Regulated and Permissioned DeFi with Sundae and Kora Labs

[GENERAL] Name and surname of main applicant

Daniel Gonzalez

[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)

2

[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 will leverage the existing ADA Handle social layer and the new Sundae v3 contracts to enable wider diversity in the permissioned capabilities of Cardano DeFi.

[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

Apache License 2.0.

The code will be available on GitHub.

[SOLUTION] Please describe your proposed solution.

Our proposed solution leverages the strength of our two projects within the ecosystem. This proposal specifically focuses on concretely defining the problem space, and developing a specification and proof of concept for our solution. We may seek funding in future catalyst rounds for the full scope of developing this solution.

Kora Labs, through ADA Handles, has built a widely adopted and dead-simple social layer. With the recent work on Personalization, custom data can be attached to your ADA Handle. While this Personalization capability has to date been used to express yourself through your ADA Handle, the scope and roadmap for the feature has always been much wider. For example, with this project, this project will seek to define a standard for associating your ADA handle with, in a secure and private way, the types of information required by current financial laws (such as global Know-Your-Customer and Countering of Terrorism Financing information).

The first key components of our solution are to extend the ADA Handle personalization protocol to integrate existing DID standards, like those championed by Atala Prism, IAMX, and Proofspace. This will create a dead-simple, widespread, and easy to use DID platform for the Cardano ecosystem.

In addition, Sundae Labs, through SundaeSwap, has built a battle-hardened and widely deployed DeFi exchange protocol; with their upcoming v3 contracts, they will extend both the scalability and feature set of that protocol.

The second key component of our proposal is to leverage the ADA Handle DID capabilities to enable permissioned financial products within the SundaeSwap Protocol. Large liquidity providers will be able to add a tailored compliance layer as they create a pool, creating confidence that their liquidity is used in accordance with any laws applicable to their business, while also providing access to the broader Cardano user base.

This also opens the door for a number of other use cases, from transactions with a real-world component (such as commodities transactions), to transactions with community centric pools where projects can offer members of their community a discount on trades, just to name a few.

Both of these will result in open source artifacts that the broader Cardano community can learn from and integrate into their own protocols. That includes code for DID resolution from an ADA Handle, and smart contract code to integrate with one or more compliance oracles.

We recognize and champion the idea that the future of finance needs to be permissionless first: we’ve both spent nearly 3 years building exactly that. This proposal doesn’t replace that, but rather seeks to complement it by expanding in the spectrum of available products, allowing a more diverse set of financial activity within the Cardano ecosystem.

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

The full scope of this project will serve a number of goals:

• Create new financial processes and instruments for the Cardano community
• Attract previously hesitant and untapped liquidity
• Enable access and exposure to new or previously inaccessible markets
• Motivate more real-world touchpoints for Cardano DeFi

This proposal specifically will:

• Concretely define the problem, constraints, legal framework needed to bring this to market
• Concretely specify a solution that satisfies the above
• Build a low fidelity prototype to get feedback from the community

Impact Measurement:

• Growth of ADA Handle and SundaeSwap usage
• Adoption of the ADA Handle DIDs in other protocols
• Growth of Cardano DeFi ecosystem and liquidity
• New real world financial services built on Cardano

[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?

Our team combines Sundae Labs' expertise in decentralized finance and Kora Labs' innovative ADA Handle technology. We have a proven track record in blockchain technology and project management. Feasibility will be validated through iterative development, community feedback, and rigorous testing phases.

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

DID specification for ADA Handles

- Outputs:

  - A detailed specification for how a DID (utilizing existing standards) may be attached to an ADA Handle

  - A detailed specification for how a service can resolve that DID, given an ADA Handle

  - A CIP extending CIP-30 with DID request capabilities

- Acceptance Criteria:

 - The specifications above are written, open sourced, and shared with the community

- Evidence of Completion:

 - A link to the github repo where the specifications are defined

Sundae protocol proof of concept for permissioned pool

- Outputs:

  - A detailed specification of how the Sundae v3 “permissioned trading pool” will work

  - A testnet proof-of-concept for a Sundae v3 trading pool that requires a signature from a compliance oracle

- Acceptance Criteria: 

  - The specification above adequately describes how such a pool will work

  - The proof of concept is accessible on the preview or preprod testnet, using a mock compliance oracle as a proof of concept

- Evidence of Completion: 

  - A link to the specification

  - A link to the testnet version of the protocol

Final Milestone: Project Completion Report and Video

- Outputs: 

  - Comprehensive project completion report, detailing the project journey, achievements, challenges, and learnings.

  - Promotional and educational video showcasing the project's features and benefits.

- Acceptance Criteria: 

  - Community acceptance and positive feedback on the report and video.

  - Increased user engagement on the platform as a result of the report and video.

- Evidence of Completion: 

  - Published project completion report and video on relevant platforms.

  - Community feedback and engagement metrics post-release of the report and video.

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

• Project Manager
• Lead Developer (Sundae Labs)
• Lead Developer (Kora Labs)
• Blockchain Integration Specialist
• Community Manager
• Marketing and Outreach Coordinator

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

Market Rates

• Development: $30,000
• Kora Labs developer: $15,000
• Sundae Labs developer: $15,000
• Project Management: $5,000
• Documentation and Reporting: $5,000
• Total: $40,000

Discounted Catalyst Ask

• Development: $20,000
• Kora Labs developer: $10,000
• Sundae Labs developer: $10,000
• Project Management: $5,000
• Documentation and Reporting: $5,000
• Total: $30,000

Using a conservative $0.30 per ADA, this is 100,000 ADA total

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

The full project's cost represents value for money by:

• Creating entirely new primitives for a regulated DeFi ecosystem
• Fertilizing the soil for massive new Liquidity on Cardano
• Conversely, enabling access for the average DeFi user to markets they would be excluded from in Classical Finance 

This proposals cost represents value for money by:

• Clearly defining the Kora handle DID standard and roadmap
• Demonstrating feasibility of the Sundae v3 contracts extensibility for this purpose
• Beginning standardization of “DID wallet” capabilities 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