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[GENERAL] Name and surname of main applicant

[GENERAL] Email address of main applicant

Additional applicants

No

[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.

This proposal is a continuation of the funded Catalyst F9 proposal Spectrum.Network | Layer 2 for DeFi.

Spectrum aims to enable ultimate interoperability on Cardano. The protocol serves as a programmable cross-chain layer that allows cross-chain messaging between Cardano and any other connected blockchain or general data source.

At its core Spectrum solves the “Oracle problem” which the “Interoperability problem” always boils down to. There are many solutions to this problem out there, some of them even offer programmable cross-chain layers. Nevertheless, ALL of them fail to provide a scalable solution to the problem. Can we really call a PBFT (Practical Byzantine Fault Tolerance) network where a fixed committee of only 8-16 nodes decides what's valid and what's not decentralized? There is no decentralization without scalability.

During the last year, we at Spectrum put an enormous amount of effort into designing a scalable protocol that solves “Oracles” and hence “Interoperability” in a trustless and decentralized way. The protocol has 2 layers. On the upper layer there are independent local committees, each dedicated to one particular data source, be it an external blockchain system or exchange rate of some fiat currency. Each committee runs a scalable collective signature protocol that we have designed and tested specifically for cryptographic primitives that are available on Cardano, Ergo, and many other blockchains RIGHT NOW. The aggregation is performed in logarithmic time, thanks to this each committee can scale up to thousands of nodes. Committees are also continuously rotated thanks to the Roll-dPoS consensus on the lower (master) layer. The master layer enables programmability and serves as a synchronization layer for simultaneous streams of events coming from external systems and served by local committees.

Notable improvements were done in the ledger design towards developers’ experience based on our own experience with dApp building on Cardano and Ergo. dApp builders on Spectrum can vary the amount of on-chain computations, e.g. choosing to perform a bit more computations on-chain for cases where a shared UTxO is involved (such as AMM Liquidity Pool, or Stablecoin Bank). This dramatically reduces the complexity of on-chain code required to implement complex DeFi dApps, while keeping the determinacy of the eUTxO approach.

The design of Spectrum makes it an ultimate platform for decentralized cross-chain applications serving Cardano (and other layer-1 platforms). DeFi apps built on Spectrum have full potential to replace centralized services like CEXes.

To sum up, we have conducted core research, evaluated protocol design and implemented the core of the protocol. There are still some vital things left to be completed to make Spectrum ready for production.

What our previous proposal didn't cover is:

• Default mode. The protocol relies on dynamic committees of independent validators in order to operate. When a committee is rotated it has to explicitly pass its “responsibilities” to the next committee. There is still a small probability that some committee fails to reach quorum. To handle this case we have outlined a design of the “Default Mode” for Spectrum consensus, that would save the protocol in the worst scenario. It requires some research and implementation. (separate proposal: “Spectrum Network: Programmable Cross-chain Messaging Protocol”)
• Programmability layer. Spectrum needs a virtual machine and a language that fits its hybrid ledger design. Just adopting Ergoscript or Plutus is not an option. One of the possible options is MoveVM and Move, which provides safety, and convenience has a more-or-less mature ecosystem, and provides formal verification capabilities. But it has to be modified to fit Spectrum's design. (separate proposal: “Spectrum Network: Programmable Cross-chain Messaging Protocol”)
• Upgradability. Initially Spectrum will support Cardano, Ergo and Ethereum, but thanks to committee sharding the system scales linearly in the number of supported chains. So the community will likely be willing to plug-in new blockchains with time. We envision this process as a routine, where developers implement a connector for a new chain, users create a configuration and vote for activation. Thus an upgradability framework should be developed. (separate proposal: “Spectrum Network: Programmable Cross-chain Messaging Protocol”)
• Testing at scale. Spectrum Node is not a lightweight software by any means and the protocol itself is intended to serve a network of thousands of nodes. To prepare the reference implementation for production usage, we have to test it at scale, this means we need hundreds of servers. (this proposal)
• Security audit. The essential complexity of Spectrum is high and it has to be carefully audited. (separate proposal: “Spectrum Network | Security Audit”)

This proposal is about only the Default mode and Programmability layer. The rest are covered in related proposals.

— — —

We provided a high-level overview of our interoperability solution, focusing on its overarching aspects. To delve into the technical details of the project, we invite you to refer to our White Paper for more in-depth information.

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

Spectrum Network addresses the challenge by providing solutions that enhance the Cardano developer ecosystem and attract developers from outside the existing community. It aligns with the aims of incentivizing open-source projects and advancing the evolution of the developer ecosystem.

The project brings significant benefits to the Cardano ecosystem:

• Expanded Development Opportunities: Spectrum Network offers new avenues for developers, both within and beyond the existing community, to actively participate in Cardano's development. It provides a tool enabling developers to create innovative cross-chain applications and services, fostering growth and attracting talent.
• Broader Adoption and DApp Solutions: The ability to build natively cross-chain applications allows for seamless integration of Cardano with other ecosystems. This attracts users and developers from different blockchain communities, increasing participation and expanding the Cardano user base. The platform's support for DeFi and tokenization stimulates innovation, providing value in areas of widespread interest.
• Supporting Stake Pool Operators: Stake Pool Operators benefit from the expanded network usage through Spectrum Network. Validating cross-chain operations presents additional opportunities for generating income, as more transactions occur within the ecosystem.

By addressing category challenges and providing key benefits, Spectrum Network strengthens the Cardano ecosystem by driving developer participation, encouraging cross-chain application development, supporting stake pool operators, and fostering collaboration and innovation within the community.

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

The success criteria for Testing at Scale

• Test orchestration system is implemented
• 200 testing instances are set up and configured.
• At least one successful run of a networking test case on top of the resulting network.

The success criteria of the Spectrum Network project can be found in the main proposal: “Spectrum Network | Programmable Cross-chain Messaging Protocol”

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

All the testing results will be published in the Spectrum repository on GitHub

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

• Our development team has over 4 years of collective experience in the DeFi sector, with 2 of those years specifically in the Cardano space.
• Spectrum Finance is highly recognized within both the Cardano and Ergo communities.
• The Spectrum Network project holds significant strategic importance for our team, as we plan to construct a cross-chain DEX on top of the Spectrum Network.
• Our development team has received successful funding twice through the Catalyst, consistently providing timely progress updates.
• Our resources extend beyond the funding obtained through Catalyst, ensuring that we are not limited in terms of available means.

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

• Objective 1: Achieve seamless interoperability with Cardano. A successful native cross-chain transfer, such as exchanging ERG for ADA, denotes the achievement of this goal.
• Objective 2: Empower Cardano developers with a tool for building decentralized cross-chain applications. The recognition of a development team utilizing the protocol as a successful implementation would signify reaching this goal.
• Objective 3: Attract users from other ecosystems to Cardano by offering natively cross-chain decentralized applications and services. A 10% year-on-year increase in created Cardano addresses within the first year after the protocol's mainnet launch (excluding average organic growth and other causes) would indicate success.
• Objective 4: Generate an additional revenue stream for Cardano Stake Pool Operators. A 20% monthly income increase for SPOs within the first year after the mainnet launch of the protocol would be considered successful in achieving this goal.
• Objective 5: Provide the entire Cardano community with access to cross-chain liquidity from other ecosystems directly through their Cardano wallets, without relying on centralized exchanges (CEXes) as intermediaries. Achieving a 30% month-over-month increase in decentralized finance transactions within the first year after the protocol's mainnet launch (excluding average organic growth and other causes) would be considered successful.

[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. Prepare testing infrastructure: hardware (servers) and software (A terminal for Spectrum Node to coordinate tests in the network of hundreds of nodes) — 2 months

• Order servers that are needed to instantiate the test network.
• Set up servers: OS image, access credentials, and users.
• Implement testing instrumentation for the Spectrum node that would allow us to rule the node during the tests. This is needed only for tests, production node implementation won't need this functionality.
• Implement a terminal to rule the resulting network of nodes. This is required to simulate different network behaviors (e.g. byzantine behavior of consensus committee members)

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

Milestone 1

Instantiated test network of 2-3 hundreds of nodes. Implementation of testing infrastructure described in the milestone.

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

Use the table for easier reading

Milestone 1. Prepare testing infrastructure: hardware (servers) and software (A terminal for Spectrum Node to coordinate tests in the network of hundreds of nodes) — 2 months — 283,644.00 ADA

• Order servers that are needed to instantiate the test network — 10,351.97 ADA
• Set up servers: OS image, access credentials, and users — 18,633.54 ADA
• Implement testing instrumentation for Spectrum node that would allow to rule the node during the tests. This is needed only for tests, production node implementation won't need this functionality — 127,329.19 ADA
• Implement a terminal to rule the resulted network of nodes. This is required to simulate different network behaviors (e.g. byzantine behavior of consensus committee members) — 127,329.19 ADA

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

During our estimation, we base our cost estimates on our team's hourly rate.

Servers are estimated at $500 per unit per month. We will need at least 6 servers. If we need more we will cover this cost ourselves.

Our main proposal: Spectrum Network | Cross-chain Messaging Protocol

Security audit proposal: Spectrum Network | Security Audit

[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.