DeltaDeFi | KnightSafe - Hydra DEX for HFT - Bring 100M+ Trading Volume to Cardano with ADA / USDM powered by SIDAN

[GENERAL] Name and surname of main applicant

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

[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] Summarize your solution to the problem (200-character limit including spaces)

Upgrade DeltaDeFi implementation with Hydra to offer features matching CEXes with a self-custodial vault for liquidity-providing, empowering extremely liquidity on-chain trading pairs.

[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] Please provide here more information on the open source status of your project outputs

Business-logic-sensitive materials will be kept close source (i.e. working with the database). All other research findings from the proposal, such as on-chain code design patterns, toolings to be built surrounding hydra would be on (an) open source Github repo(s) with Apache-2.0 license.

[METADATA] Horizons

[SOLUTION] Please describe your proposed solution

Cardano Use Case: Concept

Proposed Solution

In this proposal, we will upgrade DeltaDeFi with Hydra Head protocol for improving Cardano DeFi by allowing a true high-frequency trading experience that could compete with centralized exchanges.

DeltaDeFi - Hydra order book decentralized exchange

The core substance of this proposal is to upgrade DeltaDeFi with a Hydra-powered dencentralized exchange. Hydra is the technology that helps us build features that are required by traditional high-frequency trading, including but not limited to (1) instant order confirmation, (2) zero cost placing and cancelling orders, (3) concurrent order placing etc.

KnightSafe - Self-custody wallet enabling yield opportunities for liquidity providing

DeltaDeFi enables yield opportunities that purely arises from trading activities. Less-sophisticated retail users can stake to the vault managed by professionals to generate extra yield. It will also provide capital to professional traders with low cost, which can be the catalyst for boosting trading volume on Cardano.

Industry-standard API trading service

On top of the core feature, DeltaDeFi would expose Binance-like APIs to traders with all necessary related features like concurrent order placing etc. Traders can start trading on Cardano with the least learning curve. This feature will have high synergy with KnightSafe which has the infrastructure and a network of professional traders, onboarding huge trading volumes to Cardano at ease.

The solution above is modified from our original proposal in Cardano Use Cases: Product. both us and catalyst team got area of improvement. Always appreciate all the hard work by the catalyst team. For public record, we will put down the rationale of why we go for Cardano Use Cases: Product

DeltaDeFi has reached MVP stage

DeltaDeFi was first started in concept in F11, with the scope below:

• Conducted market analysis and requirements 
• Designed the initial architectural framework for the off-chain computation layer
• Conducted a feasibility study for the proposed HFT gateway
• Published a whitepaper detailing the concept, architecture, and potential impact
• Collected community engagement and feedback

With the completion of the milestones in F11, DeltaDeFi then evolved in the MVP category in F12 with the scope below:

• Developed a detailed technical architecture for both off-chain and on-chain components
• Designed and developed DeltaDeFi Cardano smart contracts
• Developed the API for accessing & trading on DeltaDeFi
• Designed and developed the DeltaDeFi website for traders to access
• Integrated the application with a user-facing website and deployed the API service

At this stage, DeltaDeFi has completed the MVP as evidenced by our co-founders conducting alpha testing in public - https://x.com/DeltaDeFi/status/1810287799561830639. 

KnightSafe is production ready, which belongs to “Projects and ventures porting from or bridging other ecosystems to Cardano”

Track Record: https://gov.gmx.io/t/knightsafe-gmx-grant-final-report/3847

Dune Analytics: https://dune.com/knightsafe/knight-safe-x-gmx-v2

According to the F13 guidelines at https://projectcatalyst.io/funds/13/f13-cardano-use-cases-product, this proposal should be eligible for Cardano Use Cases: Product:

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

Provide extra real yield-generating opportunities to Cardano

• Combining the feature provided by DeltaDeFi and the vault from KnightSafe, extra real yield earning opportunities, which are generated also by actual profitable trade but not purely from token printing, are provided to the Cardano ecosystem

Boosting Cardano liquidity by enabling low-cost high-frequency trading

• Extra profitable trading opportunities also attract outsiders, such as project builders and traders
• KnightSafe is an example of a project onboarded to the Cardano ecosystem due to the extra opportunities brought by the HFT capability

Showcase use cases on top of the latest technology

• Set as a practical example of how UTxO blockchain technology can be seamlessly connected to traditional finance 
• DeltaDeFi can set an example to deploy a use case with Hydra, which could be education materials for other Cardano builders

Community Service - Open source Hydra toolings contribution

• DeltaDeFi is built on top of MeshJS and whisky. For all the general-purpose building blocks required in delivering the Hydra product, we will contribute to both open-source libraries to build the infrastructure with the community, enabling other projects’ adoption of Hydra technology.
• DeltaDeFi would contribute to Hydra protocol in the process development whenever runs to scenario that needs extra feasible features

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Our team has strongly committed and experienced members, providing all required skill sets and expertise to successfully implement the proposed solution

Trust and Accountability

• Track record on Cardano ecosystem participation
• Team members have a track record of contributing to Cardano open source such as Mesh feature improvement, and research Cardano techniques with sharing on Gimbalabs.
• Leverage the team's blockchain and financial tech expertise
• Team members are professionals across a spectrum of industries, including banking and finance, cyber security and software engineering, with chartered status with different professional bodies.

Approach Validation

• This product proposal is the first idea incubated by an entire Project Catalyst process. It started with an F11 concept proposal with proven market validation and feasibility study. Then it goes for an F12 MVP proposal and DeltaDeFi conducted the Alpha launch with its support. By accumulating all the previous study it now comes to the stage of building a well-curated product, which needs community support for this F13 proposal.
• Both DeltaDeFi and KnightSafe teams are composed of technical experts and financial experts, validating actual market demand for HFTs.
• Both teams also get direct connections with multiple hedge funds with AUM up to billions of dollars, where we conduct product interviews and get validations on how the approach could solve their major pain points trading on decentralized networks.

Technical Approach Feasibility Research

• SIDAN Lab is an active team of builders on Cardano building and maintaining core infrastructure with proven technical capabilities to implement one of the most difficult technology stacks in Cardano.
• The project direction is generated by a discussion with engineers at the IOG Hydra team, the conceptual design for the envisioned product development is proven to be feasible.

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: Preparation and Organization Setup (1 Month)

Objective: Establish a solid foundation for the project by setting up the necessary infrastructure, assembling the team, and defining project management practices.

Activities:

• Set up legal and administrative frameworks.
• Confirm core team members and advisors.
• Establish project management tools.

Acceptance Criteria:

• Legal entity established and operational.
• Public announcement on core team members and advisors.
• Project management tools and systems set up.

Milestone 2: DeltaDeFi Hydra System Architecture (1 month)

Objective: Design the system architecture of DeltaDeFi upgrade with Hydra Head protocol that allows true HFT

Activities:

• Define user interaction workflows
• Prepare initial architectural diagrams
• Design the user interface and experience for the platform.

Acceptance Criteria & Evidence:

• Full documentation on smart contract logic
• Technical architecture document completed and reviewed.
• Updated Gitbook documentation on the technical architecture

Milestone 3: Smart Contract Development & Open Source (1 month)

Objective: Develop upgraded smart contracts with suites the Hydra implementation of DeltaDeFi

Activities:

• Design and develop the Cardano smart contract taking into account the Hydra nuances

Acceptance Criteria & Evidence:

• Approach commercial smart contract auditors OR initiate community auditing
• Open source the GitHub repository, which includes source code and script specification

Final Milestone 4: Prototyping and MVP (1 month)

Objective: Deploy smart contract to MVP

Activities:

• Deployment of smart contracts on Cardano preprod testnet
• Integration of smart contracts with user-facing website for presenting the prototype / MVP
• Prepare the project close-out report and video

Acceptance Criteria & Evidence:

• Fully functional website frontend with Cardano preprod testnet
• Publicly available project close-out report and video

[RESOURCES] Who is in the project team and what are their roles?

The collaboration between SIDAN Lab and KnightSafe forms a team with expertise in full-stack development, finance, trading, and cybersecurity. With 14 full-time developers, the team excels in the smart contract and open-source project contributions on Cardano. In addition, the team benefits from KnightSafe’s experience in managing over $100 million in crypto assets and high-frequency trading (HFT), along with market-making strategies.

DeltaDeFi Team

DeltaDeFi and SIDAN Lab consists of six full-time developers, proficient in front-end, back-end, and smart contract development within the Cardano ecosystem. Our team has extensive experience in decentralized finance (DeFi) and blockchain development. SIDAN Lab has successfully contributed to major open-source projects like Vodka, Whisky, and MeshJS.

Hinson Wong - Software Engineer

• Co-founder of DeltaDeFi - https://x.com/deltadefi
• Co-founder of SIDAN Lab - https://x.com/sidan_lab
• Team member of Gimbalabs, driving Hong Kong community
• Key contributor to MeshJS, a Cardano SDK for DApp development
• Ex-Citi, Chartered Financial Analyst (CFA)
• LinkedIn: https://www.linkedin.com/in/hinsonwong/
• Github: https://github.com/hinsonsidan
• Twitter: https://x.com/hinsonsidan

Jackal Leung - Software Engineer

• Over 5 years in full-stack development in creating comprehensive software solutions that encompass both front-end and back-end components
• Extensive experience in high-frequency system architecture design and infrastructure development.
• Worked and contributed to a leading FinTech unicorn (Welab Bank) in HK
• LinkedIn: https://www.linkedin.com/in/jackalleung/ 

Anson Chui - Cybersecurity Engineer

• Cybersecurity engineering work experience at Huobi, Hex Trust, and Deloitte
• Extensive experience in implementing and monitoring security controls to ensure system hardening, resilience, and integrity of mission-critical systems
• Certified Information Systems Security Professional (CISSP) & Certified Information Systems Auditor (CISA) & AWS Certified Solutions Architect
• LinkedIn: https://www.linkedin.com/in/anson-chui-219816158/ 

Neal Lam - UIUX & Media Designer

• Digital & Virtual Banking UIUX design experience at Livi bank
• Branding design experience
• Animation designer of a Hong Kong Key Opinion Leader (KOL) - mingjai (653K subscriber, Top 5 KOL in Hong Kong)
• LinkedIn: https://www.linkedin.com/in/neallam/

Kinson Cheung - Cardano Ecosystem & HFT Advisor

• Head of Incubation at Adaverse
• Experience in product marketing
• Extensive network with institutional traders in UK
• LinkedIn: https://www.linkedin.com/in/kinson-cheung-166979103/

KnightSafe Team

KnightSafe's team consists of eight full-time developers proficient in front-end, back-end, and smart contract development. Our tech management team, who used to manage a team of 200, equipped with over ten years’ experience in general-purpose programming languages as well as in solidity, is the perfect candidate to lead the development of KnightSafe.

Ethan Tong - Co-founder

• Managed over USD100m+ crypto AUM with 10+ years experience in HFT, market-making and arbitrage (3+ sharpe)
• Serial entrepreneur previously backed by top investors including Alan Howard, Dragonfly Capital, HashKey Capital & RIT Capital Partners
• Ex-UBS, Block.one, Macquarie, and Credit Suisse
• BEng (Computer Science) with First Class Honors from the University of Hong Kong
• LinkedIn: https://www.linkedin.com/in/ethantong/

Richard Li - Co-founder

• Ex-software engineer at Harmonic (HLIT:NASDAQ) and held dual positions at a top Asia-based digital asset management platform as a portfolio manager and head of structured products
• Trading system architect with 10+ years experience leading development of pricing, system architecture and automation
• Scholar and US patents holder in data processing and encoding
• MPhil & BEng in Computer Engineering with First Class Honors from the Hong Kong University of Science and Technology
• LinkedIn: https://www.linkedin.com/in/richard-li-9b5b73240/

Philip Lam - Co-founder

• Director/Responsible Officer (RO) in multi-family offices/hedge funds with USD400m+ AUM
• CFA charterholder, Ex-Ernst & Young
• BBA (Accounting and Finance) from the University of Hong Kong with full scholarship
• LinkedIn: https://www.linkedin.com/in/philip-lam-84893398

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

The total budget request for this proposal under Cardano Use Cases: ADA150,000

Milestone 1: Preparation and Organization Setup 

Activities:

• ADA - 10,000 Set up legal and administrative frameworks.
• ADA - 10,000 Confirm core team members and advisors.
• ADA - 10,000 Establish project management tools.

Total budget: ADA 30,000

Milestone 2: DeltaDeFi Hydra System Architecture 

Activities:

• ADA - 10,000 - Define user interaction workflows
• ADA - 15,000 - Prepare initial architectural diagrams
• ADA - 15,000 - Design the user interface and experience for the platform.

Total budget: ADA 40,000

Milestone 3: Smart Contract Development & Open Source

Activities:

• ADA - 40,000 - Design and develop the Cardano smart contract taking into account the Hydra nuances

Total budget: ADA 40,000

Milestone 4: Prototyping and MVP (1 month)

Activities:

• ADA - 20,000 Deployment of smart contracts on Cardano preprod testnet
• ADA - 20,000 Integration of smart contracts with user-facing website
• Prepare the project close-out report and video

Total budget: ADA 40,000

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

Investing in high-frequency trading (HFT) infrastructure offers substantial value to Cardano by driving higher adoption among institutional and professional traders, amplifying liquidity within Cardano’s Defi ecosystem, reshaping Cardano as the premier destination for cutting-edge trading. These advancements elevate Cardano DeFi's maturity and market competitiveness, propelling it to the forefront of the industry.