Takt Protocol - Enhancing Cardano's DeFi with under-collateralized flash loans for eUTXO

[GENERAL] Name and surname of main applicant

Vito Melchionna

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

Entity (Incorporated)

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

Takt Protocol: a decentralized and non-custodial liquidity market protocol inspired by AAVE that offers under-collateralized (one-transaction liquidity) flash loans via smart contracts for eUTXO.

[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?

No

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

Our solution's architecture and implementation are quite innovative. Thus, we would like to keep it closed source in the first stages of the project. However, our vision is to make Takt Protocol fully decentralized (development and governance), which means becoming open source in the future.

[METADATA] Horizons

DeFi

[SOLUTION] Please describe your proposed solution

Takt Protocol brings AAVE-like flash loans designed for developers. Our solution is implemented for Cardano’s extended UTXO model, and it allows you to borrow any available amount of assets without putting up any collateral, as long as the liquidity is returned to the protocol within one block transaction.

To do a flash loan, you need to build a smart contract that automates the borrow request. The contract will then need to execute the instructed steps and pay back the loan + interest and fees all within the same transaction.

Lenders can participate in the protocol as liquidity providers, by depositing ADA or other native assets in the flash loan pools to earn interest on their liquidity. Our smart contracts protect the lent assets by ensuring the payback within the same transaction to the pool.

https://www.youtube.com/watch?v=YiF6x193fRk

Takt Protocol is projected to enrich the Cardano ecosystem by unlocking automated DeFi use cases. You can read more about the details of our solution and architecture in our white paper (in development).

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

Our protocol enhances Cardano’s DeFi and TVL as it unlocks automated borrowing and lending transactions. This empowers developers to build bots and web services for non-custodial trading, arbitrage, and market makers.

Short-term KPIs (Q1 2025)

+ 10 active bots

+ 1000 monthly transactions

+ 1M ADA in TVL (Liquidity Pools)

Mid-term KPIs (Q2 2025)

+ 100 active bots 

+ 10000 monthly transactions

+ 10M ADA in TVL (Liquidity Pools)

Long-term KPIs (Q1 2026)

+ 1000 active bots 

+ 100000 monthly transactions

+ 100M ADA in TVL (Liquidity Pools)

[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?

Who are we

The Entropi Labs team features blockchain experts with a strong background in full-stack web development and data science. We also count on the support of LaPetiteADA, a well-known SPO and Cardano influencer, advising us on marketing, community management, and use cases for content creators.

What we have built in the past

We are seasoned web developers with more than 10 years of joined experience. We have in our web3 portfolio a confidential NFT launchpad called Geniish on the Oasis Network, which was built in less than 6 months. During, the development of Geniish, we also won second place in a 5-day hackathon with a confidential web3 chat called Momentum which uses Oasis' Sapphire ParaTime. Finally, we are developing VAULT3, a token-gating solution that allows creators and projects to easily distribute exclusive content to their communities using existing Cardano native assets and wallets as access keys.

Cardano SPOs and builders

Furthermore, Vito Melchionna and Carolina Isler (LaPetiteADA) are the SPOs of GranADA Pool, and they are also active members of the Climate Neutral Cardano Alliance. In collaboration with the Tetikasa Ala NGO, this alliance of SPOs created the CNC Ala. Which is a permaculture project in Madagascar planting 100k trees to offset Cardano's CO2 emissions, while improving the food security of local communities. This project was funded with donations (25% of each SPO's rewards) via the world's first impact staking ISPO in collaboration with NEWM, Yummi Universe, Cardano Proxies, Earth Natives, Mada's Lemurs, and DripDropz.

Steps and processes

We will implement the SCRUM framework for the agile development of the product. By defining 3-week sprints with set goals, features, and working time, we can easily keep track of the progress and fund distribution to successfully deliver Lumina Protocol within the expected period. We aim to sync our project management process with Catalyst's committee to provide full transparency on the development and to keep track of the invested funds.

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

Development started

• Project Infrastructure
• Codebase setup
• CI/CD
• Automatic testing

>Timeline: 1 month

>Acceptance Criteria: Infrastructure setup and available on a private GitHub repo.

>Budget: ₳33,400

Smart Contracts Liquidity Pools (lending)

• Create liquidity pool smart contracts for deposits, withdraws, fee structure, and under-collateralized flash loans (one-transaction liquidity).

>Timeline: 1 month

>Acceptance Criteria: It’s possible to deploy instances and interact with the smart contracts to deposits, withdraws, define fee structure, and request an under-collateralized borrow transaction and pay it back with fees before the block is closed and validated.

>Budget: ₳51,800

Lending Dapp

• Web application with wallet connection (CIP-30)
• Viewing/Creating liquidity pools
• Deposit liquidity
• Withdrawing liquidity
• Collecting earned interest

>Timeline: 2 months

>Acceptance Criteria: Users can view, create, and interact (deposit, withdraw, and collect fees) with liquidity pools to earn interest on their tokens.

>Budget: ₳45,700

Beta Release and refinements

• Deployment of smart contracts
• Releasing beta version of dapp
• Bug fixing and refinements
• Public release

>Timeline: 1 month

>Budget: ₳19,100

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

Aaron Schmid: Co-Founder

Roles: Full stack development, UI/UX design, team lead.

Bio: Aaron Schmid is a brilliant data scientist and a smart contract developer. Before founding the VAULT3, he has been working as CTO for a Swiss MedTech solution. Aaron will be key for our product development.

Vito Melchionna: Co-Founder

Roles: Full Stack Development, UI/UX design, content creation, sales.

Bio: Vito is a polyglot, co-SPO of GranADA pool, and a full-stack developer with more than 7 years of experience. After co-founding VAULT3, a token-gating solution, he's ready to take Cardano’s DeFi to the next level.

Carolina Isler: Co-Founder

Roles: Marketing strategy, community management, content creation, PR (partnerships and sales).

Bio: Carolina (a.k.a. LaPetiteADA) is a well-known #Cardano influencer and co-SPO of GranADA pool. She is an incredibly talented content creator and a self-taught community manager and marketing strategist with 2 years of experience. Carolina has a consolidated community and valuable network in the ecosystem, and she will ensure that everyone in the ecosystem knows about Takt Protocol while securing strategic partnerships.

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

Milestone 1:

• Development ₳33,400 (about 150 hours of work)

Milestone 2:

• Development ₳51,800 (about 160 hours of work)

Milestone 3:

• Development ₳45,700 (about 250 hours of work)

Final Milestone:

• Development ₳19,100 (about 160 hours of work)

Notice: All ADA prices are calculated from EUR with a ₳ price of 0.30€ as a worst case. The exact hours and calculations can be seen in our budget sheet below. Any budget surplus due to speculative price actions would gladly be returned to the Catalyst fund as soon as the final milestone is delivered.

Get access to our detailed budget plan:

🔗 Google Drive

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

Takt protocol is the missing piece of Cardano's DeFi, as it will unlock use cases for arbitrage and automated testing in the ecosystem.

We are a highly skilled and seasoned team with more than 10 years of joined experience. Furthermore, we studied software engineering in Swiss technical universities.

Since the entire team is based in Zurich, Switzerland. We estimated our costs based on average software developer (outsourced freelancer) salaries in Europe: €65.- per hour, and €90.- for a smart contract engineer.

We also considered the risk of a 15% fall in ADA prices in the budget.