CHARLI3 - Cardano integrated Side-Chain Oracle built on Substrate

[GENERAL] Name and surname of main applicant

Damon Zwarich

[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)

4

[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 propose IOG’s new partnerchains framework to build a decentralized sidechain to provide oracle services to Cardano main net, other sidechains, and UTXO based networks.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

Yes

[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.”

This project is research-based and will be driven primarily by our in-house development team.

As a company, we employ multiple contractor teams to assist us in daily operations and special projects. We may employ a senior architect to assist us in the research from one of our partner labs, these include Metalamp and Mlabs.

We are also dependent on the delivery of the partnerchains SDK from IOG to start implementation.

[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

We would ideally like to create our redesign solution completely open-sourced under the Apache license.

At a minimum, we will provide a public research report with our findings including a demo of our proof of concept for Cardano user feedback.

That said, a decentralized Oracle solution needs to prioritize data integrity and security before all else. We may choose to close source parts of the POC if we decide to invest our own funds to pursue future development.

[SOLUTION] Please describe your proposed solution.

This is a research project with an end goal deliverable of creating a bare bones proof of concept to share with the Cardano community for feedback. The goal would be to determine the demand and feasibility of this solution to build out in in the future.

Research Stage

• Where we are at now?
• Ideation stage: In the past, the Charli3 team experimented with side-chain architecture, but wanted to be as "native" as possible on Cardano... we chose to post our node values on-chain, have our aggregation happen on-chain, and to date no other solution has done this... but our current architecture can't bypass the 20 second block limitation so we've been revisiting our past research and looking towards the new IOG partnerchains to solve this problem
• Substrate best option? Our current focus is building on substrate infrastructure; the Charli3 team has been in contact with the Midnight team and members of the IOG... likewise we have team members going through the new pioneers program. We hope to learn as much as possible about using these partnerchains to build a decentralized oracle solution that integrates seamlessly with Cardano to bypass the 20 second block limitation for placing data on-chain (e.g. can projects on Cardano listen to partnerchains and pull data from there in sub-second times?)
• We also hope to incorporate Zk states, like Mina, to help the speed and interoperability of data provisions to more ecosystems.
• Assumptions:
• A side-chain with the right integration with Cardano will enable our team to build a decentralized oracle solution that bypasses the 20 second block limitation allowing DeFi protocols to request a data value and receive it in real-time / sub-second
• Guiding Research Questions:
• Will building on a side-chain solve the problem?
• Will building on an IOG partnerchain be a good fit?
• What will it take to create a proof of concept?
• What will it take to build a functioning solution?
• What infrastructure and integration layer tools are missing?
• Are there other solutions that are more feasible?
• Team:
• 2 Senior executive level architect
• Timeline:
• 24 weeks to allow sufficient time to do discovery, research, and write report(s)
• Deliverables:
• Feasibility report
• Project Plan for Proof of Concept
• Public report on findings

Proof of Concept Stage

• Development team to create a proof of concept/demo that shows it is or it isn't feasible to overcome the block limitations using a partnerchain. If it isn't feasible we will pursue a POC that showcases the pros and cons of using these side-chains to interact with Cardano
• POC/DEMO will be presented to the Cardano ecosystem as the final deliverable along with the findings from our research

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

Our team's assumption is that an independent Charli3 sidechain focused solely on Oracle data translation and transmission on an IOG partnerchain could have significant ecosystem benefits including, but not limited to the following:

• Lower Oracle data costs to the end users
• Enable faster data updates and read times via circumventing block timing limitations of main net Cardano, and focusing on our current capability of sub-second off-chain data retrieval.
• Increase ease of operability through plug-and-play SDKs
• Expand ecosystem reach and bring more awareness via the multichain approach
• Service all Cardano sidechains such as Midnight through the same network.
• service other UTXO based chains - bringing more awareness to this niche infrastructure
• The C3 token will also have more use case as it would be used for payment in a similar way to what it is currently, but more like gas and txn fees, cementing its use in an easier manner, benefitting holders and TVL for the Cardano ecosystem.

Charli3 is the only decentralized oracle solution built natively on Cardano that posts node values directly on-chain and aggregation occurs on-chain too. The benefit of doing this is auditability, transparency, and taking a fully native approach. The downside is that every transaction costs ADA rising costs for end users. A side-chain is a potential solution to drastically reduce costs. Especially, by reducing the cost of consumption (as we understand it right now there may be options to pull/listen to data on partnerchains without paying significant transaction fees).

The impact of our research will be to present to the Cardano community the benefits, limitations, feasibility, and hopefully a clear proof of concept a side-chain oracle solution.

[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?

We like to think our track record of building consistently since April 2021 speaks for itself. The ADA/USD price feed on mainnet has been live since October 2022 and up 99.99999% since then (View our flagship feed).

Our core solution passed a level 2 audit by CertiK.

It was one of the first solutions on Cardano audited by the CertiK team. Charli3 launched one of the first smart contracts after the capability was upgraded on mainnet. Our core architecture is native to Cardano and we are the first decentralized oracle solution built on Cardano.

At our peak our team consisted of 25+ team members. During the bear market, we've greatly reduced our team with intentions to scale up in 2024. The current development team consists of three core members and three contracting teams with 1-4 members each. Charli3 currently has around 15 dedicated members.

We have partners with industry leading development teams like Metalamp, Mlabs, and previously Plank.

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

Our team is currently researching partnerchains and in discussion with both Midnight and IOG team members. This project will have a delayed start after the pioneer program completes and we have sufficient information to begin the research project.

Deliverable:

• Team member assigned to research
• Research guiding questions refined and methodology decided upon
• Research timeline provided
• Research commences

Research completed with the following deliverables:

1. Feasibility of solving the block limitation problem using side-chain (yes/no/why)
2. Feasibility of using IOG partnerchain
3. Options in lieu of substrate etc.
4. Proof of concept: Full alpha layout of the architecture and components to be managed in the build this should be completed in an architecture diagram for foundational building
5. Project plan for implementing proof of concept

A single node network on the side-chain

Integration with Cardano (this could be blocked by lack of infrastructure or tooling solutions between Cardano and the IOG partnerchains)

A functioning proof of concept on the side-chain with a full report on its capabilities and limitations. If possible an integration with Cardano.

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

Charli3 team: https://charli3.io/team

• Team has since changed, but Damon Zwarich and Robert Hever are the Founders
• Project Technical lead: Deep Bhatt
• We have partners with industry leading development teams like Metalamp, Mlabs, and previously Plank.

Project Lead: Robert

Support: Metalamp and Mlabs, as needed

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

Research Stage

• Team:
• 1 Senior executive level architect (USD$150 / hr)
• Part-time (16 hours weekly)
• Timeline:
• 7 weeks to allow sufficient time to do discovery, research, and write report(s)
• Sub-Cost: USD$16,800
• Deliverables:
• Feasibility report
• Project Plan for Proof of Concept
• Public report on findings

Proof of Concept Stage

• Team:
• There is some unknown until the research report is completed how much effort it will be to create a demo / proof of concept; our best estimate is to create an absolute bare bones solution we would need 2 developers working together part-time under the lead of the architect for 18 weeks
• 2 Developers at USD$75 hourly part-time (16 hours weekly)
• 1 Architect at USD$150 for 25 hours total
• Timeline:
• 10 weeks
• Sub-Cost: USD$28,000
• Deliverables:
• Development team to create a proof of concept/demo that shows it is or it isn't feasible to overcome the block limitations using a partnerchain. If it isn't feasible we will pursue a POC that showcases the pros and cons of using these side-chains to interact with Cardano
• POC/DEMO will be presented to the Cardano ecosystem as the final deliverable along with the findings from our research

TOTAL COST: USD$44,800 (around 100k ADA at current prices)

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

by reducing operational fees, eliminating most transaction fees necessary, supplying SDKs for ease of integration, and expanding to other exosystems, The side chain will bring further operation to cardano Dapps, partner side chains, and other ecosystems.

This not only lowers time spend on oracle usage, but increases time spent on further ecosystem and blockchain innovation, ultimately building larger value for Cardano

[IMPORTANT NOTE] The Applicant agrees to Fund 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