The outlier chain

An outlier is something - or someone - that behaves unexpectedly.

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You’re likely familiar with the term outlier.

A bit of data that stands out from the rest, an outlier is something - or someone - that behaves unexpectedly.

And it’s that act of being different that is the reason we notice an outlier in the first place.

An outlier isn’t necessarily a bad thing, or a good one, and context (or sometimes hindsight) is what decides. 

7 donuts when you ordered half a dozen? Good outlier (or good marketing). 

Struck by lightning multiple times? Bad outlier.

This week, we studied an outlier among blockchains.

On-chain primitives, but make it free

Canto is a blockchain born in one of the most tumultuous times of crypto’s history — their Twitter account launched in May 2022, around when $UST depegged.

Being born into chaos is nothing new for any blockchain, but Canto took one step further outside the norm.

While nothing in this industry can be called “traditional” by definition, most chains approach economic sustainability in similar ways — the native token incentivizes validators and funds a chain foundation that works to maintain and improve the chain. That foundation in turn often funds builders with grants or investments to come build DEXes, new token economies, and various projects to fill the ecosystem.

Canto, on the other hand, decided that the core infrastructure of a blockchain should be free, rather than funded.

They call it Free Public Infrastructure (FPI), saying that when foundational dapps are launched for-profit, we often see them become rent-seeking, hindering the user experience. 

They identified three core primitives that “have emerged to anchor any healthy DeFi ecosystem”, all of which are made free on Canto:

• Decentralized exchanges (DEXes) such as Uniswap and Sushiswap

• Lending markets such as Compound and Aave

• Decentralized unit of accounts such as DAI, USDC or USDT

On Canto, the core DEX can’t be changed, launch a token, or add fees over time. The lending market is governed by Canto stakers (who are systemically disincentivized to be rent-seeking by design), and for the unit of account ($NOTE), an algorithm determines an interest fee rate designed to stabilize the unit’s price, with any leftovers funding additional public goods.

Anyone can still build goods covered by FPI, but users will always have the native free/subsidized alternative. And whatever builders decide to build, they’re rewarded directly by the chain’s transaction fees.

Contract-Secured Revenue is an approach to funding development that takes a portion of the transaction fees generated by smart contracts deployed on chain, and pays it to the builders who deployed them. 

So, the more your dapp gets used, the more money you make. This also means you can charge less. While it’s entirely possible builders just won’t charge less, FPI and CSR exist to protect against price-gouging — when usage guarantees revenue, anyone can deploy a quality protocol and earn support.

Okay, sounds cool and all, but will it work? 

Who knows? We should always be cautious with new experiments.

But it’s probably good someone’s trying.

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This week, we launched a new show in which Flipsiders interviewed two Canto validators.

Every week we'll bring you analysis, data, and insights into the most talked about or underrated parts of the industry.

Watch the 30-minute episode here.

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Airdrop Analysis

Did you know we have a research-focused newsletter?

The Flip is a collection of deep-dives and topical analyses into hot crypto topics. Below is an analysis that asks,

Do airdrops even work?

As part of our post-airdrop analytics, we've developed 8 action categories to understand how people react to airdrops, what they do with the tokens, and how the distribution of these responses differ across airdrops.

The actions are:

• Keepooor: Keeping their airdrop.

• Dumpooor: Selling their airdrop.

• Hedgooor: Keeping some, selling some.

• Exchangooor: Sending their airdrop to a central exchange.

• Market Maker: Providing liquidity with the airdrop tokens on a decentralized exchange.

• Trader: Buying and selling the airdrop token.

• Maximizooor: Receiving tokens from other addresses and then selling them.

• Intermediary: Receiving their airdrop and sending it all to another address (possibly a Maximizooor?)

In the above chart, we can see the concentration of each for popular airdrops. Since most airdrops are primarily a user acquisition strategy, we’ll want to see higher concentrations of Keepooors and Market Makers, with less Dumpooors, Maximizooors, etc.

Check out the full the report for more.

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