. Comparing T-Bill rates to traditional savings account interests highlights indirect effects. Changes in short-term interest rates for dollars, including T-Bills, can influence interest earnings in savings accounts. Relative competition among banks may not negatively impact RWAs due to DeFi’s unique trading and yield opportunities.
Contract Secured Revenue (CSR)
- Scott says that CSR introduces a unique method where deploying contracts generates associated NFTs at a protocol layer. Developers can claim a portion of metered gas fees through these NFTs, fostering fee-sharing without coordination hurdles.
Canto network upgrades
- Scott says that the Kalisto upgrade enhances Canto with Cosmos SDK v0.5 for improved block time performance down to sub-second levels. Polygon CDK integration enables trustless ZK bridging within Canto network without transitioning to a single sequencer model.
- He adds that Canto plans to maintain validators and proof-of-stake mechanisms for decentralized transaction inclusion while incorporating trustless ZK bridging from Polygon’s proving algorithm. This approach aims at balancing decentralization with enhanced efficiency.
EVM compatible
- Scott says that Canto is economically similar to Ethereum but with some differences. Canto was designed to be EVM compatible, attracting users already using tools like Metamask from the Ethereum ecosystem. Early contributors to Canto were primarily from the Ethereum community due to familiarity with Solidity and existing infrastructure.
- He adds that Cosmos SDK’s battle-hardened nature and emphasis on safety made it a secure option for building Canto. Utilizing the Cosmos SDK provided a secure foundation while enabling compatibility with tools like Metamask at the application layer.
Up-and-coming Canto protocols
- Scott says the launch of Cadence Protocol will bring innovative solutions to decentralized finance.
- He adds that Hashnote focuses on RWA issuances beyond T-bills.
Music+
- Scott says that they are exploring new ways to design music NFT formats that emphasize emotional attachment over financial gains.
- He mentions unexpected delays in project timelines but expresses excitement about new opportunities arising behind the scenes. There is a focus on exploring potential collaborations with prominent figures in the music industry, highlighting the fun and innovative nature of these endeavors.
- Scott acknowledges the progress within the web3 community to support the music industry while recognizing that full potential has not yet been realized.
Check Out These Important Links
- Watch the original episode
- Follow DeFi Dad on Twitter
- Follow Nomatic on Twitter
- Follow Scott Lewis on Twitter
- Follow Canto on Twitter
Show Information
- Medium: Youtube
- Show: The Edge Podcast
- Show Title: Canto: The L1 Built for DeFi and RWAs
- Show Date: February 24, 2023