[GENERAL] Name and surname of main applicant

Catalyst Rider

[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)

8

[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 open-source the batching agent and introduce a new smart contract-based lease on batching agent authorization tokens to enable anyone to become an agent.

[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

There will be three outputs:

1. Batching agent token lease Plutarch scripts
2. Batching agent off-chain service
3. Auditing tool for batching agent behavior

All of these three will be fully open-source by the MIT license. For more details about the individual outputs please check the proposed solution.

[SOLUTION] Please describe your proposed solution.

Decentralizing the batching agent is the grail among the current DeFI protocols and it is a long-awaited and requested step from the community. It benefits the overall ecosystem by bringing forth pioneering research into decentralizing protocols with a single centralized off-chain component, commonly called the agent or batcher. It gives opportunities to 3rd parties to financially benefit from participating in the protocol. Lastly, it gives users access to more decentralized and therefore resilient DeFi applications.

However, it presents several challenges. In essence, a system is needed where anybody can participate as a batcher, but at the same time, ensure that everybody gets a fair chance to create batches and that everybody follows the rules that cannot be enforced in smart contracts (FIFO ordering of requests, not blocking liquidity pools). Therefore, the solution consists of 3 parts.

1. Smart-contract lease on batching agent authorization tokens

The core of the solution is an open-source system to lease the authorization tokens, needed to create batch transactions. This smart contracts-based lease system will be collateralized to ensure there is leverage on potential malicious actors. Furthermore, the individual leases will be rate-limited smartly to ensure that everyone gets a chance to create a batch. The collected batching agent fees will be time-locked in the lease for a short period, and in case of malicious behavior, these fees will be slashed together with the collateral, further discouraging bad actors. More on slashing in the 3rd part.

2. Open-sourcing batching agent software

WingRiders will open-source the batching software with modifications to support the leased tokens to ensure anybody can easily spin up a batching agent instance.

3. Open-sourced auditing tool to monitor the fairness of decentralized batchers

The auditing tool is here to monitor that every participating batcher follows the rules of fair participation. These are rules that cannot be enforced in a smart contract - strict following of the FIFO order, not blocking liquidity pools with small batches, etc. If a malicious actor is detected, then upon agreement by the DAO, their collateral will be slashed and the lease canceled.

Overall, the solution will be specific to WingRiders, but the research and contracts done while developing the catalyst proposal could be adapted and reused by other DEXes using a similar batching agent model.

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

Accepting the proposal will positively impact the following groups:

• Community: This is a long-awaited and requested feature. We want to fulfill our promises to the community and finally make the D in DEX true. We believe the overall Cardano will also be positively impacted by having one of the larger DEXes transition to a truly decentralized model.
• Projects: The research, contracts, and tooling we will do to enable the decentralization of WingRiders will all be open-sourced. That means other projects can reuse our solution and work to make it easy for them to become more decentralized. Therefore, this Catalyst proposal has the potential to bring more decentralization to already established DeFi protocols running on Cardano.
• Traders: Traders will get to experience more decentralized and therefore resilient DEXes across the Cardano ecosystem, beginning with WingRiders.
• Batchers: A new type of user will emerge, focusing on revenue through batching transactions—WingRiders and others alike.
• SPO: SPOs with already running Cardano nodes can easily spin up a batching agent instance with minimal additional costs to a traditional SPO infrastructure setup and have an additional revenue stream outweighing the costs by far.
• Builders: The open-source outputs of this project can be used as learning material for building smart contracts and off-chain services on Cardano

The impact of the solution will be determined by how many external batchers will participate in the protocol while still maintaining all the safety, speed, and fairness properties of the DEX. A secondary measure of impact will be how many other DeFi protocols will adopt our solution to improve decentralization.

All the outputs of this proposal will be open-source, including all the research. The progress will be shared using our community portal.

[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?

As WingRiders, we have a track-proven record of developing within the Cardano ecosystem. Over the years we’ve shown to be at the forefront of technological advancements when it comes to DEXes and Cardano in general. We were the first ones to bring support for Stableswaps, have a fully on-chain DAO governance, and recently launched the first trustless non-custodial launchpad. Decentralizing the batching agent is a natural next step in the evolution of the products we offer.

Regarding fund management, we adhere to rigorous protocols ensuring robust financial stewardship and accountability. Our practices encompass the maintenance of transparent financial records, periodic internal audits, and strict compliance with financial reporting standards. We understand the imperative nature of prudent fund management and commit to upholding the highest standards of fiscal responsibility throughout the project's lifecycle.

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

Research

• Description: Conduct research on the ways to handle the leasing mechanism of batching agent tokens, and its possible implications on the safety and fairness of the protocol. 
• Expected Timeline: 4 weeks
• Outputs: An open-source document specifying the leasing mechanism and how it fits into the existing WingRiders batching agent model
• Acceptance Criteria: A well-described and finalized theoretical solution to the leasing mechanism is proposed.

Smart Contracts Development

• Description: Implementation of the smart contracts as defined in the first milestone.
• Expected Timeline: 9 weeks
• Outputs: Open-source repository with the batching agent token lease contracts
• Acceptance Criteria: Test deployment of contracts on the Preprod network and demonstration of leasing functionality. The usage of a leased token in a batch transaction is omitted here and left for milestone 3.

Adapting and Open-Sourcing Batching Agent

• Description: Adapting the batching agent to work with the leased tokens, and making the software fully standalone and not dependent on any WingRiders-specific infrastructure. After which the batching agent can be open-sourced.
• Expected Timeline: 7 weeks
• Outputs: Open-source standalone batching agent software with support for leased tokens
• Acceptance Criteria: List of on-chain verifiable transactions showing batch transactions executed with a leased batching agent token.

Auditing Tool Development

• Description: Developing an open-source audit tool that will be used to check if the created batches follow rules of fair participation that cannot be enforced in smart contracts - such as following a FIFO order of requests. If the tool detects malicious batchers it will generate a report that can be used for a DAO vote on dealing with the malicious participant.
• Expected Timeline: 4 weeks
• Outputs: Open-source audit tool for auditing batching transactions
• Acceptance Criteria: Demonstration of the tool being able to detect a malicious batcher on the Preprod network.

Testing, Documenting, and Fine-Tuning

• Description: Testing the overall solution on Preprod network, covering all relevant scenarios, such as detecting malicious actors, load testing, and fair participation of multiple batchers. Also documenting the overall solution with the main focus on documenting the process of becoming a batcher and deploying your own batching agent instance.
• Expected Timeline: 6 weeks
• Outputs: Implementation of test scenarios, public open-source documentation
• Acceptance Criteria: On-chain demonstration of performed tests and well-structured documentation

Deploying the Solution

• Description: Creating a way for users to lease batching agent tokens and deploying the solution on Mainnet. The final completion report and video are publicly available.
• Expected Timeline: 6 weeks
• Outputs: Way to lease batching agent tokens and fully functioning solution on Mainnet.
• Acceptance Criteria: It is possible for an independent party to lease a batching agent token, launch an instance of batching agent software, and participate in the protocol.

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

WingRiders engineering team is composed of experienced professionals in blockchain technology and software development. Our team members stand behind projects like Adalite, Yoroi wallet, Emurgo’s first blockchain explorer/indexer, firmware for hardware wallets Trezor and Ledger (bringing them to Cardano), and a whole plethora of FinTech products.

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

The proposal budget will be used to cover the cost of engineering and project management:

Milestone 1: Research

• Milestone Budget: ₳ 101,000
• Resource MDs: 
• Software engineer/architect: 20
• Project manager: 2

Milestone 2: Smart Contracts Development

• Milestone Budget: ₳ 156,000
• Resource MDs: 
• Software engineer: 45
• Project manager: 4

Milestone 3: Adapting and Open-Sourcing Batching Agent

• Milestone Budget: ₳ 145,000
• Resource MDs: 
• Software engineer: 35
• Project manager: 4

Milestone 4: Auditing Tool Development

• Milestone Budget: ₳ 67,000
• Resource MDs: 
• Software engineer: 20
• Project manager: 2

Milestone 5: Testing, Documenting, and Fine-Tuning

• Milestone Budget: ₳ 145000
• Resource MDs: 
• Software engineer: 30
• Project manager: 3

Milestone 6: Deploying the Solution

• Milestone Budget: ₳ 135,000
• Resource MDs: 
• Software engineer: 30
• Project manager: 3

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

The successful adoption of this model by WingRiders and potentially other DEXes has significant advantages for various stakeholders in the Cardano ecosystem. It would offer SPOs a potential additional revenue stream. It can help with the decentralization of other projects and their protocols. Users will be able to interact with more decentralized and resilient protocols. For all the builders out there, this project will result in open-source research, contracts, and off-chain code that also has the potential of being a good learning resource on how to build on Cardano. In addition to these benefits, we expect the decentralization to further drive the adoption of Cardano, increasing network transactions, and resulting in more network fees collected by the blockchain.

[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