Sundae Labs Hydra Ledger-only Mode

[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.” in this field.

The Hydra team will need to accept the pull request; we’ve spoken with them and they are eager to accept a pull request that accomplishes this. 

[GENERAL] Will your project outputs 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.” in this field.

Project will be fully open source.

[METADATA] Category of Proposal

[IMPACT] Please describe your proposed solution.

This approach aims to address the challenge of processing large batches of transactions in an efficient and scalable manner within a decentralized network, like the Gummiworm protocol.

Standard Hydra or Cardano nodes cannot fulfill this role as they include irrelevant functionality, such as initializing and closing the head on layer 1, contestation periods, and peer-to-peer communication.

The ledger-only mode feature allows for streamlined validation and application of transactions. This makes the node a convenient building block for other protocols, developer tooling, testing frameworks, and other advanced architectures.

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

The ledger-mode fork of the Hydra node primarily aims to enhance the scalability and efficiency of processing transactions independent of a full node in the Cardano ecosystem.

Here's how the solution addresses the key issues:

1. Scalability: Current standard Hydra and Cardano nodes have extra functionalities that are unnecessary in some use cases, like initializing and closing the head on layer 1. The ledger-only mode for the Hydra node, by focusing solely on maintaining an evolving ledger state and executing the core logic of the Cardano ledger, enables the node to handle larger transaction volumes with ease, thereby improving scalability.
2. Efficiency: The ledger-only mode enables validators to maintain an evolving ledger state and validate transaction batches more efficiently. This streamlined process reduces the complexity and processing time, improving overall network efficiency.
3. Flexibility: This approach provides the ability to run or validate transactions without the need for a full private testnet. This flexibility would be a major asset to developers and projects that require transaction validation in various scenarios, making the Cardano ecosystem more adaptable.
4. Security: Despite being a more streamlined version, the ledger-only mode does not compromise the security and integrity of the blockchain. The transactions are validated and applied with the same rigor as the full Cardano node, ensuring a secure environment.
5. Collaboration: The ledger-mode exemplifies the open-source philosophy for the Hydra project, and would be a major first step towards shared community ownership of the protocol..

Overall, this solution enhances the performance and adaptability of the Cardano ecosystem, making it more attractive and accessible for both existing and potential new users. Of note, we are proposing this contribution for the Hydra node as it’s a more modern and less-complex codebase, with a core team that has communicated its openness to collaboration/external contributions.

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

1. Transaction Processing Performance: Measure the transaction processing speed and the number of transactions processed per second in the new mode, and compare this to the standard Cardano nodes. A successful project would exhibit improved performance.
2. System Resource Usage: Monitor the computational resources (CPU, memory, etc.) consumed during operation. The ledger-mode fork should demonstrate efficient use of resources relative to the standard mode.
3. Operational Overhead Improvement: When compared to running a full private Cardano testnet or hydra node, a Gummiworm node should be vastly more simple to operate.
4. Adoption Rate: Track the number of users, developers, or projects adopting the ledger-mode fork for their operations over time. Higher adoption rates would signal successful implementation and real-world value.
5. Error Rate: Count the number of failed or erroneous transactions in the ledger-only mode, with an aim for this to be low, demonstrating the robustness and reliability of the system.
6. Developer Feedback: Collect qualitative feedback from developers using the ledger-mode fork. Their insights on its usability, efficiency, and any improvements could be invaluable for iterative development.
7. Community Engagement: Gauge the interest and engagement of the Cardano community around the ledger-mode fork. High levels of community engagement and positive sentiment could be indicative of success.

[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, LinkedIn or 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.

Specific to this proposal, Sundae Labs was the first team to demonstrate an end-to-end demo of Hydra in a dApp, and were also the first to ever run smart contracts on Hydra (before the Hydra team themselves!). We’ve worked closely with the Hydra team in the past.

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

Develop a Robust Ledger-Only Mode for Hydra Node: Create a variant of the Hydra Node that can operate in ledger-only mode. This would involve forking the Hydra Node, eliminating unnecessary functionalities (like initializing and closing the head on layer 1), and integrating the capacity to accept and process transaction batches effectively.

To validate the feasibility of this approach, we will:

1. Conduct a Feasibility Study: Before the project begins, we will carry out a detailed study to assess the feasibility of the goals. This will involve understanding the technical challenges and how they can be overcome, as well as engaging the hydra team to fully plan out the project work.
2. Test the Ledger-Only Mode: Once the ledger-only mode has been implemented, it will be tested under a variety of conditions. This will include processing large batches of transactions and monitoring how the system performs under stress.
3. Obtain Feedback from Developers and Users: As a part of the testing process, the project team will seek feedback from developers and other stakeholders. Their insights can help validate the functionality and usability of the new mode.
4. Monitor Key Performance Indicators (KPIs): We plan to track specific KPIs related to the system's performance, such as transaction processing speed, system resource usage, and error rate. This data will provide objective evidence of the system's performance and indicate whether the project goals have been met.

[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: Project Kickoff (1 week)

• Finalize project scope, requirements, and timelines.
• Set up project management and communication tools.
• Align the team on the project objectives and milestones.
• Build out complete plan with core Hydra team

Milestone 2: Contribute to Hydra Node and Add "Local Ledger" Mode (6 weeks)

• Develop the "local ledger" mode feature that accepts transactions and applies them to a local state without requiring an L1 head or connecting to peers.
• Test the new feature thoroughly and fix any bugs identified.

Milestone 3: Share Outputs and Gather Feedback (2 weeks)

• Share the progress of the project with the community through various channels, as outlined in the communication plan.
• Gather and review feedback from the community, subject matter experts, and other stakeholders.
• Implement necessary changes or improvements based on feedback received.
• QA with Hydra team and incorporate feedback

Milestone 4: Final Testing and Debugging (2 weeks)

• Conduct rigorous testing of the entire system to ensure all components work together smoothly.
• Debug any issues that arise and retest to confirm the fixes.
• QA with Hydra team and incorporate feedback

Milestone 5: Project Completion and Documentation (1 week)

• Prepare robust documentation explaining the usage and benefits of the ledger-mode fork with the Hydra team.
• Make a final announcement about project completion to the community.
• Organize a final project review to learn from the project's challenges and successes.

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

Milestone 1: Project Kickoff

• Deliverables: Finalized project plan, roles and responsibilities, communication and project management setup.
• Outputs: Project documents including the plan, roles and responsibilities, and communication strategy.
• Outcomes: A clear, agreed-upon direction for the project and roles for all team members.

Milestone 2: Fork Hydra Node and Add "Local Ledger" Mode

• Deliverables: Forked Hydra node repository, local ledger mode feature.
• Outputs: Source code, test results, and technical documentation for the new feature.
• Outcomes: A functional fork of the Hydra node capable of operating in "local ledger" mode.

Milestone 3: Share Outputs and Gather Feedback

• Deliverables: Communication materials for the community, feedback reports.
• Outputs: Community updates, gathered feedback, and reports.
• Outcomes: Improved features and adjustments based on community feedback.

Milestone 4: Final Testing and Debugging

• Deliverables: Final version of the forked Hydra node 
• Outputs: Source code, test results, and bug reports.
• Outcomes: A polished, bug-free version of the project that is ready for wider use.

Milestone 5: Project Completion and Documentation

• Deliverables: Comprehensive documentation, project completion announcement.
• Outputs: Project documentation, completion report, and announcement materials.
• Outcomes: Completion of the project, increased understanding and adoption by the community. 

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

Total budget: $172.5k USD / ~588,000 ADA / 3 months

Engineers (x2): $25k/mo

Project Management: $5k/mo

Administrative: $2.5k/mo

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

This project represents significant value for money for the Cardano ecosystem through the following avenues:

1. Enhancing efficiency and composability: This helps position the Hydra node project to be not just a single protocol satisfying certain use cases, but a building block in a whole family of protocols and tools, such as testing frameworks and scaling solutions. As a concrete example, the Gummiworm protocol under development by Sundae Labs will greatly benefit from this work.
2. Promoting open-source collaboration: This is an important first milestone in making the Hydra protocol community owned, and built by an ecosystem of open-source collaborators.

In these ways, the project represents a valuable investment for the Cardano ecosystem, as it is designed to deliver tangible improvements and foster an environment for continued innovation and community engagement.

[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.