- Optim Finance OADA - Innovative ADA Synthetic . Supercharge DeFi with better ADA liquidity + Boosted yield

[GENERAL] Name and surname of main applicant

Ethan Protas

[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)

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)

The OADA model is composed of two separate ADA synthetics: OADA- ADA alternative that's the DeFi trading vehicle / sOADA- the yield bearing equivalent. Yield, governance, &dApp usability are improved

[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 dependancies

[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

The code will be open source but with a 3 year Business Source License.

[SOLUTION] Please describe your proposed solution.

The OADA model separates concerns between two different synthetics, each serving a different purpose and working in unison to facilitate enhanced yield and governance. As native staking yield falls, the DeFi ecosystem rises, and Cardano governance advances, the opportunity arises to create more dynamic, versatile, and potent forms of ADA.

OADA can be considered an evolutionary extension of Optim's Liquidity Bonds, which would serve as an AMO (algorithmic market operation) of OADA. Pure-ADA yield products that don't require managing CDPs, risk liquidations, or require holding a pair of tokens on a DEX exposed to impermanent loss are an important part of Cardano's DeFi ecosystem. As staking yield falls below 3% and incentives to actively stake diminish, it is important that ADA yield incentives and the active governance of the network that results is appropriately considered. The OADA system addresses this, along with improved composability and interoperability due to separating staking concerns which can burden dApp developers.

The system is composed of trading and staking exposed synthetics. OADA is the ADA stablecoin. Cheaper than ADA, but pegged to ADA. sOADA is a yield bearing token. Higher yielding than ADA, but always redeemable for ADA.

OADA is stripped of staking yield and can be thought of as the trading vehicle of the system. It is nimble and provides a variety of composability and usability advantages when integrated in DeFi protocols. sOADA is the staked version that provides enhanced yield over the base staking rate through natural system leverage and algorithmic market operations (AMOs).

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

OADA will provide a less cumbersome and more composable form of ADA for Cardano dApps to build with which will result in more advanced DeFi across the ecosystem.

sOADA will provide a safe, yield boosted alternative to ADA that is always backed 1:1. As staking yield falls below 3% it is likely that many ADA holders sitting on the sidelines passively staking will be looking for straightforward yield while retaining governance right

A system like OADA serves as a form of Liquid Staking or improved staking at the point that native staking yield is unappealing in the 1-2.5% range which is fast approaching. Bringing tons of ADA into DeFi in this way has the potential to boost TVL in the ecosystem significantly. This will benefit all projects as new participants and liquidity eventually explore the ecosystem further.

[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?

Optim Finance has achieved a substantial milestone with the successful launch of a functional dApp, achieving top 5 TVL on Cardano. We’ve safely handled nearly 70 million ADA on our dApp in the past year. Our inaugural product, Liquidity Bonds, an innovative addition to the DeFi landscape, distinguishes itself by its uniqueness within the crypto space. This accomplishment underscores the team's capacity for not only conceiving but also effectively implementing sophisticated DeFi solutions.

The team's ability to introduce novel financial instruments showcases a forward-thinking approach that contributes to the diversification and enrichment of the broader DeFi ecosystem, transcending conventional paradigms.

Critical to Optim Finance's achievements is its strategic alignment with Cardano's unique capabilities. By leveraging the distinct features of the Cardano blockchain, the team has demonstrated not only the conceptualization of pioneering products but also the agile and cost-effective deployment of these solutions. Optim’s track record underscores the team's adeptness at leveraging Cardano's strengths and showcases the efficient delivery of DeFi solutions.

The team's proven ability to innovate, design, and swiftly deploy DeFi products meets the evolving needs of the decentralized finance landscape, solidifying their role as leaders in the ongoing narrative of DeFi innovation.

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

Feature complete design of OADA including the system dynamics, scaling factors, liquidity requirements, governance mechanics, and yield modules for both OADA and sOADA synthetics to scale at meaningful yields.

Milestone output:

Complete public documentation in Optim Gitbook will detail the design.

Code complete OADA system with both OADA and sOADA as an extension of pure-ADA yield products that can integrate via AMO to existing Liquidity Bonds module, DEXs, and across the ecosystem.

Milestone output:

Private testnet with attestations of functionality by known, trusted members of the Cardano community.

Audit of the entire OADA system. OADA, sOADA, AMO modules, and ecosystem interoperability components.

Milestone output:

Public Audit Reports

Public Testnet to test product under load, refine user experience, and make final adjustments to any modules if necessary.

Milestone output:

Public Testnet Report

Mainnet Launch

Milestone output:

Fully functional product released and scaled as described in documentation.

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

Ethan Protas - Product lead

Maksymilian Brodowicz/Zygomeb - Tech lead

Experience - Minswap, MLabs, IOHK, Optim

Consistently delivered/shipped high quality DeFi protocols to mainnet

Clear track record of successfully delivering dApps that are widely adopted

Website: https://www.optim.finance/ 

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

Software Engineering - Includes extending Optim Liquidity Bonds AMO , Secondary AMO for ADA reserve staking auctions, basic transition to OADA and sOADA , redemption mechanisms, full system mechanics for properly functioning dApp, and front-end development.

Cost - 400,000 ADA

Financial Engineering - Extensive modeling of liquidity requirements, peg defense mechanisms, AMO incentive structures, and yield balancing between all parts of the system. Documentation and detailed instructions of risk factors and financial models for retail and institutional users.

Cost - 100,000 ADA

Audit - Audit of all on-chain code. This cost is based on estimates and costs of previous OPTIM audits as well as the price of audits for projects across the ecosystem (Indigo, Minswap, Liqwid)

Cost - 150,000 ADA

Audit of fixes - Typically projects do not audit the changes made to contracts that are implemented to fix vulnerabilities. This should be standard.

Cost - 50,000 ADA

Marking, Promotion - Videos, marketing materials, education, general outreach to normal users and whales. The TVL boost to Cardano could be huge and impactful, thus proper marketing is necessary to bring idle, staked ADA off the sidelines.

Cost- 50,000 ADA

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

A system such as OADA has the potential to completely change Cardano DeFi in a number of meaningful ways. The value provided to the ecosystem is enormous. Cardano needs unique DeFi primitives that go beyond new and improved ways of swapping tokens. Cardano needs increased liquidity and to put ADA to work in the DeFi ecosystem. Less than 2% of all ADA circulating now participates in DeFi on-chain. OADA shows great potential to change this.

Many ADA holders large and small want a safe place to enjoy passive yield. We've seen over 70 Million ADA enter Optim's Liquidity Bonds, only constrained by the number of borrowers. With OADA and sODA having a larger yield capacity with fewer dependancies, it is feasible that we bring hundreds of millions of ADA off the sidelines to participate in Cardano DeFi.

The Optim team has shown its ability to design and ship new DeFi primitives that people actually use. This has been delivered in an efficient and cost effective manner. We will continue to provide value to the ecosystem. A few hundred thousand US dollars is a tremendous value, especially in light of the countless millions given to projects that have failed to find product market fit or release products that increase on-chain activity.

[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