Why Canton Keeps Winning Institutions, According to Co-founder Eric Saraniecki

Canton isn’t just building a blockchain. According to Digital Asset co-founder Eric Saraniecki, it’s attempting to re-architect finance and it’s doing so by learning from crypto’s past mistakes.

“We have a huge edge in being late to the tokenomics,” Saraniecki tells Coinage in a new interview. “Having the opportunity to watch roughly a decade’s worth of prior art on what people have done before us… there’s a lot of room for improvement.”

In our ongoing coverage of the top projects in crypto for Crypto Project of the Year, if we have learned one thing about Canton it's that they are doing things differently than the blockchains that came before.

Unlike many crypto projects that started by prioritizing retail or speculation, Canton’s entire architecture is designed around one thing: making traditional institutions feel comfortable enough to move assets onto a blockchain.

“If you think you’re re-architecting or replatforming finance, that will include a number of very large intermediaries, incumbents, and existing financial institutions,” he said. “You’re not going to rid the world of all of them. So having an understanding of what they need to participate and flourish is probably the most important bit of empathy that we have.”

That empathy has helped Canton land some of the largest institutional partnerships in crypto, including DTCC’s launch of U.S. Treasuries onchain, and JPMorgan's JPM coin. While many chains are still chasing their first big RWA integration, Saraniecki says Canton deliberately targeted “asset classes that have really large surface area of utility and is underutilized today.” A number of financial giants, including Goldman Sachs, Citadel, and Tradeweb are backers of Digital Asset, which raised $135 million last year to accelerate Canton's adoption.

The thesis is that Canton can edge out other general use case blockchains by taking a narrower focus to meet some of Wall Street's biggest players where they are at. Scaling in a more narrow sense leads to larger amounts of dollars coming onchain — and that thesis is already playing out in the token’s supply mechanics. Canton Network's token is up by about 20% to start the year, while most other major crypto tokens are off by at least that margin.

“We’re flirting with the idea of being deflationary… and the market doesn’t understand how much stuff is going on in this ecosystem,” Saraniecki said. “We’re not getting the thousand-x multiples on fees that other ecosystems are getting. We’re getting something very, very close to no forward multiple.”

Canton features a burn-mint equilibrium model that other blockchains have tried. Meaning that as activity grows, if the market undervalues the coin, supply can start shrinking — creating a deflationary feedback loop.

“It obviously can’t happen permanently, or you would completely run out of coins,” he said. “But we’re consistently seeing that the activity in the network continues to really push the boundary on this permanent equilibrium function.”

But it’s not just the token design that differentiates Canton. Saraniecki is highly critical of how previous networks rewarded infrastructure operators at the expense of builders.

“One of those hallmark mistakes… is that all of the rewards in these smart contract ecosystems go to the infrastructure operators,” he said. “The value of those ecosystems is the health of the applications… and they’ve earned zero mining rewards for doing that.”

It’s a dynamic he believes has hollowed out Ethereum’s moat.

“If I want to bet on DeFi on Ethereum, I no longer buy ETH. I buy Aave, or I buy Uniswap, or I buy Ondo,” he said. “So that sort of double shedding of network effects is really, I think, quite insidious.”

To combat that, Canton designed a model where both apps and validators are rewarded, with the goal of aligning long-term incentives around actual usage. But unlike many Layer-1s, Canton also doesn’t think performance alone is enough to convince enterprises to come on-chain. As Saraniecki explains, the chain offers its own privacy solution that is distinct from the way that Ethereum or Solana or others have tried to add it on as a feature on the roadmap. Rather than merely anonymizing things from public view, Canton lets certain systems maintain a view into assets as they move through the chain.

“Anonymity makes absolutely no sense in the context of money, RWAs, data you control,” he said. “In Canton, we’re saying if you’re the issuer of an asset, you have a responsibility to know everything about what’s going on in your asset at all times.”

That approach has obviously sparked criticisms from those accustomed to the ways of public blockchains. Many in those camps claim that Canton carries too many permissions as a result of the design choices. Saraniecki disagrees.

“Anybody can take the open source software, deploy an instance of Canton, have anyone run their own nodes and connect to it, and they can do whatever the heck they want with it,” he said. “There are apps that are permissioned. There are apps that are permissionless.”

In fact, Saraniecki argues that crypto’s obsession with P2P ideals has lost touch with reality.

“There’s really no such thing as P2P in these ecosystems anymore,” he said. “Greater than 98 or 99% of activity in the network is intermediated by some materially valued company — wallet, custodian, exchange or otherwise.”

But if there's one thing nobody seems to be arguing about Canton, it's that they are taking their own approach to scaling. Unlike the retail-first approaches of almost all the other chains from prior cycles, Canton is focused squarely on getting the biggest financial institutions onboard before expanding to other use cases.

“If you can satisfy the hardest-to-satisfy customers, then you can serve everybody,” Saraniecki said. So far, that approach seems to be working.

“The number one emotion we experience when we talk to these institutions is relief,” Saraniecki said. “They are a deer in headlights… and when we explain Canton’s design, the emotion we hear most is relief.”

Coinage Caucus and Network NFT holders, along with $COINAGE holders on Base and BAT holders on Ethereum can vote to advance Canton in our Crypto Project of the Year series when voting opens (must be holders by the time the snapshot is taken.)

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