Sirwin
Sirwin

Is the Canto “DeFi Chain” worth the hype? Bridging, Lending, LP Providing: My full Experience, Guide and Outlook

By n1ce | DeFi Adventures | 28 Jan 2023


Canto? Yet another new, up and coming blockchain? I was very skeptical at first, that’s why I did not investigate or buy anything in the beginning of January.

But I kept hearing about it on Crypto Twitter which obviously could mean good or bad, depending on who you are following. But some buzzwords stuck with me: no venture capital investor seed rounds that could be dumping on retail as soon as price go up, crypto native builders, a chain made with DeFi in mind from the start. Then I saw the command-line themed homepage and was kind of hooked:

Canto homepage in nostalgic command-line style.

How did I hear about it? SpiritSwap on Fantom announced they will be expanding there:

Shilling from the $RUNE community:

Why CANTO? What’s the value proposition?

  • Layer1 focussed on DeFi
  • Have their own stable unit of account $NOTE, backed by native $Canto
  • Built with the Cosmos SDK — IBC compatible
  • They will give gas rebates back to contracts, which means projects don’t have to launch their own token — it’s called CSR (contract secured revenue)

Also check out this great article on Canto from November:

https://medium.com/coinmonks/canto-a-new-primitive-in-defi-1f561fc3a31f

Why is $Note a good idea? Don’t we have enough stable coins?

Have a look at this great comparision with $DAI on ethereum:

Tl;dr: $Note is very efficient and native to Canto. $Note can spread through the Cosmos and become the de-facto censorship resistant stable coin. Even though it isn’t really a stable coin.

My experience

I don’t simply want to give you all the boring details but create a hands-on guide explaining my steps and helping others who are interested in exploring Canto. Let me know if you had any challenges or need help in the ecosystem!

Chapter A: Briding

  • Adding Canto to Metamask wallet using chainslist.org (I would love to see XDEFI Wallet support soon)
  • Moving FTM to Fantom from Kraken.com (my exchange)
  • Selling FTM to USDC on Beets.fi
  • Bridging USDC using Synapse, in my case from Fantom
    The process should also be very smooth if you are coming from the Cosmos ecosystem due to the IBC connection

Unfortunately, I lost the screenshots I took of the process.

Chapter B: Arrived on Canto

My portfolio: ~492 USDC I started with around $450 on Kraken exchange and $44 on Fantom.

My expenses so far: Kraken Withdraw, Fantom Swapfees, Bridge fees

My Goal: Safely farm with $300, bet long on canto with rest, stake.

Buy Canto for $44 = 146 Canto on Slingshot exchange

I have now $148 left to buy more Canto. We will see if this is a smart decision or if will FOMO buy more even with rising prices. As soon as Bitcoin crashes again (which it will eventually) I am super happy to buy more.

Supply $300 to Lending → 1.58% APR

Borrow: 63 $Note, 99 $USDT

Create $160 LP → 20% APR (stable, risk $Note). Keep in mind, this is borrowed money.

Staking 100 Canto → 21% APR (bet on Canto, risk $Canto price)

Which results in a total Portfolio on Canto: $448 in stables, $53 in $Canto with $Canto at $0.37 at the time of writing.

Upsides of Canto

  • $Canto is not listed on any exchange yet
  • There is no VC investment
  • Currently good stable farming APRs of 20%
  • There will be little ecosystem tokens, as projects can earn a percentage of fees their contracts generated, so they don’t have to create their own token. This is called CSR, more here: https://docs.canto.io/evm-development/contract-secured-revenue

Risks

Of course a new blockchain that is only running live since a few months comes with a lot of risk. Non of this is investment advice, just an example on how I will allocate my capital. The following risks are to be taken seriously, among others:

Price of the token

So far the $CANTO token is up-only this year, up 300% in the last 30 days. Looking at a longer timeframe you can see that we are at the all time high from last year august. However, it is not being listed by any exchange yet.

Token allocation

From the 1 billion total, 150,000,000 (15%) are circulating. The rest is allocated to long term liquidity mining (45%), medium term liquidity mining (35%) and 5% for future public goods grants.

Even though there are no seed rounds or VCs involved, early contributors are holding 13% of the total supply already unlocked.

Conclusion

Overall, I am super happy with the experience on $Canto. I had to whip out Metamask since not using it for a while in favor of the great XDEFI Wallet and I was reminded how great XDEFI Wallet handles all my cross-chain needs from Fantom to Bitcoin.

Canto itself has a great userexperience. You can see that the developers put a lot of effort into making the UX simple and fast. Many values are calculated live so you know what to expect from a transaction. If I think back to the early days of DeFi on Fantom, this is very welcome step forward.

I am very excited for what’s to come for Canto, I think they have the chance to deliver a very special project. It reminds me of the early vibes of the Luna ecosystem and of course I am very careful trusting a new algorithmic stablecoin. However, $Note is overacollateralized and there is no looping possible like there was for $UST.

Canto & $Note have a lot of room to grow, considering they are EVM compatible and also connected to the Cosmos via IBC. I just realized the other day that they are an EVMOS competitor but with the horrible launch and problems on EVMOS, Canto really stands out with an already working product that’s attracting lots of TVL already.

I know it can be hard to keep up with all the new chains but this time I was very hooked from the beginning.
What about you? What do you think of Canto? Did you make your first experiences or are you watching from the sidelines?

Let me know here in the comments or on twitter: https://twitter.com/0xn1ce

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That’s it for today!
n1ce

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n1ce
n1ce

I love to teach you Decentralized Finance on Fantom and THORChain Follow me on twitter: https://twitter.com/n1ce34007134


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