Delana - The First Factoring Platform in Cardano (RealFi)

[GENERAL] Name and surname of main applicant

Roberto Intriago

[GENERAL] Email address of main applicant

rob@delana.io

Additional applicants

Ilan Melendez

Fernando Ontiveros

Alejandro Rodriguez

Douglas Montero

[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] 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] If NO, please describe which outputs are not going to be open source. If YES, please write “Project will be fully open source.”

In line with Blockchain philosophy, we are committed to the principles of collaborative development and transparency. As such, all elements of the Delana project that directly interact with the Cardano network, including our smart contracts, will be open source. This reflects our commitment to give back to the Cardano community and contribute to its ongoing growth.

However, we must also consider the unique requirements and challenges of running a platform like Delana. With that in mind, there are certain elements of our project that won't be open-source for specific reasons:

• Backend Infrastructure: This involves our custom databases, servers, and data-processing systems that form the backbone of Delana. Open-sourcing these components could risk exposure of sensitive data, potentially compromising the security and privacy of our users.
• Business Algorithms & Logic: The services and core features of Delana are driven by our unique business models and proprietary algorithms. These provide us with a competitive edge, and making them open-source could offer our competitors an opportunity to mirror our business model, threatening the platform's potential for profitability and growth.

[METADATA] Category of Proposal

RealFi

[METADATA] SDG rating

SDG goals

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

SDG subgoals

• Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
• Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labor-intensive sectors.
• Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services.
• Improve progressively, through 2030, global resource efficiency in consumption and production and endeavor to decouple economic growth from environmental degradation, in accordance with the 10‑Year Framework of Programmes on Sustainable Consumption and Production, with developed countries taking the lead.
• By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value
• Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment.

Key Performance Indicator (KPI):

• Level of national compliance with labour rights (freedom of association and collective bargaining) based on International Labour Organization (ILO) textual sources and national legislation, by sex and migrant status.
• Average hourly earnings of employees, by sex, age, occupation and persons with disabilities.
• Proportion of informal employment in total employment, by sector and sex.

[IMPACT] Please describe your proposed solution.

Imagine being a small business in a developing country, where the financial landscape is challenging. Despite Micro, Small & Medium Enterprises (MSMEs) making up 99% of businesses, contributing significantly to employment and GDP, they receive less than 15% of the credit allocated to companies [1]. Traditional invoice factoring, a potential lifeline, is slow, inefficient, and costly, with extensive paperwork, high fees, and long payment cycles that stifle growth. It's also often inaccessible to startups and smaller enterprises without strong credit histories. Fraud is another concern, with activities like invoice duplication and falsification of documents increasing risks and costs. Lastly, the lack of transparency in pricing, terms, and conditions adds to the confusion and difficulty for MSMEs trying to manage their cash flow and financial obligations. It's a tough road that many businesses navigate daily [2].

Delana is a breath of fresh air in the invoice factoring industry, offering a decentralized platform built on the Cardano blockchain that directly addresses the challenges MSMEs face. It's a marketplace where MSMEs, customers, and investors meet, enabling companies to sell their invoices at a discount for immediate payment, thus boosting their working capital management. The platform simplifies the factoring process, reduces risks and enhances trust between parties. Delana’s ecosystem will have 3 main actors that will get different benefits from interacting with the platform:

• Benefits for MSMEs
• Increase your cash flow: Get your invoices financed quickly with low rates.
• Worldwide access to funds: No borders to get liquidity. Marketplace with global access around the world.
• Easy to use: Get funding almost real-time with their sales as collateral.
• Benefits for Investors
• Yield: Provide liquidity and get a high yield with low-risk in return
• Transparency: Transaction details are transparent and easily accessible to all parties involved.
• Minimize associated risks to payments and fraud
• Automation: Get your investment paid on time by automated transactions.
• Benefits for Companies Buying
• Reduce operational costs and implicit control on payments to providers/suppliers.
• Rewards in the form of token/discount for on-time payments.
• Payment automation.

Our Platform

In the steps below, the numbers are shown as an example:

1. Purchase: Buyer orders $5000 worth goods from the seller.
2. Invoice: Seller delivers goods, issues $5000 invoice due in 90 days.
3. Tokenization: Seller uploads the invoice to Delana, discounts it to $4900 for immediate payment.
4. Approval: Buyer confirms the invoice on Delana.
5. Investment: Investors on Delana collectively fund the $4900.
6. Payment: Seller receives $4900 instantly, improving their cash flow.
7. Invoice Due: After 90 days, buyer pays the full $5000 to Delana.
8. Return: Investors receive their initial investment plus interest (~$5000 = $4900 + ~8% APY)

Components

Delana's platform is built on several core components:

• Decentralized Ledger: The foundation of the Delana platform, the decentralized ledger securely stores token ownership and transaction data, ensuring the immutability and transparency of all records.
• Tokenized Invoices: Delana utilizes tokenization to represent each invoice as a unique digital asset on the platform. These tokenized invoices contain essential information, such as the invoice amount, due date, seller and buyer details. Tokenization simplifies the trading of invoices, enabling seamless transactions and reducing the potential for disputes and frauds.
• Smart Contracts: The platform employs smart contracts to automate various aspects of the invoice factoring process, such as payments, collateral management, and dispute resolution.
• Historical Record: Delana maintains a comprehensive historical record that tracks the performance of every participant on the platform, including their transaction history, repayment rates, and risk profiles. This information is crucial for assessing the creditworthiness of borrowers and payers, as well as for determining appropriate discount rates for invoices.
• Delana Protocol: The Delana Protocol serves as the backbone of the platform, connecting suppliers of investment assets with demands of liquidity. By matching investors with suitable investment opportunities and facilitating the efficient flow of capital, the protocol ensures that MSMEs can access the funds they need to sustain and grow their businesses.

Smart Contract Development

For the development of our smart contracts, the majority of our focus will be on using Marlowe, using toolsets designed specifically for financial contracts on Cardano. Marlowe offers us a high-level, intuitive way of constructing contracts that ensure transparency, security, and efficiency, making it a perfect fit for our invoice financing platform.

However, while Marlowe is great for most of our needs, there may be specific features and exceptions in our design that necessitate the use of a more flexible and general-purpose language. For these, we'll be using Plutus. Our team has extensive experience and expertise with Plutus from working on IOG projects, so we're well equipped to handle any complexities that arise.

Marketplace

The Delana marketplace serves as a central hub for investors to access a wide range of tokenized invoice investment opportunities. It offers a user-friendly interface and provides detailed information about each opportunity, such as the Company Buyer's profile, payment record, feedback from other investors, transaction volume, suggested interest rate and invoice details. This wealth of information empowers investors to make well-informed decisions and maximize their returns while ensuring secure, traceable, and tamper-proof transactions through blockchain technology.

Catering to both institutional and individual investors, the Delana marketplace democratizes access to investment opportunities, fostering financial inclusion and allowing more people to benefit from the growing invoice factoring market. This feature contributes to the overall economic growth of the region and enhances investor confidence in the Delana ecosystem.

Payments

The platform will utilize a stablecoin available in Cardano (TBD; e.g. DJED or iUSD) for loans to MSMEs, return payments for investors, and fees. Payers will also use this stablecoin for their invoice payments. This approach ensures stability and mitigates the risks associated with ADA price volatility.

--While out of the scope of this proposal, in the long term Delana has plans to explore the introduction of its own utility token as a means of incentivizing positive behavior within the ecosystem's operations.--

Use Case Examples

1. A company categorized as a MSME in the manufacturing sector has a 60-day payment term with a large buyer. The MSME buyer has a solid payment history, but the MSME needs funds immediately to cover operational costs. The MSME tokenizes its invoice on Delana, enabling investors to purchase the invoice at a discounted rate. The investor gains an attractive return, while the MSME receives immediate funding.
2. A small retailer in Latin America has a stable relationship with its supplier but struggles to manage cash flow due to delayed payments from customers. The retailer tokenizes its accounts receivable on Delana, allowing the supplier to factor these invoices and receive immediate payment. The supplier gains liquidity, while the retailer secures essential goods for its operations.
3. An investor is seeking alternative investment opportunities with attractive returns and low risk. Through Delana's platform, the investor can access a diverse pool of tokenized accounts receivable with varying risk profiles and returns. The investor can diversify their portfolio and invest in multiple invoices, spreading the risk and maximizing returns.

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

Delana will become the first Factoring solution built on the Cardano Blockchain allowing MSMEs to access credit and allowing their businesses to grow fast while investors from all over the world will get low-risk yield in return. This will mean a massive adoption of Cardano Blockchain in a real world use case with a real world mission: financial inclusion.

We want to become a worldwide platform expecting thousands of businesses to use Delana and dozens of thousands of investors to take advantage of the APY offered by the platform.

We'll also encourage developers to build solutions for real-world business applications on Cardano, strengthening the Cardano reputation, the ecosystem and encouraging innovation. In the long run, this project's success could position Cardano as a leading choice for FinTech solutions, enhancing its global reputation.

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

We'll determine our project's success through a blend of quantitative and qualitative key performance indicators, such as user acquisition, transaction volume, short-term and long-term impacts on Cardano.

Quantitative KPIs:

1. User Adoption: We aim to attract 5,000 MSMEs and 2,500 Investors within the first operational year, creating a vibrant ecosystem within Delana.
2. Transaction Volume: We aspire to stimulate a transaction volume approximating $2.5 million during our inaugural year. This target is attainable given the escalating need for unconventional financing solutions in emerging markets.

Qualitative KPIs:

1. Short-term Impact: By facilitating a high transaction volume, Delana will corroborate the utility of Cardano in real-world business applications, enhancing its applicability and relevance.
2. Long-term Impact: Delana's success could act as a magnet for additional FinTech ventures to leverage Cardano's robust capabilities. By introducing thousands of MSMEs and investors, Delana will not only expand the community but also invigorate it, contributing to Cardano's growth and fortifying its reputation in the FinTech arena.

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

We'll keep the community updated through regular reports and updates on our website, blog, and social media platforms. Here's a more organized presentation of our plans to share the results:

• Communication: We will use our website, blog, and social media platforms for regular updates. Also, participating in Cardano Town Halls, Discord, Telegram, Twitter AMA sessions and webinars will allow direct community interaction.
• Phased Rollout: We will adopt a phased approach for output spread, beginning with pilot regions and then expanding across the world.
• Reinvestment of Profits: Profits will be reinvested to improve platform features, security, and to support expansion into new markets. The team will also plan, in the long term, to develop blockchain-based solutions for urgent financial issues, ensuring Delana's success continues to enrich the Cardano ecosystem.

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

Our team brings a unique blend of industry experience and technical acumen as we have a proven track record. Our core team has worked in IOG for the last 2 years, in Fintech and Blockchain for over a decade. We have strong financial management skills, underscored by experience with previous startups. We've managed budgets effectively, ensuring optimal use of resources.

We ensure proper management of funds through:

1. Detailed Budgeting: We allocate funds comprehensively to cover all project expenses.
2. Financial Controls with Multi-Sign Wallets: We ensure strict oversight and security by using multi-signature wallets and implementing approval processes for fund transfers.
3. Regular Reporting: We provide transparent financial reports to keep stakeholders informed about project finances.
4. Open Auditing: Our financial processes are auditable by the community and external stakeholders, promoting accountability and independent verification.

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

The main goals of the projects are:

1. Implement Core Features: Finish the development and deployment of all core platform features within six months. Completion of planned milestones will mark this goal as achieved.
2. Validate Business Model: Aim to process 100 transactions and onboard 15 MSMEs and 30 investors in the first month. Success signifies our model's viability.
3. Early User Satisfaction: Achieve a Net-Promoter-Score (NPS) of 70%.

[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.

This is a detailed breakdown of our project's major milestones, the activities associated with each milestone, and the expected timeline for delivery. Each milestone will involve regular team meetings, status reports, and reviews to ensure the project is progressing as planned and any challenges are addressed promptly.

Milestones

1 - Project Kickoff & Designing

• Tasks:

1. Assemble the project team, define project scope and requirements, identify key risks and Establish communication channels.
2. Elaborate the technical architecture design.
3. Begin UI/UX design.

• Success Criteria: Project team assembled, requirements document, solution architecture outlined and initial UI/UX design drafted.
• Delivery date: Month #1

2 - Release A: Invoice registration and login modules

• Tasks:

1. Implement user registration functionality, allowing users to create new accounts.
2. Develop a secure login system, including password hashing and encryption.
3. Design and implement a user-friendly login and registration interface.
4. Implement role-based access control (RBAC) to restrict user access to specific features and functionalities.
5. Design and create a user interface for invoice registration, allowing MSMEs to input invoice details.
6. Implement validation and verification checks on invoice data to ensure accuracy and prevent fraudulent entries.
7. Store basic and non-confidential information about the invoices in smart contracts deployed in the decentralized ledger.
8. Integrate appropriate APIs or services for tokenizing invoices and listing them in the marketplace, while storing the complete invoice information in a traditional database for enhanced security and confidentiality.
9. Implement search and filtering options for invoices based on specific criteria (e.g., amount, due date, MSME name).

• Success Criteria: All components of the platform have been successfully developed and passed internal testing.
• Delivery date: Month #3

3 - Release B: Marketplace and Integration

• Tasks:

1. Integrate Decentralized Ledger for storing invoice and transaction data securely.
2. Implement smart contracts to automate the invoice factoring process and enforce terms and conditions agreed upon by the parties involved.
3. Implement mechanisms for associating tokenized invoices with relevant metadata, such as invoice details, due dates, and payment information.
4. Integrate token management functionalities, allowing users to view, transfer, and redeem tokens associated with invoice ownership.
5. Develop a system for tracking historical records of buyers and sellers, including transaction history, payment records, and dispute resolutions.
6. Implement a user interface to access and view transaction details and historical data.
7. Continuously improve the user interface (UI) and user experience (UX) based on user feedback and usability testing.
8. Optimize the UI to provide a seamless and intuitive experience for all user roles.

• Success Criteria: Marketplace is fully functional. All features successfully pass performance tests. Any identified issues, bugs, or vulnerabilities are addressed through debugging and refinement processes, ensuring a stable and reliable marketplace experience.
• Delivery date: Month #5

4 - Launch & Gathering User Feedback

• Tasks:

1. Launch the initial version of the platform.
2. Roll out marketing campaigns to onboard early users to the platform.
3. Collect their feedback, and identify areas for future enhancements.

• Success Criteria: Successful launch with positive user feedback, early users onboarded, and actionable feedback collected for future enhancements.
• Delivery date: Month #6

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

The deliverables and their metrics to track progress can be seen in the following table:

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

Considering the following:

A cost rate of 50 USD per man-hour.

Exchange rate of ADA-USD is 0.30 USD/ADA.

Milestone 1

• Resources: Solution Architect, PM and UI/UX Designer
• Estimated Man-Hours: 150 hours
• Cost: ₳ 25,000

Milestone 2

• Resources: Solution Architect, PM, QA, Developer and Blockchain Engineer
• Estimated Man-Hours: 210 hours
• Cost: ₳ 35,000

Milestone 3

• Resources: Solution Architect, PM, QA, Developer and Blockchain Engineer
• Estimated Man-Hours: 210 hours
• Cost: ₳ 35,000

Milestone 4

• Resources: PM, Marketing Specialists and Customer Support
• Estimated Man-Hours: 60 hours
• Cost: ₳ 10,000

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TOTAL = ₳ 105,000

PS: For the first phase of our project, we'll use the free startup package from Microsoft Azure, eliminating initial infrastructure or licensing costs. However, as we progress, future milestones may require upgraded resources, and we'll plan accordingly for those costs.

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

The ₳ 105,000 ($31,500) budget for our Delana project is based on a standard man-hour rate of ₳ 167 ($50), in line with industry standards for developers, architects and PMs in the sector. This cost includes project management, architecture, UI/UX design, feature development, testing, and platform launch, all performed by our highly experienced team.

Each dollar spent on Delana is an investment in the Cardano ecosystem, aiming to strengthen it by enabling MSMEs in developing countries to access funding, attracting new users and showcasing Cardano's utility. Thus, we believe the project represents excellent value for money.

Justification of the cost:

1. PM, Architecture & UI/UX Design: Our experienced team ensures maximum value per dollar spent, producing a user-friendly and efficient platform.
2. Core Features Development: Building secure and efficient systems on Cardano requires skilled blockchain engineers, thus justifying the cost.
3. Testing and QA: To launch a high-quality, bug-free platform, rigorous testing is necessary, warranting its allocation in the budget.
4. Launch & User Feedback: The marketing and support team will ensure effective platform launch and collection of crucial user feedback.

[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