Canto Growth Continues Amidst Changes in Monetary Policy

Building a new Layer 1 (L1) network is a complex endeavor, often requiring careful coordination between developers, validators, and major stakeholders to achieve growth and eventual stability. Economic incentives are especially important in this regime, driving behavior from various participants that is beneficial for the network in the long run. For instance, token emissions are often used to reward validators for providing security in proof-of-stake (PoS) networks, and treasury funds have been used extensively in the past to attract users and liquidity providers (LPs) to L1 ecosystems. 

One L1 network that has centered its design around these incentive dynamics is Canto, which recently garnered attention from a January 19th post by crypto VC firm, Variant Fund, disclosing its investment in Canto and its thesis for doing so. A core part of the thesis is a long-term belief in Canto’s unique socio-economic mechanism for funding developers and “public good” decentralized finance (DeFi) protocols. As we reviewed in our earlier reports on Canto, there are three main DeFi primitives that are closely intertwined with the Canto L1 chain: the Canto decentralized exchange (DEX), lending market, and unit of account - NOTE.