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How canoLiq Works

This page is a plain-language walkthrough of the whole protocol — no proto knowledge required. If you are new to liquid staking, start here.

The one-paragraph version​

You give the protocol CNPY (the Canopy native coin). In return you get cCNPY, a receipt token that quietly grows in value as staking rewards come in. You can hold or trade your cCNPY freely, and redeem it back for CNPY whenever you like (after a short cooldown). A second token, CPLQ, is a fixed-supply governance token: people who hold and stake CPLQ vote on how the protocol is run and share in the value it captures.

Step by step​

1. You deposit CNPY and receive cCNPY​

When you deposit, the protocol adds your CNPY to a shared pool and mints cCNPY to you at the current exchange rate:

cCNPY minted = deposit amount × (total cCNPY supply ÷ total pooled CNPY)

The very first deposit is minted 1:1. After that, the rate reflects how much CNPY the pool has accumulated per cCNPY in circulation.

2. Rewards accrue and your cCNPY gets more valuable​

The pooled CNPY earns staking rewards each block. Those rewards flow back into the pool, so the same cCNPY is now backed by more CNPY than before. You don't claim rewards — the exchange rate simply rises, and your cCNPY is worth more CNPY over time. This is what "yield-bearing receipt token" means.

exchange rate = total pooled CNPY ÷ total cCNPY supply   (rises as rewards arrive)

3. A protocol fee is taken and split four ways​

Before rewards lift the exchange rate, canoLiq takes a 12% protocol fee and splits it:

SliceShareWhere it goes
Stakers40%Back into the pool (lifts the exchange rate for everyone)
DAO treasury30%Funds the protocol; a small cut is skimmed to an insurance reserve
Validators15%Paid to the committee validators securing the chain
Buyback15%Saved up to buy back CPLQ later

See Fee Structure for the exact math.

4. Redeeming back to CNPY​

When you want out, you redeem cCNPY. The protocol burns it, calculates the CNPY you're owed at the current rate, and queues a redemption that matures after an unbonding window. Once mature, you claim your CNPY. The cooldown mirrors the chain's own unstaking delay so the pool can unwind its stake first.

5. CPLQ holders govern the protocol​

CPLQ holders stake their CPLQ to gain voting weight, then create and vote on proposals — changing fees, spending the treasury, running buybacks, and more. Locking CPLQ for longer (vote-escrow) multiplies your vote and boosts your share of buyback distributions. Different kinds of decisions need different approval thresholds.

6. The protocol earns its independence​

canoLiq starts as a Canopy nested chain. As it grows — more TVL, more validators, healthy voter turnout, real transaction volume, and a self-sustaining treasury — it can graduate to autonomy and become a sovereign chain. The protocol continuously measures itself against five thresholds and reports whether it is eligible.

Where canoLiq runs​

canoLiq is a Go plugin that runs alongside the Canopy FSM (Finite State Machine). The FSM handles consensus; the plugin owns all canoLiq-specific state and logic, talking to the FSM over a Unix socket using the standard CheckTx → DeliverTx → EndBlock lifecycle.

┌─────────────────────────────────────────────┐
│                  Canopy FSM                  │
│  ┌─────────┐  ┌──────────┐  ┌────────────┐  │
│  │Controller│→│   BFT    │→│  Consensus  │  │
│  └────┬────┘  └──────────┘  └──────┬─────┘  │
│       │                            │         │
│       └────────────┬───────────────┘         │
│                    │ Unix socket              │
└────────────────────┼─────────────────────────┘
                     │
┌────────────────────┼─────────────────────────┐
│          canoLiq Plugin                       │
│  ┌─────────┐  ┌──────────┐  ┌────────────┐  │
│  │ CheckTx │→│ DeliverTx │→│  EndBlock   │  │
│  └─────────┘  └──────────┘  └──────┬─────┘  │
│                                    │         │
│                          ┌─────────▼──────┐  │
│                          │  ProcessRewards│  │
│                          └────────────────┘  │
└─────────────────────────────────────────────┘
  • CheckTx — fast, stateless checks (fee paid? valid address? authorized signer?).
  • DeliverTx — the real work: read state, apply the message, write state.
  • EndBlock — periodic upkeep: sweep and split rewards, tally proposals, execute matured treasury spends, evaluate alerts.

Keep reading​