New SPO revenue streams for securing bridge infrastructure

[GENERAL] Name and surname of main applicant

[GENERAL] Email address of main applicant

Additional applicants

Core team:

• Mohammad Hasan Samadani: Lead developer for the Rosen Bridge project + SuSy Bridge (Wormhole). Holds a PhD in computer science and has over 12 years experience in security, software development, and team management. Designed various applications for the Ergo ecosystem.

• Joseph Armeanio: Currently a Board Member and Manager of Business Development of the Ergo Foundation.

• Daniel Friedman: Currently an advisor to the Ergo Foundation and Co-Founder of zenGate Global. Previously, he was part of the IOHK early-founding team that helped launch the Cardano blockchain.

• Theodore Morisis: Operator of the Chef Stake Pool, community educator and Cardano Ambassador. Theodore also works as a community manager for zenGate Global.

Subject matter experts and advisory:

• Alexander Chepurnoy: Co-founder of the Ergo Blockchain and smartcontract.com (now Chainlink). One of the first employees at IOHK, as a researcher fellow and manager for the Scorex Project. Active in blockchain since 2011 and has 20+ academic papers contributed to the industry.

• Yasha Black: Co-Founder and CPO of Spectrum Labs and Protocol. Former UI developer and product manager for the core-development team at the Ergo Foundation.

• Ilya Oskin: Core developer for the Ergo Blockchain. Co-Founder and CTO of Spectrum Labs and Protocol (previously known as ErgoDEX). Former lead back-end developer for a leading fintech.

• Sam Lambert: Co-Founder of zenGate Global. Previously, worked as a management consultant at Oliver Wyman and helped set up the Global Digital Assets practice. Worked with some of the largest banks, insurance and telecommunications companies around the world.

[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.” .

A key dependency for this proposal is getting alignment with stakepool operators. We intend to collaborate closely with a working group made up of community advocates and SPOs. Some of the pools and advocates we have already started (or plan) to consult with include:

• xSPO Alliance: Extra small stake alliance of SPOs
• CSPA (Cardano Single Pool Alliance)
• Cardano Whale: Leading Cardano twitter educator and advocate 
• Stoic Pool: Community advocate and SPO. Part of the Single Pool Alliance.
• Hosky: Ecosystem educator and advocate.
• BBHMM Pool: CSPA member and TOSI Drop Core Pool

[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

[METADATA] SDG rating

N/A

[IMPACT] Please describe your proposed solution.

Problem Statement:

Stakepool Operators and delegators are the backbone of upholding the security of Cardano’s decentralized ecosystem. Currently, the main forms for SPO revenue include staking rewards or occasional ISPO allocations. We believe that SPOs can earn a new income stream for providing security of other infrastructure such as bridges.

As for some context, we believe in a cross-chain future where communities collaborate and projects benefit from the various tools available in these ecosystems. However, none of this can thrive and succeed without having decentralization, strong security and risk management assumptions. As such, in the past year alone, according to Chainalysis, over $2 billion USD in cryptocurrency was stolen from cross-chain bridges across 13 separate hacks. Poor design choices such as centralization risks have made bridges an attractive target for hackers and many communities have been financially affected by these events.

Proposed Solution:

Our solution is a new revenue source for SPOs for securing and validating bridge activity. Not only does this have a significant impact on SPOs ability to tap into new income streams, but has huge benefits to the community by improving interoperability and collaboration with other blockchain ecosystems (or even other Cardano sidechains).

The Rosen Bridge utilizes a 2-layer validation framework and is currently operational between the Cardano and Ergo blockchain. The project is already open source and our mission is to become the most decentralized and secure bridge infrastructure and framework available in the blockchain industry.

In order to achieve this mission, the team is looking to draft and submit a CIP, then build out the required tooling to onboard SPOs to validate bridge transactions (and earn rewards for doing so).

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

How our proposed solution addresses the challenge:

Our team believes that our proposed solution of building a bridge that connects communities / ecosystems and leverages the existing SPO community (while rewarding at the same time) directly addresses the challenge question - which is initiatives to build and support the SPO ecosystem and community. 

As part of the design and deployment process, we plan to directly engage the SPO community, starting with a small working group of established and recognised SPOs to help guide our initial direction. Ultimately, for this bridge to have the most robust security assumptions, support and adoption by the SPOs are crucial - hence, ensuring the incentives and value-add is clearly aligned with the SPOs is the only path forward. This consultation and the outcome that follows will have a positive impact on the SPO community.

Impact and value to the Cardano Ecosystem:

The project team’s core goals are also to connect the UTXO ecosystems (and others in the future). Initially Rosen Bridge will connect the Cardano and Ergo ecosystems. However, the same infrastructure can connect Cardano with other ecosystems.

When successful, this will usher in a new wave of liquidity, project activity and collaboration with the broader Cardano ecosystem. Furthermore, this opens up opportunities for Cardano projects to leverage the many different tools available in other ecosystems.

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

As for the key metrics to track progress and measure success, these include:

• Successful draft completed of a Cardano Improvement Proposal within the first 8 weeks of project start

• Design an inclusive tokenomics and get buy-in from community within the first 8 weeks of project start

• 30 SPOs onboarded and launched as watchers during the beta launch

• 30 more SPOs joined as watchers within the first 3 months of production launch

• Complete onboarding documentation to empower any SPO to join as a watcher

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

Our approach for sharing outputs and progress is as follows:

• Monthly Twitter AMAs: The zenGate team has a track record of hosting monthly AMAs and updating the community on key milestones. We will host these with the Rosen Bridge team.

• Up-to-date open source documentation: The team will regularly update the already open-source github - the link can be found here.

• Educational content: as part of the milestones, we will also be developing various onboarding videos and documentation which will share the progress as well as instructions on how to get started.

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

Members of this proposal and advisory team have strong experience in the blockchain sector and have delivered (and delivering) a number of successful products for the Ergo and Cardano ecosystems. The team are strong advocates of open-source technology and have examples to show for this. As such, they will continue to leverage their experience to ensure that timelines and milestones are met.

Notable examples of project delivered by key team members include:

• Ergo Blockchain, SCOREX and smarcontract.com: Alexander Chepurnoy is the core developer for the Ergo blockchain and founded various other projects. Previously worked as a researcher for IOHK.

• ERGO mining softwares, Stratum server, and ergopool - developed by Mohammad Hasan Samadani

• Spectrum - the first DEX on the Ergo blockchain and launching the first cross-chain DEX between Cardano and Ergo

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

Project goals:

• The headline milestones from this challenge is tooling which easily allows SPOs to provide security to Rosen Bridge and earn rewards for doing so 

Validation of approach:

• Designing an inclusive tokenomics framework for SPOs to earn rewards from providing security

• Build simple tooling for SPOs to easily onboard as watchers

• Onboarding an adequate number of SPOs to decentralize the bridge

• Improving collaboration between ecosystems

[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.

Project milestones by workstream

Workstream 1: Incentivisation and rewards model working group | Week 1-8

• Set up a small working group of Cardano community members and SPO subject matter experts to understand SPO incentives for Rosen Bridge security
• Design the bridge tokenomics and iterate after consulting with various stakeholders (e.g SPOs, community members, guards, etc…)
• Discuss fee tiers, fee models and profit distribution design

Workstream 2: SPO tooling - scoping and design | Week 1-8

• Understanding the existing SPO infrastructure and their ability to act as watchers. This includes speaking with SPOs in the ecosystem. 
• Completion of the SPO tooling design and specifications document. This will inform the team how to build the tools.

Workstream 3: Cardano Improvement Proposal (CIP) draft | Week 4-8

• The team will draft a CIP targeted to ensure the right tools can be built on Cardano to allow SPOs into the Rosen Bridge solution
• Communicating with various stakeholders as part of the CIP process

Workstream 4: Development of SPO tooling | Week 8-24

• Develop the smart contracts and off-chain tools required
• Develop design for open-source Rosen Suite (Toolbox for New Chains or Sidechains)
• Develop simple interface for SPOs to interact with
• Conduct security and code-audits
• Conduct extensive testnet testing until mainnet launch
• Run Beta program with select SPOs

Workstream 5: Onboarding, education and bootstrapping | Week 20 - 26

• Build and open source an instruction manual of how SPOs onboard as a watcher for Rosen Bridge.
• Publish educational material: including video explanations, AMAs and blogs to ensure maximum alignment with the community. 

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

Deliverables by workstream

Workstream 1: Incentivisation and rewards model working group

• Conduct 4 working group sessions made up of SPOs and subject matter experts
• Present rewards model and get alignment on the design
• Summarise meeting minutes and key findings summarised for the working group sessions

Workstream 2: SPO tooling - scoping and design

• Conduct working group sessions with SPOs to understand existing infrastructure and tooling requirements
• Complete design and build specifications documentation for required tooling

Workstream 3: Cardano Improvement Proposal

• Draft the CIP and share with the community
• Iterate community feedback into the CIP

Workstream 4: Development of SPO tooling

• Build Rosen's Easy-Install Module for SPOs
• Complete Rosen interface and dashboard for SPOs
• Complete Rosen Suite Design (process and toolkit to onboard new blockchains and sidechains)
• Complete code audits
• Complete Beta testing with SPO cohort

Workstream 5: Onboarding, education and bootstrapping

• Prepare documentation for the main-net launch to onboard new SPOs as watchers
• Publish educational material
• Complete outreach to onboarding more SPOs to improve decentralisation of watcher set

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

Budget breakdown by workstream: (Total - 850,000 ADA)

Workstream 1: Incentivisation and rewards model working group (60,000 ADA)

• 1x Tokenomics lead - for 8 weeks
• 1x SPO project manager to coordinate working groups - for 8 weeks
• 1x Project Analyst to support project manager prepare materials and run workshops- for 8 weeks

Workstream 2: SPO tooling - scoping and design (50,000 ADA)

• 1x lead back-end developer - for 8 weeks
• 1x back-end developer - for 8 weeks
• 1x SPO project manager to support integration plans - for 4 weeks

Workstream 3: Cardano Improvement Proposal (40,000 ADA)

• 1x technical lead writer to draft CIP - for 4 weeks
• 1x developer to support technical writer - for 4 weeks

Workstream 4: Development of SPO tooling (550,000 ADA)

• Backend team: 1x lead, 3 back-end developers to build installation module, Rosen Suite and iterating Beta launch feedback
• 1x UX lead to design SPO tooling suite and dashboard design (including making iterations during Beta launch feedback) - for 6 weeks
• 1x front-end developer to build UX requirements - for 8 weeks
• 1x security auditor - for 3 weeks
• 1x SPO project manager to manage Beta program and mainnet readiness- for 6 weeks

Workstream 5: Onboarding, education and bootstrapping (150,000 ADA)

• 2x Marketing team members to lead outreach and onboarding SPOs to run validation infrastructure - for 6 weeks
• 1x Technical writer & 1x video editor to lead onboarding documentation drafts - for 6 weeks
• 1x Lead developer to review and support drafting onboarding documnetation - for 4 weeks

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

Development fees:

The majority of the costs allocated to the proposal budget is going directly towards development of the open-source tooling for SPOs. The idea is the team will build the Rosen Suite, which will enable to easily set up as a watcher to secure the bridge - this could be security over blockchains or Cardano sidechains. The fees for developers are in-line with industry rates.

SPO working group, incentivisation and onboarding fees:

The large remainder of the costs are associated to ensuring we proactively engage with SPOs on design choices - including the profit distribution and reward system. Further, to ensure the success and benefit to the SPO community, the team will need to spend time onboarding SPOs to secure the bridge. This will include a lot of education, outreach and discussions with the community.

Impact for Cardano:

As mentioned before, this is a novel and innovative approach to enabling SPOs to earn a completely new source of revenue. Not only is this open source, but the tooling is scalable - enabling SPOs to earn rewards for securing bridges between new blockchains and sidechains in the future.

[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.