Sundae Labs Automated Price Discovery

[GENERAL] Name and surname of main applicant

[GENERAL] Email address of main applicant

Additional applicants

Pi Lanningham @ Sundae Labs

Artem Wright @ Sundae Labs

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.” .

No dependencies.

[GENERAL] Will your project’s output/s be fully open source?

[GENERAL] If NO, please describe which outputs are not going to be open source. If YES, please write “Project will be fully open source.”

Project will be fully open source.

[METADATA] Category of proposal

[IMPACT] Please describe your proposed solution.

Sundae Labs' proposed solution is an innovative platform built on the Cardano blockchain. The main feature of this platform is an automated price discovery mechanism called the “Taste Test”, designed to bring transparency and confidence to crypto investments.

The automated price discovery process is designed to happen before, or shortly after the token launch of a new project. It allows a diverse set of market participants to participate in the injection of a large amount of liquidity into a project token, collaboratively arriving at a shared price for all participants, absorbing risk and initial volatility of a new token. By doing this, it helps investors make more informed decisions, increasing their confidence in their investments.

For DAOs and project owners, the platform aims to provide maximum liquidity and dampen volatility at launch. By estimating and communicating the launch token value effectively, it can help attract more investors, thus generating more liquidity. This not only helps in the project's initial phases but also contributes to its long-term sustainability by fostering a stable investment environment.

Additionally, the platform serves as an endorsement of project quality for Cardano's chain stakeholders. The use of the automated price discovery system can be seen as a measure of a project's commitment to transparency and investor protection, and hence, increases its credibility.

Over time, as more projects use this system, the Cardano ecosystem can become more vibrant and trusted, populated with high-quality projects and characterized by healthy liquidity. This will benefit everyone in the ecosystem, from individual market participants to DAOs and project owners to the wider Cardano community.

The smart contracts for this product have already been written, so the bulk of the funding and effort described in this proposal will involve the productization and build-out of the service offering around those contracts.

[IMPACT] How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?

The solution offers enhanced transparency and investor confidence, while also supporting better liquidity for project stakeholders. Here's how:

1. Increased Investor Confidence: By employing an automated price discovery mechanism before a token launch, investors are equipped with critical knowledge about their potential investment. This information, available upfront, helps them make more informed decisions and ensures the risk involved aligns with their personal thresholds.
2. Maximized Liquidity: For project stakeholders, the solution offers a reliable way to estimate and communicate their launch token value, thereby maximizing liquidity. With the token's value determined before the launch, it can attract the right investors, thereby reducing volatility and ensuring financial stability for the project.
3. Decentralized: Our proposed solution will be fully decentralized, powered by efficient Aiken smart contracts. No entity will have custody or control over user funds before or after the creation of the pool, and no entity will be able to abort the creation of the pool or manipulate the opening price. This creates a fairer price discovery mechanism that is highly resistant to tampering or manipulation.
4. Enhanced Ecosystem Quality: For Cardano's chain stakeholders, this solution adds significant value. It allows them to demonstrate the quality of their ecosystem and its projects quantitatively. This boosts the overall reputation and trust in the Cardano ecosystem, inviting quality projects and promoting healthy liquidity.

In summary, Sundae Labs' proposed solution can effectively transform the Cardano ecosystem into a more robust, scalable, and trusted space for both investors and project stakeholders. It offers a win-win for all parties involved by aligning their interests and promoting transparency, liquidity, and quality assurance in the ecosystem.

[IMPACT] How do you intend to measure the success of your project?

1. User Adoption: One of the most straightforward metrics would be the number of users or investors using the platform
2. Project Adoption: The number of projects opting to use the automated price discovery platform for their token launch would be another crucial metric
3. Liquidity and Volatility: These can be measured by tracking the volume of investments and the price fluctuations of the tokens launched using the platform
4. Investor Confidence: This can be somewhat subjective, but regular investor surveys can provide insights into investor sentiment and confidence in their investment
5. Ecosystem Growth: Success in the broader goal of supporting Cardano's ecosystem can be assessed by tracking the growth in the number of quality projects, overall liquidity, and market reputation. 
6. Financial Metrics: We will compare the spread between high and low prices in the first week of new tokens launched with and without the taste test to estimate liquidity and volatility impacts, specifically

[IMPACT] Please describe your plans to share the outputs and results of your project?

1. Project Blog Posts and Updates: Regularly post updates on the project's progress on popular platforms like Medium, the project website’s own blog, and YouTube channel. These posts can detail recent accomplishments, hurdles overcome, and next steps.
2. Release Notes: With each significant release or update, publish detailed release notes outlining the changes, improvements, or bug fixes. These can be included directly in the project repository or on the project's website.
3. Webinars and Online Tutorials: Conduct webinars or create online tutorials to demonstrate the functionality of the ledger-mode fork of the Hydra Node. This will help users understand its features and how to use them.
4. Community Forum Discussions: Use platforms like the Cardano community forum or Reddit to engage with the community. Answer questions, ask for feedback, and participate in discussions about the project.
5. Presentations at Conferences or Meetups: Present the project's results at blockchain or Cardano specific conferences and meetups. This not only reaches a larger audience but also provides an opportunity to receive direct feedback from peers and users.
6. Social Media Announcements: Leverage Twitter, LinkedInor other popular social media platforms to share project milestones and engage with the community.
7. Documentation: Finally, create robust documentation that thoroughly explains how to use the new ledger-mode fork, its benefits, and potential use-cases. This documentation should be easily accessible from the project's website and repository.
8. Publish Academic/Technical Papers: If applicable, writing and publishing academic or technical papers about the project's outcomes, the technology used, or the problem solved can help share detailed results with a more technical audience. 

[CAPABILITY/ FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability?

Sundae Labs is a proven and trusted contributor to the Cardano Ecosystem. We built the first AMM DEX on Cardano, and supply turnkey Rewards and Governance products/services to other high-profile projects in the Cardano ecosystem. Additionally, we actively support various ad-hoc activities like Cardano security and scalability R&D. We also contribute actively to ongoing IOG initiatives like Voltaire and other core tech topics of discussion. Learn more at https://sundae.fi.

For this project specifically we pioneered the idea early on: https://sundaeswap-finance.medium.com/sundaeswap-presents-the-taste-test-a5b125ee2645

[CAPABILITY/ FEASIBILITY] What are the main goals for the project and how will you validate if your approach is feasible?

1. Automated Price Discovery: Drawing inspiration from our Taste Test concept, Sundae Labs aims to create an infrastructure within the Cardano ecosystem for automated price discovery. This system would provide a fair and transparent initial pricing for tokens, reducing the risk of 'rug pulls' and ensuring both small and large investors are protected from drastic volatility. 
2. Enhanced Liquidity: Sundae Labs sees the opportunity to build 'liquidity as a product'. By giving projects the ability to have deep liquidity pools without having to self-fund, the platform could potentially attract more projects to launch their tokens and more investors to participate, thereby increasing overall liquidity and stability in the Cardano ecosystem.

Validation of the approach:

1. Proof of Concept (PoC): Sundae Labs plans to build a PoC available in the preview environment first. This PoC should be tested in real-world scenarios using data from similar bootstrapping events. Feedback from these tests would validate the technical feasibility and market acceptance of the solution.
2. Partner with Existing Projects: Sundae Labs will partner with an (as of yet unidentified) upcoming project on the Cardano chain to conduct pilot testing. This project’s participation and feedback will provide practical understanding and validation of our solution.
3. User and Project Feedback: Gather feedback from potential users and projects that might launch a token via this system. This can be done through surveys, interviews, or beta testing of the platform. Their feedback will be critical in validating whether the platform meets their needs and addresses their pain points.
4. Measure Liquidity and Volatility: The success of the project can be validated by tracking the liquidity and price stability of tokens launched using this platform. Increased liquidity and reduced price volatility would confirm the effectiveness of the platform.
5. Ecosystem Reputation: Track the reputation of the Cardano ecosystem before and after the implementation of the solution. An improvement in reputation, evidenced by the attraction of quality projects and reduction in 'rug pulls', would validate the efficacy of the project.

[CAPABILITY/ FEASIBILITY] Please provide a detailed breakdown of your project’s milestones and each of the main tasks or activities to reach the milestone plus the expected timeline for the delivery.

Milestone 1: Market Research and Analysis

• Conduct detailed market research to understand investor needs and pain points.
• Analyze existing solutions in the market to understand their strengths and weaknesses.
• Interview project stakeholders to understand their requirements for token launching and liquidity.

Milestone 2: Offchain SDK for Taste Test Contracts

• Establish a dedicated team for this project.
• Add to the sundae-sdk methods for starting new “Taste Tests”, depositing and withdrawing funds, aggregating funds for pool creation, creating the pool, distributing LP tokens, and finally claiming the LP tokens from the final contract..

Milestone 3: Preview POC and testing

• Build and pilot an initial POC on the preview network, using simulated load conditions matching the launch of other similar events, such as Indigo’s token launch.
• Gather feedback and refine the PoC as needed.

Milestone 4: Partnership and Pilot Testing

• Partner with an upcoming project with a great reputation on the Cardano chain for pilot testing. (Reach out to us if you are interested!)
• Evaluate feedback from partners and refine the platform as needed.

Milestone 5: Final requirements and development of the Platform

• Update the full platform based on insights and feedback from the PoC and pilot testing.

Milestone 6: Platform Launch

• Launch the platform within the Cardano ecosystem, available for use by all projects.
• Provide support and resources to projects wishing to use the platform for their token launch.

Milestone 7: Post-Launch Evaluation

• Continually track liquidity, price stability, and the overall reputation of the Cardano ecosystem.
• Gather feedback from users and make necessary adjustments to the platform.
• Develop and implement a plan for ongoing improvement and support.

[CAPABILITY/ FEASIBILITY] Please describe the deliverables, outputs and intended outcomes of each milestone.

Milestone 1: Market Research and Analysis

• Deliverables: Comprehensive Market Research Report
• Outputs: Key insights on investor needs, strengths and weaknesses of existing solutions, and project stakeholder requirements.
• Intended Outcomes: Inform the design and features of the Proof of Concept (PoC).

Milestone 2: Development of Proof of Concept (PoC)

• Deliverables: A working PoC for automated price discovery and DID requirement mechanism.
• Outputs: A testable software prototype.
• Intended Outcomes: Demonstrate the feasibility of the proposed solution.

Milestone 3: Testing of PoC

• Deliverables: Testing Report
• Outputs: Feedback and data gathered from testing the PoC.
• Intended Outcomes: Refine and improve the PoC based on feedback and data.

Milestone 4: Partnership and Pilot Testing

• Deliverables: Pilot Testing Report, Partnership Agreements
• Outputs: Feedback and data from pilot testing, proof of partnerships.
• Intended Outcomes: Further refine the platform and build relationships with existing projects in the Cardano ecosystem.

Milestone 5: Full Development of the Platform

• Deliverables: Complete Platform Software
• Outputs: A fully functioning platform ready for launch.
• Intended Outcomes: Enable token launching with automated price discovery, increased liquidity, and DID requirements.

Milestone 6: Platform Launch

• Deliverables: Official Launch Announcement
• Outputs: The platform is live and operational within the Cardano ecosystem.
• Intended Outcomes: Projects begin using the platform for token launches, enhancing liquidity and price stability in the ecosystem.

Milestone 7: Post-Launch Evaluation

• Deliverables: Post-Launch Report
• Outputs: Data on platform performance, liquidity, price stability, and user feedback.
• Intended Outcomes: Continually improve and adjust the platform to better serve the Cardano ecosystem and its users.

[RESOURCES & VALUE FOR MONEY] Please provide a detailed budget breakdown of the proposed work and resources.

Total budget: $180k USD/~620k ADA / 2 months

Discounted budget: $90k USD/ ~310k ADA / 2 months

Engineers (x3): $25k/mo

UI Design: $10k

UX Design: $10k

Project Management: $5k/mo

Given that Sundae Labs seeks to generate revenue from this product, we are steeply discounting the cost of this proposal, hoping to recoup those costs through operation of the platform.

[RESOURCES & VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

The project represents excellent value for money for the Cardano ecosystem in several ways:

1. Investor Confidence: The platform will bring a fair and automated price discovery mechanism for new token launches. This will increase investor confidence, drawing more investment into the Cardano ecosystem, which in turn boosts the overall market capitalization and value of the Cardano ecosystem.
2. Project Attraction: By providing a platform that helps to dampen price volatility and increase liquidity for new projects, Cardano becomes more attractive for projects to launch their tokens on. The growth in the number and quality of projects on Cardano further strengthens its value and position in the market.
3. Improved Reputation: The introduction of this platform will help Cardano gain a reputation as a chain that prioritizes fairness, transparency, and investor protection. A strong reputation can attract more projects and users to the Cardano ecosystem, thereby increasing its value.
4. Efficient Use of Capital: By helping projects launch with deep liquidity pools, the platform enables projects to utilize their capital more efficiently, rather than using a significant portion of their capital to create initial liquidity. This, in turn, could lead to more successful projects and higher returns for investors in the Cardano ecosystem.
5. Risk Mitigation: By reducing the likelihood of 'rug pulls' and enhancing investor protection, the platform helps mitigate risks that can lead to substantial financial losses and reputation damage for the Cardano ecosystem.

In short, while there will be costs associated with the development and maintenance of the platform, the potential benefits in terms of increased investment, project success, reputation enhancement, and risk mitigation should provide significant value for the Cardano ecosystem as a whole. This makes it a worthwhile investment.

[IMPORTANT NOTE] The Applicant agreed to Fund10 rules and also that data in the Submission Form and other data provided by the project team during the course of the project will be publicly available.