Djed Osiris Decentralized Stablecoin on Cardano's EVM Sidechain Milkomeda

[GENERAL] Name and surname of main applicant

Dr. Bruno Woltzenlogel Paleo (a.k.a. Zahnentferner)

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

Entity (Not Incorporated)

[GENERAL] Requested funds in ada

499030

[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 have researched and implemented the Osiris version of the Djed stablecoin protocol to Milkomeda. The Osiris version improves the Minimal version in ways that make it more robust.

[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

Project is already fully open source.

[METADATA] SDG rating

SDG rating:

On the topic of Sustainable Development Goals, we believe that sustainability and stability go hand-in-hand. One cannot exist without the other.

The Djed Osiris stablecoin on Milkomeda is non-discriminatory and allows permission-less interaction. Therefore, anyone, regardless of their traits (such as country of origin or residence) has equal opportunity to access a stable currency and use it, for instance, for remittances at close to zero cost. This deployment of Djed provides a crucial building block for a resilient financial infra-structure, by being fully autonomous and highly censorship-resistant.

Therefore, this Djed Osiris stablecoin on Milkomeda and, more generally, the mission of the Djed Alliance as a whole, contribute to the following SDG Goals, Subgoals and KPIs:

SDG Goals:

• 9 - Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
• 10 - Reduce inequality within and among countries
• 11 - Make cities and human settlements inclusive, safe, resilient and sustainable

SDG Subgoals:

• 10.3 - Ensure equal opportunity and reduce inequalities of outcome, including by eliminating discriminatory laws, policies and practices and promoting appropriate legislation, policies and action in this regard
• 10.c - By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent
• 9.1 - Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all

Key Performance Indicator (KPI):

• 10.c.1 - Remittance costs as a proportion of the amount remitted
• 10.3.1 - Proportion of population reporting having personally felt discriminated against or harassed in the previous 12 months on the basis of a ground of discrimination prohibited under international human rights law

[SOLUTION] Please describe your proposed solution.

The Djed family of stablecoin protocols is characterized by being crypto-backed and autonomous. Users can buy and sell stablecoins and reservecoins by interacting with the contract for prices that depend on an oracle and on the reserve ratio. The contract's algorithm aims to keep the reserve ratio significantly greater than 100%, thus ensuring that every stablecoin is backed by significantly more than 1 USD worth of ADA and can absorb significant price shocks. Stability theorems have been mathematically proven and formally verified, and the paper was accepted at the IEEE International Conference on Blockchain and Cryptocurrency.

This implementation of a stablecoin protocol on Milkomeda is based on the Osiris version of Djed, which improves the Minimal version by allowing the sale of reservecoins even when the reserve ratio is below the minimum threshold, provided that stablecoins are simultaneously sold in a proportion that increases the reserve ratio. This makes it easier for the reserve ratio to recover and for the peg in secondary markets to be restored even in situations where the demand for stablecoins is high and the demand for reservecoins is low following a price shock (a situation that is currently affecting SigmaUSD and COTI's Djed, making them trade above the peg at secondary markets). This version also introduces maximum transaction limits, in order to reduce the wholesale discount effect described in the paper.

Our solution is composed of:

• Fully immutable smart contracts, running on Milkomeda.
• A frontend (accessible here: https://milkomeda-c1.djed.one) that has also been deployed to IPFS (InterPlanetary File System) and that can also be run locally by anyone.

Therefore, it is fully autonomous, zero-governance, not operated by anyone, censorship resistant, transparent (with code open to inspection and contributions), audited and rent-seeking-free.

To know more, watch our whiteboard animation video.

To reduce the friction for users of Cardano to use this deployment of Djed on Milkomeda, we will do two things:

• Integrate Milkomeda's Wrapped Smart Contract functionality, which will allow users to interact with Milkomeda Djed contract directly from their cardano wallets (Flint, Eternl, Nami and NuFi will be supported), with no need to manually bridge ADA from Cardano to Milkomeda.
• The distribution of delegation rewards to the reserve of the contract.

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

Stablecoins are explicitly listed here (https://cardano.ideascale.com/c/campaigns/348/about) as being of a type of project addressing the Products & Integrations challenge within the DeFi category.

As the challenge states, "Cardano needs a thriving ecosystem of different products and integrations for the community to use that increasingly become the better alternatives over current centralised providers". Djed Osiris on Milkomeda is the first fully decentralized (operator-free, governance-free, fully imutable) stablecoin protocol in the Cardano ecosystem, and thus directly addresses the challenge's statement.

Stablecoins are a foundational building block to enable DeFi to flourish on Cardano. Djed Osiris ensures that this foundation is strong and reliable.

[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?

The Djed Alliance is the guardian of the Djed stablecoin protocol and is supportive of all faithful Djed deployments. This proposal is focused on one particular deployment (Milkomeda Djed Osiris) of Djed, a community-driven implementation of Djed that has counted with the contributions from numerous anonymous contributors and by people affiliated with the following teams:

Bloxico: a company founded in 2018 by several blockchain and fintech experts with the goal of creating second to none software products in fintech and Web3 domain. Bloxico is focused on continuous innovation, always searching for new solutions that use Blockchain to revolutionize the way Business is done, with quality as a top priority. Bloxico has enjoyed an astonishing growth of 1152% since its inception. It currently gathers a team of 100+ highly skilled professionals and was recognized internationally by being ranked 9th on the Deloitte Technology Fast 50 Central Europe list. Bloxico is IOG’s known partner that contributed to several strategic projects, including COTI's Djed implemented in Plutus on the Cardano Blockchain.

AOSSIE: the Australian Open Source Software Innovation and Education association, a not-for-profit registered charity founded in 2016 and funded by Google Summer of Code every year to mentor students in open source software development of innovative projects.

Thespian: a full-cycle software development company founded in 2015.

Vacuum Labs: building across the fintech landscape for organizations of all sizes – from startups and scaleups, to leading corporations, since 2012.

dcSpark: The company that built Milkomeda and that was founded by 2 members of the original 5-person team that did the research and development of Djed.

This decentralized team of teams has faced unspeakable challenges in the delivery of this deployment of Djed. To overcome these challenges, high opportunity costs were incurred. We hope the Cardano community will appreciate it. The Djed alliance is proud to support this deployment of Djed.

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

Refactoring and simplification of the Minimal Djed smart contract.

Implementation of the Djed Osiris features (simultaneous sale of stablecoins and reservecoins, transaction limits and decreasing treasury fee) in the smart contract.

Refactoring of the frontend, to conform with the new interface of the improved and upgraded smart contract. 

Audit of the smart contract.

Implement Wrapped Smart Contract integration.

Implement distribution of delegation rewards to the reserve of the contract.

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

This project benefitted from contributions by people and teams who wish to remain anonymous and by people and teams whose identity and participation in the project is known. Below we list only the latter.

• Dr. Bruno Woltzenlogel Paleo (a.k.a. Zahnentferner): 
• Vision, overall supervision, research of Djed Osiris, implementation of Djed Osiris features.
• Dragutin Vukotic:
• Project management.
• Filip Dimitrijevic: 
• Business development.
• Bloxico:
• Katarina Antic: management of the frontend upgrade.
• Kristina Pejcic: software development of the frontend for upgraded contracts.
• Danilo Kitanovic: development of smart contracts.
• Nikola Jovancevic: quality assurance and tests.
• Tomislav Ivanovic: devops. 
• Australian Open Source Software Innovation and Education:
• Raj Ranjan: 
• Smart contract development, tests and IPFS CD configuration.
• Ayush Tiwari:
• Smart contract development and tests.
• Yogesh Agrawal:
• Smart contract development and tests.
• Thespian:
• Home-page design and implementation.
• Alexis Hernandez (WiringBits, former technical architect for Atala at IOG): 
• Configuring the Djed Alliance's repository settings and setting up Code Preview, to ease the review of pull requests and improve our PR processes. 

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

• Refactoring of Minimal Djed smart contract: 15000 USD.
• Implementation of auxiliary contracts: 900 USD.
• Research of Djed Osiris features: 30000 USD.
• Implementation of Djed Osiris features: 15000 USD.
• Research of Improvements for Milkomeda's Open Oracle (MOO): 15000 USD.
• Implementation of Improvements for Milkomeda's Open Oracle (MOO): 11000 USD.
• Implementation of a better Oracle poster script: 1180 USD.
• Refactoring of the frontend: 22000 USD.
• Testing and Devops: 5535 USD.
• Audits: 9600 USD.
• Marketing : 15240 USD.
• Business development (for adoption by DEXes on Milkomeda): 10000 USD
• Infographic: 105 USD.
• White Board Animation: 263 USD.
• Djed Alliance Logo: 89 USD.
• Domain Purchase: 100 USD.
• Home-Page: 2600 USD.
• Implementation of oracle adapters: 10000 USD
• Implementation of wrapped smart contracts: 20000 USD
• Implementation of delegation rewards: 20000 USD

Total: 199612 USD

Total: 499030 ADA

(Assuming 1 ADA = 0.4 USD)

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

This project significantly enhances the user experience for people on Cardano who need a decentralized stablecoin, by making Milkomeda Djed Osiris available directly on Cardano's mainnet. This will provide a solid foundation for Cardano's DeFi to flourish.

The software development costs were calculated by carefully tracking each contributor's spent time and multiplying it by his or her hourly rate. Contributors were from countries where rates are (un)fortunately low, such as: Serbia, Poland, Mexico and India...

[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