Several months ago, a novel way for smart contract developers to generate revenue from decentralized applications on the Canto network – Contract Secured Revenue (CSR) – was announced.
After months of development on Canto’s consensus and EVM execution layers, CSR has completed a Code4rena security audit and is ready to begin rolling out on Canto’s testnet and mainnet networks.
This article recaps the core promises of Contract Secured Revenue, shares potential use cases, and provides a timeline for the design’s imminent mainnet launch.
Find complete details below.
CSR, or Contract Secured Revenue, is a fee splitting model for the Canto network that enables smart contract developers to earn from original work by claiming a percentage of the transaction fees paid to the network when users interact with their smart contracts.
Developers who register their smart contracts for CSR receive Non-Fungible Tokens (NFTs) that are used to claim contract fees. These same NFTs can be traded, fractionalized, and otherwise composed within community-created DApps.
As revenue accrues gradually and automatically to a ledger on the protocol layer, a smart contract’s associated CSR NFT can be utilized to withdraw these funds at any time, enabling unique use cases for Canto developers.
Because a CSR NFT is composable, a complementary protocol can allow for it to be traded, wrapped, staked, collateralized for loans, fractionalized, and more.
For example, with Canto Splits by Neobase, a project’s accumulated revenue could be distributed from the NFT to multiple recipients, and/or added to a Waterfall contract to distribute funds in a pre-defined order.
As a collateral, the CSR NFT can enable self-serviced loans in $NOTE, empowering developers to gain access to less volatile liquidity, make investments, and bootstrap their projects.
What’s more, a single CSR NFT can access accrued revenue from multiple contracts, including factory pattern contracts. This means even complex protocols such as NFT collections or lending markets can take full advantage of Canto's CSR infrastructure to generate revenue.
Finally, CSR provides smart contract teams a new path to earn from their work without relying on extracting protocol fees from users or other rent-seeking behavior. By substituting native governance or utility tokens for a CSR NFT, developers may not only reduce regulatory risk, but may also reach economic sustainability without relying on traditional design mechanisms, application fee structures, or vesting token economics.
With these potential use cases in mind, a planned governance proposal will call to increase Canto gas fees significantly from their current incubation levels. This change will ensure CSR is a meaningful source of revenue for smart contract developers, while also discouraging low quality or spam transactions.
Following the conclusion of its recent audit, CSR is currently being battle-tested on a private testnet. Pending any last modifications or bugs, a governance proposal to:
release CSR on mainnet, and
begin burning the base fee portion of transaction fees will go live at approximately 11 AM ET on Wednesday, January 25th.
If the vote is successful, these changes will be implemented by means of a chain upgrade lasting several hours. The chain will be fully functional within ~2-3 hours.
~24 hours later, at approximately 11 AM ET on Thursday January 26th, a governance proposal will go live, calling to:
increase Canto gas fees from their current levels, and
enable CSR, which is by default disabled
Additional details about the exact technical implementation of CSR as well as instructions for smart contract developers will be released upon CSR’s launch.
Contract Secured Revenue is a novel mechanism and foundation of Canto’s CIP-001, credited to designer Scott Lewis, CIP-001 co-author Zak Cole, and engineers Plex and Tom Z.
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.