Treasury and Catalyst Withdrawals: Analyzing their Impact on ADA Market Price

[GENERAL] Name and surname of main applicant

Dominik Tilman

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

Individual

[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)

We'll create a dashboard to track ADA price volatility, liquidity and market trends after Catalyst and treasury withdrawals, providing insights to reduce volatility and improve disbursement strategies

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

All project outputs, including developed software and documentation, will be fully open source under the Apache 2.0 or MIT License.

[METADATA] Horizons

Governance

[SOLUTION] Please describe your proposed solution

=> Overview:

We propose developing a dashboard to monitor the effects of Catalyst fund distributions and treasury withdrawals on ADA’s price, liquidity, and market behavior. The goal is to create a tool that collects and analyzes on-chain data, market trends and recipient behavior post-distribution, offering insights that can help minimize price volatility and stabilize the market. This dashboard will provide key metrics and visualizations to assist the Cardano community in making informed and better decisions about fund allocations and withdrawals.

=> How we perceive the problem:

With the beginning of the Voltaire era, ADA withdrawals from the treasury, including those of Catalyst, present a potential risk to market stability due to their volume. Such large withdrawals could cause significant price fluctuations and liquidity issues that affect the long-term value of ADA. Currently, there is insufficient data and analysis on these effects, leaving the Cardano ecosystem vulnerable to volatility. Our solution fills this gap by providing a detailed analysis of the impact of these large transactions on the ADA market.

=> Our approach:

We will develop a dashboard that pulls data from various sources, including on-chain transactions, market price feeds and liquidity pools. This tool will track market behaviour during and after significant ADA withdrawals, such as Catalyst fund distributions or treasury allocations. It will focus on key indicators such as price volatility, liquidity shifts and changes in the trading behaviour of fund recipients.

=> The dashboard will feature:

• Real-Time Tracking: It will monitor ADA price movements and liquidity fluctuations in real-time during key withdrawal periods.
• Data Visualization: Visual charts and graphs will illustrate correlations between fund distributions and market movements, enabling users to easily understand trends.
• Market Impact Metrics: The tool will calculate and display key metrics that reflect the market impact of Catalyst and treasury disbursements, such as:
• Volatility index
• Liquidity changes
• Trading Behavior

=> How we'll engage with the community:

• Those requesting withdrawals: They can use insights to better plan the timing and amount of ADA withdrawals, reducing the risk of market disruption.
• ADA holders and investors: They would benefit from real-time data on the potential market impact of large ADA movements, enabling more informed decision-making.

=> How we'll demonstrate our impact:

• Developing a functional prototype that tracks ADA price and liquidity trends following Catalyst and treasury withdrawals.
• Validating the tool using data from past Catalyst rounds to ensure accuracy and reliability.
• Gather feedback and refine the dashboard to ensure it meets the needs of the community.
• Providing actionable recommendations on how fund disbursement processes can be optimized to mitigate market volatility and improve ADA’s long-term stability.

=> What makes our proposal unique and important:

Our solution is the first of its kind, focusing on the analysis of ADA volatility and market behaviour specifically associated with large-scale treasury withdrawals, such as Catalyst Fund distributions. By developing a tool for this purpose, we are pioneering a data-driven approach to optimising ADA distribution strategies and minimising market risk. No other tool within the ecosystem currently offers such comprehensive real-time insight into the impact of treasury withdrawals.

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

=> Positive impact on the Wider Cardano Community:

This dashboard could improve market stability within the Cardano ecosystem by offering insights into how large ADA distributions, such as Catalyst and Treasury withdrawals, affect ADA’s price and liquidity. This will help:

• Reduce Market Volatility: Those who request to withdrawal funs can better time and plan it, leading to fewer price swings.
• Improve confidence of ADA holders: ADA holders and investors will have access to real-time data, helping them make more informed decisions and reducing uncertainty.
• Improve Treasury Management: The community will be able optimize disbursements, ensuring innovation like through Catalyst while maintaining market stability.

=> How we'll measure our impact:

1. Quantitative Metrics:

• On-chain Metric: ADA Volatility
• Metric: Track changes in ADA’s price volatility before, during, and after Catalyst and Treasury withdrawals.
• Goal: Reduce volatility by providing data that allows for more informed withdrawal timing.
• User Adoption:
• Metric: Number of users (dashboard visitors)
• Goal: Achieve 2,000 active users in 6 months.

2. Qualitative Feedback:

• Community Feedback:
• Metric: Collect qualitative feedback from the community about the tool’s usability and utility in reducing volatility or helping decision-making around withdrawals.
• Goal: Achieve a satisfaction rate of 80% or higher based on user feedback surveys

=> Sharing Outputs:

• Open-Source: The dashboard will be shared as an open-source tool, accessible to the entire Cardano community.
• Educational Resources: We will provide guides and tutorials to help users understand and benefit from the tool.

[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?

=> Previous Funding and Experience:

TrustLevel and Dominik Tilman have a proven track record of delivering successful Catalyst-funded projects since Fund 3. Over several Catalyst rounds, we’ve be awarded with complex blockchain project such as Aiken Smart Contract Library in F11 and zero-knowledge protocols in F12.

=> Team Capabilities:

1. Technical expertise: We are experts in Cardano's blockchain, smart contracts and data analysis, and we ensure that we can develop a useful tool to monitor ADA volatility.
2. Catalyst Experience: Our experience in implementing funded projects with strong community engagement demonstrates our ability to manage resources and meet deadlines.
3. Community engagement: We have strong connections within the Cardano ecosystem and work will continue to work with relevant teams to ensure adoption and value creation of our projects

=> Active Ecosystem Collaborations:

We are currently engaged in several collaborations across the Cardano ecosystem:

• SidanLab and MeshJS: We are collaborating on smart contract development, particularly within the open-source Aiken Smart Contract Library, a project funded in Fund 11.
• LidoNation: Working on reputation scores for Catalyst reviewers, where we focus on analyzing user behavior and building models to assess reputation and trustworthiness in the Cardano Catalyst ecosystem.
• Photrek: Involved in the development of a community tool for voting calculations and community engagement in SingularityNet, building and testing decentralized voting mechanisms.

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

=> Architecture and System Design

Goal:

Develop the tool architecture to monitor the effects of Catalyst fund distributions and treasury withdrawals on ADA’s price, liquidity, and market behavior.

Deliverables:

• System architecture document outlining the data sources and tools for data collection and analysis
• Dashboard interface design for data visualization and user interaction
• Definition of market metrics, including price volatility, liquidity changes, and recipient trading behavior post-distribution.

Acceptance Criteria:

• The architecture must clearly define methods for data collection from on-chain sources, market APIs, and historical Catalyst data.
• The design must cover both technical components (backend infrastructure, APIs, data flows) and user interaction elements (dashboard layout and visualization).

Evidence:

• A published system design and architecture document available on Github.

=> Data Collection and Tool Development

Goal:

Develop the tools to gather on-chain data, track market trends and analyze the impact of Catalyst fund distributions on ADA’s market behavior.

Deliverables:

• Data collection tool that retrieves historical Catalyst distribution data, ADA price trends, liquidity changes, and relevant market behaviors.
• Algorithms to analyze correlations between Catalyst distributions and market behavior (e.g price volatility and liquidity shifts).
• Prototype dashboard that visualizes key metrics, including price trends, liquidity fluctuations, and market reactions in real time.

Acceptance Criteria:

• The tool must collect and visualize Catalyst fund distribution data in correlation with ADA price movements and market trends.
• Visualizations must display insights from past Catalyst distributions, showing clear market reactions such as price volatility and liquidity shifts.

Evidence:

• Published code for the data collection and visualization tool on Github for community access.
• A demo video showcasing the tool’s functionality in tracking and analyzing Catalyst fund distributions and ADA market data.

=> User Testing and Refinement

Goal:

Engage with the community to test the prototype, gather feedback and refine the tool.

Deliverables:

• User testing to validate the prototype’s accuracy, usability and relevance.
• Refinements to data collection and visualizations based on user feedback.
• Final version of the dashboard.

Acceptance Criteria:

• The tool must deliver insights, validated through testing with the community.

Evidence:

• Updated code and user feedback documentation published on Github.
• Reports summarizing user feedback and detailing the improvements made to the tool based on that feedback.

Project Close-Out Report

Goal: Summarize the project’s achievements and future development opportunities.

Deliverable:

• Close-out report
• Final documentation for users

Acceptance Criteria:

• The report must cover all milestones and provide a clear path for future development.

• All code, documentation and feedback must be publicly accessible.

Evidence:

• Published project close-out report and documentation on Github.

• All relevant code and deliverables available publicly.

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

TrustLevel, founded by Dominik Tilman in 2023, develops tools and protocols to measure the reliability of data, information and reputation in decentralized ecosystems. Supported by grants from Cardano, SingularityNet and Arbitrum, our main focus is on creating a Decentralized Reputation Layer (DRL). Our tools, including the Voting Calculation for DeepFunding and a ZK Voting Protocol, enable privacy-preserving reputation management across governance, DeFi, and cross-chain applications. All outputs are open-source.

TrustLevel Core Team: 

• Dominik Tilman: Project and Technical Lead, Dominik has been actively engaged since Fund 3 in Project Catalyst and involved in multiple funded projects. All proposals are either successfully delivered or on track. He is founder of TrustLevel.io and has 15+ years experience in innovation management and company building.
• Roman Preuss: Full-Stack Developer
• Josch Rossa: Full-stack developer and LLMs
• Alex Ramalho: Full Stack AI Developer
• Sergey K: Blockchain Developer
• Dani Kalman: Data Analytics

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

Budget Breakdown: 150,000 ADA Total

We have calculated with an hourly rate of 75 USD (at 1 ADA = 0,4 USD).

Milestone 1: Architecture and System Design – 60,000 ADA

• System design and architecture.
• Identification of key metrics for tracking and visualization.

Milestone 2: Data Collection and Tool Development – 60,000 ADA

• Development of 5the tools to collect on-chain and market data.
• Building a dashboard for visualizing the impact of Catalyst distributions on ADA’s price and liquidity.

Milestone 3: User Testing and Refinement – 20,000 ADA

• Conducting user testing with the community.
• Refining the tool based on feedback.

Milestone 4: Project Close-Out Report – 10,000 ADA

• Final report summarizing the project and future recommendations.
• Publication of all code, data, and deliverables.

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

Strategic Investment:

This tool will help reduce market volatility from large ADA withdrawals, leading to better treasury management and a more stable market. This stability is important for attracting investors and growing confidence in Cardano.

Expertise and Complexity:

Our budget covers fair pay for experts in blockchain and data analysis. These roles need a strong understanding of Cardano and financial markets to ensure we build a high-quality tool.

Risk Mitigation:

We accept the risk of changes in ADA’s price during the project. If ADA’s value drops, we’ll handle the loss. If its value rises, we’ll use the extra funds to add more to the project without asking for more money.