Last updated 2 months ago
Cardano native tokens’ usability as regulated tokens such as fractionalized tokens or stablecoins is limited. Those often require blacklisting of addresses or other on-transfer functionalities.
This is the total amount allocated to Cardano Native Token Extension: Programmable Tokens. 2 out of 5 milestones are completed.
1/5
Research on Programmable Tokens
Cost: ₳ 60,000
Delivery: Month 2 - May 2024
2/5
Exploring Wallet and dApp Interactions
Cost: ₳ 30,000
Delivery: Month 3 - Jun 2024
3/5
First Proof of Concept for Common Programmable Tokens
Cost: ₳ 30,000
Delivery: Month 4 - Jul 2024
4/5
More Proofs of Concept for Common Programmable Tokens
Cost: ₳ 50,000
Delivery: Month 6 - Sep 2024
5/5
Final Assessment and Future Roadmap
Cost: ₳ 30,000
Delivery: Month 7 - Oct 2024
NB: Monthly reporting was deprecated from January 2024 and replaced fully by the Milestones Program framework. Learn more here
The rest of the Vacuumlabs Auditing team.
We will research and showcase an extension of Cardano native tokens with programmable on-transfer functionalities, introducing exciting new possibilities to the ecosystem.
No dependencies.
All the outputs, including the design document and the proofs of concept will be open sourced on Github under the open-source GPL-3.0 license.
In short:
Our proposal aims to enhance the Cardano blockchain by introducing programmable features to its native tokens, similar to those found in Ethereum's popular ERC-20 tokens. In simple terms, we're working to make Cardano's tokens smarter and more flexible, allowing for features like blocking certain addresses or adding fees to transfers without changing their core nature. This innovation will not only keep the tokens user-friendly but also open up new possibilities for how they can be used, benefiting everyone in the Cardano community. Our project will demonstrate these enhancements through practical examples.
Our enhancement of Cardano's native tokens will benefit the entire community by offering a new foundation for innovation. It allows for the development of new types of applications, enriching the ecosystem and benefiting everyone, from developers (they have a foundation to build upon) to long-term ADA holders (ecosystem progress) and SPOs (overall increase in the ecosystem attractiveness).
Longer more technical version:
Cardano tokens are unique by being a direct part of the user's UTxOs. They enjoy native support within the Cardano ledger. This contrasts with Ethereum's ERC-20 tokens which are essentially smart contracts that internally track balances. While this approach has its drawbacks, it also provides the significant advantage of programmability. Any smart contract logic can be executed during token transfers, a feature extensively used within the Ethereum ecosystem.
Currently, integrating the functionalities of Ethereum's ERC-20 tokens into Cardano's native tokens presents a significant challenge. These functionalities are vital for compliance and sophisticated token management. It includes capabilities such as blacklisting specific addresses, enforcing mandatory fees on token transfers, the ability to freeze tokens during critical situations, and much more.
Our approach does not rely on locking tokens into smart contracts. We believe that would fundamentally alter their nature and be impractical. Instead, we propose a solution that aligns closely with the philosophy behind Cardano's native tokens and does not compromise interoperability with decentralized applications (dApps).
Our aim is to thoroughly explore and document this concept. The solution will not necessitate modifications of the ledger. It will include the development of three distinct proof-of-concept sample implementations. These will illustrate our findings and demonstrate how they can be applied.
The potential this brings to Cardano is substantial. By adopting the principles outlined in our proposal, Cardano's native tokens could leverage the advanced capabilities currently seen in Ethereum’s ERC-20 tokens. This advancement is not just theoretical; it holds the promise of accelerating and enabling a range of innovative projects within the Cardano ecosystem.
The primary impact of our project is to bridge the capabilities of Ethereum's world with Cardano's native tokens, significantly enhancing their utility. This includes not just compliance-related features but also opens up possibilities for NFTs with integrated royalties, deflationary tokens, automatic charitable donations, advanced security measures like blacklisting known scammers, allowing only whitelisted users to own certain assets, advanced token recovery options, time-based loyalty and reward systems and many more. Our proposal will explore functionalities like transfer fees, maintaining a blacklist of addresses and token freezing in case of an emergency.
These features are crucial for projects that currently face difficulties in controlling token transfers due to compliance or operational requirements, and those that are completely infeasible without them. Our proposal aims to overcome this challenge by exploring and presenting viable solutions. This initiative draws in projects that would find it infeasible to integrate into our ecosystem under current conditions.
The ultimate goal of this proposal is to enrich the Cardano community by broadening its scope, capabilities and audience. As for measuring our project's success, we will focus on the level of interest and discussion it generates within the community. Engagement and enthusiasm about this topic will serve as key indicators. Our team is open to engaging with interested parties and helping any company that seeks to explore these new possibilities. Updates and insights will be shared through our social media channels, ensuring that the community stays informed and involved in this groundbreaking journey.
As seasoned auditors of smart contracts on Cardano, we possess extensive experience with audits and design reviews conducted in Plutus, Plutarch, and Aiken languages. We have already identified various vulnerabilities, viewable at https://github.com/vacuumlabs/audits. Additionally, we are launching a series of blogs on common Cardano vulnerabilities, accessible at https://medium.com/@vacuumlabs_auditing.
Furthermore, thanks to Catalyst 10, we are developing the Capture the Flag game. The ongoing progress and the tasks already completed can be found at the milestone module or in the public repository.
Drawing from our expertise, we are confident in our ability to create a well thought-through and useful programmable tokens' design.
Milestone 1: Research on Programmable Tokens
Milestone 2: Exploring Wallet and dApp Interactions
Milestone 3: First Proof of Concept for Common Programmable Tokens
Milestone 4: More Proofs of Concept for Common Programmable Tokens
Milestone 5: Final Assessment and Future Roadmap
Vacuumlabs Smart Contract Auditing Team: website
Michal Porubský is the Lead Smart Contract Auditor at Vacuumlabs. As a founding member of the smart contract auditing and consultancy division, he specializes in providing expert consultation to find the optimal design of decentralized applications and conduct comprehensive Cardano smart contract audits to ensure their robustness and security. He previously worked for WingRiders, NuFi and in the traditional finance world. During the high school he competed at several national and international competitions where he won several regional and national ones. Later at the university he helped to organize and prepare tasks for similar programming competitions.
Michal Sládeček is a Smart Contract Auditor, a security consultant and an ethical hacker with a very wide range of experience ranging from web exploitation to reverse engineering and cryptography. He is a holder of the OSCP certificate with experience in programming C++, C, Javascript and Python code, and a good theoretical background in algorithms. One of his biggest accomplishments is a bronze medal from the International Olympiad in Informatics (IOI). During his university studies, he also helped organize national competition in programming.
Michal Anderle, also a Smart Contract Auditor at Vacuumlabs, honed his problem-solving skills through competitive programming during his studies. His achievements include a bronze medal from the IOI, participation in the ACM ICPC finals, and organizing programming competitions. Currently, he teaches an algorithmic course at a university. In his role, he employs these skills to identify potential vulnerabilities, enhancing the efficiency and security of his clients' products.
Research and Design Document (2 months): 60,000 ₳
Comprehensive research and initial Design documentation.
Wallet and dApp Interaction Research (1 month): 30,000 ₳
Detailed analysis and expansion of the Design document.
First Proof of Concept Development (1 months): 30,000 ₳
Creation and testing of the first smart contract proof of concept.
Two More Proofs of Concept Development (2 months): 60,000 ₳
Creation and testing of two more smart contract proofs of concept.
Final Analysis and Roadmap (1 month): 20,000 ₳
Final project next steps’ research, reporting, and video production.
Therefore, the total budget is 200,000 ₳.
The work will be conducted by the Vacuumlabs Auditing team, leveraging their deep understanding of the underlying primitives essential for achieving high-quality results in this project.
This proposal offers significant value to the Cardano ecosystem by introducing functionalities from Ethereum which have already demonstrated their extensive utilities such as collecting transaction fees on-transfer, implementing deflationary mechanisms, charitable donations, whitelist/blacklist functionalities and much more. These are essential for i.e. the development and management of regulated fractionalized assets within Cardano.
The proposal can be thought of as an investment in the future capabilities of Cardano’s ecosystem. It opens up opportunities for new types of projects that were not possible before. Everyone will benefit from this progress.
A critical component of our proposal is the formulation of a comprehensive design. To achieve this, we are utilizing the expertise of our smart contract auditors, ensuring the highest quality at a cost-effective rate. This strategic use of resources underscores the proposal's value for money, positioning it as an efficient investment in the future capabilities of Cardano’s ecosystem.