With Canto’s sixth month of liquidity mining incentives ending soon, two new governance proposals will call to reduce network emissions to improve the program’s sustainability and align Canto stakeholders.

Across two proposals, both security emissions and liquidity mining incentives will be reduced by approximately 30% overall:

• The proposal to reduce security emissions is to be submitted to governance at ~11AM Eastern Time on Monday, February 13th.

• The proposal to reduce liquidity mining incentives is to be submitted to governance at ~11AM Eastern Time on Friday, February 17th.

Information about the new parameters and the rationale for their updated values is provided below.

Analysis

After achieving deep liquidity in the Canto DEX and Canto Lending Market, contributors are looking to optimize the long-term sustainability of Canto’s incentives program by tapering security and liquidity mining incentives.

With the adjusted values, contributors hope to maintain as much liquidity as possible within Canto’s Free Public Infrastructure, while taking a meaningful step towards reducing Canto’s inflation.

Network Inflation

Network security emissions will be reduced by exactly 30% compared to the previous period, with an inflation rate of 5.6 CANTO per block, minting ~2.45m new CANTO tokens in the upcoming 30-day period.

Currently ~50% of the circulating CANTO supply is staked for network security. This is at the higher end of the target range of 40-50%, so the proposed emissions adjustment is designed to maintain the staked supply ratio within the target range while still decreasing $CANTO’s inflation rate.

Liquidity Mining Program

Liquidity mining parameters will face a reduction across the board compared to the previous period, with liquidity mining incentives dropping to a total of 37.6 CANTO per block, minting ~16.5m new CANTO tokens to LP token holders in the upcoming 30-day period.

Overall, this represents a ~30% reduction in liquidity mining rewards. Additionally, the allocation of liquidity mining rewards amongst DEX and lending market pools will be adjusted:

• CANTO/NOTE: 17.9 CANTO per block (~30% reduction)

• ETH/CANTO: 7.8 CANTO per block (~30% reduction)

• ATOM/CANTO: 7.8 CANTO per block (~30% reduction)

• NOTE/USDC: 1.7 CANTO per block (~30% reduction)

• NOTE/USDT: 1.7 CANTO per block (~30% reduction)

• cUSDC: 0.3 CANTO per block (unchanged)

• cUSDT: 0.3 CANTO per block (unchanged)

The programs will begin immediately when their respective proposals are executed on-chain.

About Canto

Canto is a Layer 1 blockchain built to deliver on the promise of DeFi – that through a post-traditional financial movement, new systems will be made accessible, transparent, decentralized, and free. Created by a loosely organized collective of chain-native builders, Canto is a new commons powered by Free Public Infrastructure.