Some online speculate that Canto’s price increase may be due to a surge in the volume of Note, a metastable coin issued by Canto and pegged to USDT/USDC.
Recently, some Twitter users have begun to speculate that layer 1 decentralized tokens may eventually face downward pressure due to their connection to notes. The TerraUSD/UST algorithmic stablecoin collapsed in 2022 after running out of pegs, exfiltrating $45 billion worth of assets.
However, members of the Canto discord community quickly downgraded all FUD.
“UST was not collateralized by anything. They have 10% collateral. 100% is stablecoin here. You cannot mint notes with Canto.”
What is Kant?
Canto is a permissionless Layer 1 (L1) blockchain running on the Ethereum virtual machine, providing Tendermint consensus secured by validator nodes in EVM execution via the Cosmos SDK.
Canto’s business model is centered around what is known as Free Public Infrastructure. Canto DEX is a commission-free DEX for liquidity providers.
The business model also includes the Canto Lending Market (CLM), which provides users with pooled funds through the Lending Compound v2 fork. The note completes the decentralized Trifecta offering by Kant, described as “a fully collateralized unit of account token issued by CLM that also offers an ecosystem as a USDC/USDT soft-pegged stablecoin.” .
Canto’s decentralized utility lives on the Cosmos chain and uses a cross-chain protocol called Inter-Blockchain Communication (IBC) to enable blockchain interoperability.
As of January 26, Canto holds $42 million in USDC and USDT and is listed in CLM Lending Units. This allows users to borrow notes.
In theory, if the banknote peg drops below $1, the solution is to print more banknotes, putting inflationary pressure on the existing banknote supply.
However, since Note is an interest rate system, tokens cannot be created, only borrowed. The rate at which they are rented is automatically adjusted every 6 hours based on the Time Weighted Average Price (TWAP).
Canto’s price has risen significantly over the past 30 days, but the coin has since hit a low of $0.075 in early January, boosted largely by news that it has secured an investment from venture capital firm Variant. It surged to $0.35. 26.
