DeltaDeFi - Decentralized Financial Option Protocol on Cardano with eUTxO-native Efficient Order Book Model

[GENERAL] Name and surname of main applicant

Hinson Wong

[GENERAL] Email address of main applicant

hinson.wong@deltadefi.io

Additional applicants

Anson Chui

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

6

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

No

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

No

[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?

Yes

[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

DeFi

[IMPACT] Please describe your proposed solution.

• We introduce financial options to the ecosystem, which has a -1 to 1 delta exposure, enabling full spectrum of delta management. The changing delta depending on the distance between strike price and spot price enables tail risk management. Time decay on option price also introduces the second dimension of risk factor for dynamic risk exposure on the portfolio. 
• Decentralized financial options can also further improve price discovery of highly traded cryptocurrencies as well. We acknowledge that there are market participants who prefer pure private custodians due to security or other concerns. In turn, for all the ample of products provided by CEXes, the decentralized option could be the preferred channel for them to reflect their investment view on the cryptocurrencies.
• From the product standpoint, both the retail investors and institutional traders would be directly benefited from the application we provide as there is a brand new on-chain product as one of the core trading tools.
• Macro-speaking, the whole Cardano ecosystem would be benefited as a whole as extra financial management tools would inject extra liquidity to the ecosystem, fostering higher degree of Cardano on-chain activities.

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

• The core pain point DeltaDeFi is attempting to solve is the lack of financial product for users to manage portfolio dynamic risk exposure. From a product standpoint, introducing financial options to the ecosystem provides an extra tool to manage portfolio risk on-chain. Reduce the reliance on centralized exchanges.
• We aim to introduce extra liquidity to the market. By inviting institutional market makers, extra liquidity would be injected into the Cardano ecosystem. Improving overall trading experience on several DEXes.
• Enhance the TVL of Cardano ecosystem as a whole.
• From an infrastructure standpoint, our team strives to research and develop an efficient order book model. Upon success, it could be one of the core backbone supporting Cardano’s DeFi ecosystem.

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

• Number of partnered market makers
• Number of option contract initiated
• Number of unique wallets interacting with the protocol
• Total value locked

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

• The smart contract would be open sourced once we get a reasonable assurance on its security from an external auditor. It would be one of the examples of Cardano smart contracts in the community for education.
• In DeltaDeFi, we are dedicated to research and develop an efficient order book trading model which is eUTxO native. This would become the backbone of our further development in several DeFi products.
• We believe it is more important for the Cardano ecosystem to succeed as a whole rather than confining the success to the project itself. That being said, we would strive to balance, to an extent which our project team is motivated to keep on researching and developing.

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

• DeltaDeFi’s team is supported by Hong Kong Science and Technology Parks Corporation (HKSTP), admitted by its Ideation programme. DeltaDeFi is also one of the projects admitted by AWS for the Idea Launcher programme.
• Our team possesses deep financial knowledge, with multiple team members (one with CFA exams passed) having been / had been working in the financial services industry. 
• Our core developer is an active contributor to the Cardano ecosystem. A 3rd cohort Plutus Pioneer. One of the community docs contributors for IOG. Participated in Lace Beta UX interviews. Led development of other Emurgo funded infrastructure projects. 
• Other team members including product operation experts in centralized exchanges, cyber security experts (with CISA and CISSP exams passed).
• We have multiple core team members having guest speaker experience in the local crypto forums.
• Our project has proper accounting records in all transactions, we are open for making accounting records public for the funds related to project catalyst.

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

Technical goal

• Have the financial option protocol developed and launch in Cardano mainnet
• Develop an efficient order book system

Business goal:

• Onboard at least 1 market maker partnership. 
• Be profitable and able to sustain continuous development

Community goal

• Increase the liquidity and TVL of the Cardano ecosystem as a whole
• Enhance the awareness and adoption of decentralized applications versus centralized exchanges
• Educate and share the experience of building DeFi products on Cardano

[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: System design and architecture (draft completed and ongoing improvement)

• Solution architecture of the whole application
• Smart contract design
• UIUX design of the application
• Overall timeline planning
• Resources planning
• Acceptance criteria:
• All documentations needed for kickstarting the development

Milestone 2: Development of the core product

• Smart contract development
• Frontend development
• Backend development
• Acceptance criteria:
• Completion of development of separate components

Milestone 3: Application Integration and Testnet Launch

• Integrating all smart contracts and backend servers into browser application
• Setting up all social presence needed and have a marketing plan
• Acceptance criteria:
• Testnet launch
• Accounts setup for necessary community tools and social media such as Twitter, Medium, Discord etc.
• Detailed marketing schedule and plan

Milestone 4: Mainnet Launch

• Audit on smart contract completed
• Unit and integration test on application
• Acceptance criteria:
• Mainnet launch
• Open source of smart contract or plan for open source

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

Milestone 1:

• Application architecture diagram
• Smart contract data flow diagram
• UIUX draft
• Documentations of overall timeline, resources needed plan

Milestone 2:

• Complete frontend development on design components with ready to connect APIs and wallet interactions.
• Complete backend development
• Complete smart contract development with ExUnits limitation tested.

Milestone 3: Application Integration and Testnet Launch

• Testnet launch
• Accounts setup for necessary community tools and social media such as Twitter, Medium, Discord etc.
• Detailed marketing schedule and plan

Milestone 4: Mainnet Launch

• Audit on smart contract completed
• Unit and integration test on application
• Mainnet launch
• Open source of smart contract or plan for open source

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

Period: 6 months

Salary is based on market-rate.

Whole team structure:

Total Budget Require: 219,600 ADA

We are continuously looking for external investors to fund the R&D of the protocol, and seeking way to further minimize the cost

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

At the date of submission, ADA price is around 30 cents USD. We believe it has a high value for money to develop a product ready to integrate with institutions. Other value bringing to the community includes:

• Trading volume natively on the Cardano blockchain
• Foster development of other projects through sharing development experience

[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.

I Accept