Liquidity 4 Virtual Assets (L4VA) - Building the 1st AMM for NFTs, enabling users to instantly sell for the floor price on Cardano

[GENERAL] Name and surname of main applicant

Rob Eberenz

[GENERAL] Email address of main applicant

rob@l4va.com

Additional applicants

ADA Anvil and team

@cashanvil

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

11

[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?

Yes

[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.” .

Yes, ADA Anvil: We have engaged the Anvil team for smart contract development of our protocol. We screened multiple potential Cardano Plutus development agencies and could not be happier or more confident about our partnership with Ada Anvil and their team. We look forward to our engineering team working hand-in-hand with Ada Anvil’s team to fully develop and ship our protocol to market, on-time and on-budget.

[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

dApp

[IMPACT] Please describe your proposed solution.

Our protocol is designed to automatically provide market-making demand liquidity for NFTs and NVAs on Cardano (i.e. Our dApp enables users to instantly sell whitelisted NFTs for the current market floor price). 

The Opportunity / Problem: The future of tokenized non-fungible assets is a multi-trillion dollar market. We are seeking to solve the very large, very simple problem of a lack of buy-side liquidity in non-fungible asset markets, to make those markets efficient when NFTs mature into Non-fungible Virtual Assets (“NVA”s) and crypto supports the exchange of real-world NVAs on-chain.  

The Status Quo: Non-fungible asset markets are naturally illiquid (not-liquid) and inefficient, due to the unique nature of each asset. In traditional finance there are centralized players that make an on-demand market for sellers. (e.g. Fannie Mae, the public/private institution that was set up to automatically purchase any mortgage which “conforms” to certain standards in the USA; acts as a market maker for mortgages, which are non-fungible assets). To support the widespread adoption and tokenization of NVAs, we need a decentralized automated protocol to serve this function.

Immediate Solution: Our initial use case will be improving efficiency of NFT markets on Cardano, ensuring that sellers have a simple way to sell NFTs at floor market prices.

Future Solution: The data we collect will be valuable to analyze and then utilize to train AI systems capable of optimizing the pricing of Non-fungible Virtual Assets (“NVAs”) on our platform. This data will help to develop later iterations of the protocol that will allow for fair market purchasing of assets based on their meta-data and other information, not just the floor price of the asset collection.

Mission: Our mission is a dual mandate to deliver automated liquidity to non-fungible virtual asset markets and maximize value to L4VA token holders over time.

Values: We plan to achieve our mission by designing and building our protocol to be flexible, intuitive, simple, and scalable. 

What are NVAs? In an effort to broaden the view of what constitutes an NFT, we have coined the term Non-fungible Virtual Assets (“NVA”s) to include NFTs, Digital Collectibles, Traditional Non-fungible Assets (mortgages, insurance, real estate, etc.), and other New / Synthetic / Exotic Non-fungible Assets yet to be tokenized on the blockchain. We believe that NVAs and the innovation of NVA Applications (“NVAP”s) will be required to ultimately deliver mass utility and wide-scale adoption of blockchain technology into the future. 

How it Works: We are building a decentralized automated protocol to solve the inherent liquidity problem in non-fungible asset markets by (1) providing buy-side liquidity for non-fungible assets at the floor price of the asset, (2) automatically emitting those assets back to the market via flash auctions at a profit, and (3) then sharing profits with the community of L4VA token holders who govern the protocol.

Who We Engage: The project will initially engage all of the participants in NFT markets on Cardano for a portion of their trading (e.g. when an owner wants to sell an asset quickly), then will evolve to support market participants across all forms of NVAs traded on the blockchain.

Scaling Opportunities: We are building this protocol to scale and support all types of non-fungible assets over time (e.g. real estate, bonds, mortgages, insurance policies, annuities, precious materials, etc).

Validating the Utility: We will prove our impact based on usage of the system in terms of % of sales on L4VA compared to other NFT marketplaces on Cardano. For every “Sacrifice” transaction on our dApp (defined as when a user sells an NFT in exchange for L4VA on our protocol) our value is validated. Our business model seeks to capture 5% of all NVA market volume at maturity. 

Market Impact: Economic theory predicts that our protocol will help to equalize supply and demand for particular asset policy IDs, which will demonstrate itself by increasing floor prices of projects with high correlation to the percentage of transactions for a particular policy ID happening on L4VA. We also expect that our protocol will help to reduce volatility of floor prices due to short term supply and demand shocks, especially during times of lower transaction volume.

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

L4VA is the first decentralized automated market-maker for non-fungible assets to exist anywhere.

Right away, our application is solving a major problem in NFT markets and laying the foundation for widespread adoption of Cardano as the blockchain of choice for Non-fungible Virtual Assets (“NVAs”) and NVA Protocols (“NVAPs”). Our solution is designed to be fully open source, with open APIs for integration into other marketplaces and applications, helping to solve market inefficiencies across the Cardano ecosystem.

Immediate Benefits: L4VA will immediately deliver value to Cardano NFT market participants by providing (1) instant automated buy-side liquidity for sellers of NFTs at the floor price and will (2) raise floor prices on p2p markets as sellers no longer need to undercut the natural floor price to seek fast liquidity.

Intermediate Benefits: L4VA will attract projects seeking to utilize blockchain to build digital non-fungible asset protocols (NVAPs) to solve real world problems (e.g. mortgages in developing countries, tokenizing real estate, insurance, etc.), because Cardano will have L4VA as an open source application and open API integrations to support the proper functioning of these markets during periods of low volume and/or volatility.

Future Benefits: L4VA has the potential to serve as the automated market maker for all NVAPs across all non-fungible assets, which will drive adoption of Cardano by large enterprise players who seek to integrate their assets as NVAs on the blockchain with the most advanced automated market maker for NVAPs. We are building this protocol to scale to support all types of non-fungible assets over time (e.g. real estate, bonds, mortgages, insurance policies, annuities, precious materials, etc).

L4VA is a true DeFi solution AND has broad utility applications across many of the focus areas of this challenge:

Physical products - Tokenised housing as a Cardano native asset, Fractionalised physical asset ownership, others...

In order for physical products to have a functioning market the owners must have the ability to sell assets efficiently at a fair value; without L4VA these projects innovating in this area will struggle if there isn’t consistent fairly priced demand for their NVAs.

DeFi - Stable coins, DEXs, borrow & lending, synthetic assets, others...

By definition our protocol is a true DeFi protocol in every way. We are a decentralized financial protocol delivering value and utility to the NFT market today and the NVAs and NVAPs of tomorrow.

Gaming - Open world games, card games, RPG, others...

For every unique NVA across gaming, there needs to be fast and reliable markets functioning to support the purchasing of these in-game tokens from sellers in real time; L4VA solves this.

Climate Change - Solutions that help to solve environmental issues

Carbon credits have not made a major impact on blockchain yet, largely due to the complex nature of these assets. L4VA could be the protocol that makes Cardano the right place for carbon credit owners to trade carbon credits as NVAs, since L4VA can help make an efficient market for these assets.

Marketplaces

Marketplaces are inefficient for trading NFTs and NDAs. L4VA is a different type of marketplace, providing an enhanced solution for markets to generally operate more efficiently.

Insurance

Insurance policies are all non-fungible. Decentralized insurance underwriting financed by a diversified pool of investors requires that there is a protocol to purchase policies from applicants initially in order to collateralize these policies into portfolios which can be fractionalized and sold. L4VA will play a critical role in helping to augment NVAPs operating in this space, by providing buy-side liquidity for sellers of policies quickly.

Artificial intelligence

We plan to utilize all of the data captured through usage of our protocol as a training set for AI models to help drive more specific pricing intelligence that will allow us and other applications to better understand market pricing of NFTs and NVAs so that we can provide automated buy-side liquidity to sellers at the floor price, and potentially provide instant liquidity quotes for sellers at higher prices based on p2p market pricing correlated to metadata and auction performance on L4VA.

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

Our project fulfills all three major metrics for success (as defined by the Catalyst Challenge):

Increasing the number of products available for the community to use that help to enrich the ecosystem with new use case

Our product is completely new and innovative, while also helping to support adoption of other new use cases by making markets more efficient for NVAPs in (real estate, mortgages, insurance, climate, physical assets, etc)

Increase the number of integrations that bring existing solutions together for a more seamless and connected experience between different products.

Our protocol is fully open source and we will provide open api’s to ensure that we can continue to support the ecosystem by way of integrations.

Increased quality of existing products & integrations through improvements and new functionality

Our protocol will increase the quality of NFTs, NVAs and NVAPs by providing liquidity to those projects and improving the user experience by ensuring that owners can freely enter and exit ownership.

Our project will attract other projects seeking to tokenize real assets as NVAs by providing stable well functioning markets in early stages of adoption and lower volume; this will boost the number of projects who will build on Cardano.

Success Metrics: The success of L4VA will be directly measured based on usage of the protocol itself, specifically in the following areas:

1. TVL: Total value of floor prices of NFTs locked on the protocol (“in Purgatory”). TVL growth will show adoption and trust in the L4VA Protocol over time.
2. Transactions: Total NFTs Sacrificed (sold) to L4VA. Transaction growth will demonstrate adoption of the protocol and value to market participants.
3. Market share: Percentage (%) of NFT Sacrifice transactions divided into all NFT transactions on other exchanges over time. This will demonstrate how valuable the L4VA protocol is compared to existing person-to-person exchanges.
4. Market Impact: Floor price increase % over period of time, divided into % increase in sacrifice Trxns over the same period. A value >= 1 shows correlation between floor price increases and adoption of L4VA.
5. Active Users: Growth in number of daily, weekly, monthly active users on the platform, (1) gross and (2) as percentage of total number of active wallets on Cardano.

Existing products and integrations:

There are p2p marketplaces for NFTs but there so far does not exist any product or solution like L4VA. We are open to integrating with all existing marketplaces for NFTs and Non-fungible Virtual Assets (“NVAs”).

Technical Requirements: As far as we are aware there are no technical constraints currently to accomplish the development and release of our protocol and dApp as designed.

Ecosystem Maturity: Our protocol solves a problem for NFT markets today and NVAs tomorrow!

Why it’s Important: Our protocol utility is crucial to support decentralized NVAs and NVAPs and to make the vision of crypto (democratizing ownership and free exchange of assets without the need for a central 3rd party) truly realistic and competitive in the face of strong entrenched traditional financial players. Without a decentralized market maker for Non-fungible Virtual Assets (NVAs) on the blockchain the hope and vision for mass blockchain may never be achieved.

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

We plan to openly and honestly report on the outputs of our project through multiple public forums, including:

Github: We will share code commits on Github as we complete them. 

Success Metric Analytics: Upon main-net launch, we will track and visually display the success metrics above (TVL, Transactions, Users, etc.) in the user interface.

User-facing Analytics: Upon main-net launch, we will share data analytics in the user interface related to price performance, transaction volume, and auction KPIs of specific asset types and/or collections (by policy ID). This will improve the user experience and increase usage per user.

Internal Analytics for Future Development: We will track and analyze the protocol transaction data to support the development of advanced functionality (e.g. providing variable pricing across NFTs and other types of asset NVAs based on metadata beyond the floor price). This will allow us to develop functionality that will create markets for more types of assets (real estate, bonds, mortgages, insurance, etc.) into the future.

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

Our Founder is the CFO of a an enterprise software startup, who in partnership with a leading Cardano development agency (Anvil) and a team of professionally trained design, engineering, and marketing partners, are committed to responsibly utilizing funds from Catalyst to support the delivery of the L4VA protocol.

Our founder and executive manager of the project, Rob Eberenz has over 18 years of professional experience in investment banking, economics, and technology management, currently serving as CFO for an enterprise software startup. Over the past 3 years, Rob has deeply immersed himself in the Cardano ecosystem and closely studied the rise and adoption of NFTs, which combined with his extensive experience in finance, fund raising, entrepreneurship, and software project management makes him highly capable to initiate and lead our project. 

Our co-founders and team consist of a senior UX/UI developer (William Devogalaere) who previously completed a successful ICO and NFT launch on Ethereum, and senior full-stack software engineers (Casey Siebel and Nick Goehner) who have experience developing blockchain web apps, as well as serving as senior engineers on leading enterprise software teams.

Our partner for smart contract development, Anvil Development Agency is a 15 person team that is deeply embedded within the Cardano community. Our developers have more than 50 years of combined experience in software development and programming.

Over the two years since smart contracts went live on Cardano, Anvil has become one of the leading backend development service providers on Cardano and has amassed an extensive record of delivering state-of-art solutions for projects building on Cardano.

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

Quantitative Goals:

1. Complete 1,000 Sacrifice Transactions in first 30 days following main-net launch
2. Reach 100,000 ADA TVL within the first 30 days following main-net launch
3. Complete 300 Auctions in the first 60 days following main-net launch
4. Capture 5% of daily total Cardano NFT transaction Volume, within 12 months following main-net launch
5. Demonstrate positive correlation between % increase in transactions on L4VA and % increase in floor prices of NFTs on the market

Qualitative Goals:

1. Purpose - To provide instant automated liquidity in exchange for non-fungible tokenized assets.
2. Vision - Automated protocol capable of exchanging any tokenized asset for fair value equivalent in L4VA.
3. Mission - Deliver liquidity to users and maximize value to L4VA holders over time.
4. Act as an independent decentralized market protocol, to help improve the overall functioning of non-fungible asset markets
5. Attract innovators seeking to tokenize non-fungible assets to the Cardano ecosystem
6. Attract non-fungible virtual asset applications (NVAPs) to the Cardano ecosystem (Crypto Mortgages, Crypto Bonds, Crypto 

[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.

1. Test-net Completion (Month 6): Release of the web-app which will allow users to test the basic flow of sacrificing test-NFTs in exchange for test-L4VA, then use test-L4VA to purchase one of the test-NFTs sacrificed by others at Auction.
2. Web App UX/UI Design and Front-end Development: Design and completion of the L4VA Web-app (120,690 ADA; see Budget and Other Sources of Funds)
3. Demand Protocol: Completion of the “Sacrifice” protocol. (86,200 ADA; see Budget)
4. Emission Protocol: Completion of the automated auction emissions protocol. (86,200 ADA; see Budget)
5. Integration of Protocols with Web App (delivered and financed by Team and Other Sources of Funds)
6. Initial Sacrificial Offering (Month 7): Private launch of the protocol to holders of the official L4VA NFTs (Relics of Magma). This is when Cardano NFTs are first sacrificed in exchange for L4VA utility tokens (financed by Other Sources of Funds). 
7. Mainnet Launch (Month 8): Mainnet public launch of L4VA protocol, following the launch of L4VA / ADA pair on DEXes. Requires completion / integration of price oracles for (1) L4VA / ADA fungible token price and (2) NFT collection(s) ADA floor price(s). (51,730 ADA; see Budget)
8. Governance Protocol (Month 11): Initial release of decentralized governance mechanism, integrating community of L4VA token holders into key protocol function and management decisions. (51,725 ADA; see Budget)

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

1. Test-net Dapp Completion (Month 6): We will validate success of completion of test-net launch by measuring what % of users successfully complete the testnet flow. We plan to open the testnet to holders of the Relics of Magma NFT collection and reward participants with airdrops of L4VA. We will release the results of the testnet launch, including critical bugs, and other results publicly. We will make any necessary bug fixes, optimizations, and/or improvements to the smart contract functionality.
2. Initial Sacrificial Offering (Month 7): We will validate the success of the Initial Sacrificial Offering based on how the Demand Protocol and Emission Protocol function, in terms of how many users successfully complete one full cycle on the dApp, meaning: (1) Sacrifice an NFT for L4VA credits, (2) Spend a portion of L4VA credits to purchase an NFT at auction, and then (3) Sacrifice at least 1 NFT purchased at auction again for L4VA credits. 
3. Mainnet Launch (Month 8): We will validate the success of the Mainnet Launch based on the metrics for success mentioned above (TVL, Transactions, Market Share, Floor Price Impact) over the first 30 days. 
4. Governance Protocol (Month 11): We will validate the success of the Governance Protocol based on participation of community members in governance votes.

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

Total Requested Amount = 396,540 ADA 

Smart Contact & Back-end Protocol Development

86,200 ADA = Demand Protocol: Smart contracts protocol development governing the core functionality of the protocol which enables automated purchasing of Non-fungible Virtual Assets on Cardano. (US$25k)

51,725 ADA = Oracle Development / Integration: Nft floor oracle, L4VA Oracle, etc. (US$15k)

86,200 ADA = Emission (Auction) Protocol: Smart contract protocol development governing the demand sensitive automated auction mechanism and instant redemption mechanism. (US$25k)

51,725 ADA = Governance Protocols: Governance mechanisms interfacing with both the demand protocol and supply emission of the application, to allow for decentralized management of the application via token holder voting, governing protocol whitelists, blacklists, purgatory function mechanics, profit distributions, etc. (US$15k)

17,240 ADA = UX/UI Design: We have considerably (75%) subsidized the cost of UX/UI design in our Catalyst proposal for this scope of work, by assigning it to a core team member who will be responsible for producing full designs for the web app. In exchange we are budgeting a team token allocation and other payment from Other Sources of Funds. See William Devogelaere in team. (US$5k)

103,450 ADA = Front-end Development: We have considerably (75%) subsidized the cost of Front-end Development in our Catalyst proposal for this scope of work, by assigning it to two core team members who will be developing the front-end web application. In exchange we are budgeting a team token allocation and other payment from Other Sources of Funds. See Nick Goehner and Casey Siebel in team bio. (US$30k)

Tech Support & Dev Ops: Our full-stack engineering team (Nick Goehner and Casey Siebel) will initially be charged with providing technical support during the Test-net, ISO, and Public Launch phases of the project, with the expectation that we may need to add full time employee engineers at a later stage, which we have budgeted for in Other Sources of Funds and team token allocation.

Community Management & Support: The core team is managing the community leading up to the release of our NFT mint. We are budgeting NFT proceeds and team allocation of the L4VA token as remuneration for the community management and support team.

Marketing: Our NFT mint and gamified staking are designed to drive awareness throughout the community of potential users, who will ultimately be our early adopters and protocol users (i.e. our investors are our early customers, which means we can activate the community with incentives to drive social media marketing campaigns, greatly reducing the need for traditional advertising and promotion). For marketing strategy and management, see Bailey Bio. For any additional marketing expenses, we plan to finance these through Other Sources of Funds (see below).

Legal: We have budgeted legal fees, but we plan to finance these through Other sources of Funds (see below).

Project Management: Technical project management will be managed as part of the scope for each deliverable above, with Anvil tasked with project management of the back-end protocol development project. Executive project management will be provided by Rob Eberenz in exchange for team token allocation and payment from Other Sources of Funds, no need for Catalyst financing; see bio.

Other Sources of Funds:

• NFT Mint: We are launching a three phase NFT mint to raise funds to support the development of a gamified NFT staking mechanism, to build community and engagement leading up to the launch of the L4VA protocol. Expected fundraise >= 10,000 x 99ADA = 900,000+ ADA net fundraise projected.
• Founder funding: The core team is financially capable of supporting the project if needed.
• Private funding: The core team have extensive experience, existing relationships, and a track record raising funds from private investors and venture capital to finance software projects in the past. See Rob Eberenz bio.

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

We have made best efforts to minimize the total funding amount requested, to increase the return on investment of our project for the Cardano community and ecosystem (see Other Sources of Funds above).

We have engaged Anvil Cardano development agency for smart contract and back-end protocol development (reflected in the quote here). This is the market rate for U.S. based smart contract development.

We are providing heavily subsidized (75% reduced cost) team labor for the design and development of our web app (reduced request for Catalyst funding).

We have fully subsidized team labor or covered costs from Other Sources of Funds for (1) Executive Project Management, (2) Marketing Management, (3) Community Management, (4) Legal Fees, and (5) Tech Support, DevOps, etc. (no request for Catalyst financing). 

[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