Decentralized Farming Contracts

[GENERAL] Name and surname of main applicant

MuesliSwap Team

[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)

5

[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 design, build, and audit smart contracts for a fully decentralized and feature-rich farming solution. Additionally, we will provide the corresponding off-chain infrastructure components.

[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.”

Yes, our project has a dependency on an external auditor to ensure the security and reliability of our smart contracts. This dependency is essential for our project’s delivery, as it provides independent verification of our code's integrity and security. We consider this relationship reliable based on our successful past collaborations with the auditor, who has consistently delivered high-quality results.

[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

Our project will be fully open source throughout its entire lifecycle, utilizing the MIT License for all outputs.

Scope of Open Source Elements:

All components will be open source, including:

• On-Chain Components: Staking contracts, top-pools contracts, and governance-based farms (see anwers to questions below for details on what these are) developed in OpShin.
• Off-Chain Infrastructure: All supporting off-chain infrastructure and interaction protocols.
• Documentation and Guides: Comprehensive documentation on deployment, usage, and modifications.

Repository and Access:

The source code and all related materials will be hosted on GitHub, freely accessible for use, modification, and distribution.

By using the MIT License and hosting all project components and documentation openly, we ensure full transparency and accessibility to the Cardano community.

[SOLUTION] Please describe your proposed solution

Our proposed solution is designed to enhance the (decentralized finance) landscape within the Cardano ecosystem by establishing a fully decentralized, community-governed farming solution based on smart contracts. We recognize the limitations of current farming systems, primarily their dependence on centralized backend services ensuring the correct distribution of tokens, which can undermine the principles of truly decentralized finance. Our approach involves the development of smart contracts that enforce the correct distribution of farming rewards, enabling trustless, DAO-governed farming. In addition to smart contracts, we also aim to develop the necessary off-chain infrastructure that is necessary to interact with the respective on-chain code.

In the following, we describe the components which the envisioned system is composed of:

• On-Chain Staking Contracts: “Farming” usually describes the process of staking, i.e. locking, LP tokens (which are tokens representing a liquidity pool provider’s position) in order to receive some additional reward that is provided as incentive, e.g. for liquidity provision. Hence the core component of our envisioned set of smart contracts is a contract that tracks staking position and the rewards earned by each staker. Note that this indeed represents a significant development challenge, as:

1. Currently used staking contracts generally do not track the staker’s earned rewards at all. This is instead done in an off-chain way which requires the staker to trust the operator of such a centralized service.
2. Computing rewards in an on-chain manner requires keeping track of the positions initialization time, as well as (depending on the reward distribution scheme) knowing who else staked how much throughout any given time period. It is not straightforward to implement such checks for an eUTxO-based blockchain.

In addition to enforcing correct reward payments per farm, our system must also manage the allocation of rewards among farms. For this we propose to implement two different mechanisms whose functionalities will complement each other.

• Top-Pools Contracts: First, there should be farms for all the largest liquidity pools available on the platform. In order to determine “size” of a pool inside the smart contract, LP-eUTxO’s will be fed into the contract to be used as price “oracles”. This way the contract can maintain a list of pools with largest TVL. Rewards will then be allocated to pools as a function of the pool’s rank in this list of top-TVL pools. The contract will be upgradeable via governance to adjust the parameters of this function.
• Governance-Based Farms: In addition to the top pools, a fair farming system should also allow for allocation of rewards to new/small pools if the community supports this token. After all, the motivation for farming is to incentivise pool growth. Therefore, we propose an additional contract that allows community-governed voting on farm proposals.

Why This Is Important for Cardano:

Our solution directly supports Cardano’s mission to advance decentralization and empower community governance within its ecosystem. By implementing a farming system that supports transparent and decentralized reward distribution through community-driven governance, we significantly enhance trust and user engagement. This infrastructure not only benefits individual projects by offering decentralized tools but also strengthens the overall Cardano network by fostering greater participation in DeFi activities. This is crucial for Cardano's ongoing growth and positioning as a leader in scalable blockchain solutions.

Engagement and Impact:

• Community Engagement: Especially with the above-described “governance-based farms”, our system is designed to naturally promote community involvement. By incorporating mechanisms that require and encourage user participation in governance processes, our solution ensures that it evolves in response to the community’s needs and feedback. This inclusive approach helps in building a robust and responsive DeFi ecosystem.
• Demonstration of Impact: We will demonstrate the impact of our solution through clear, quantifiable metrics such as the number of active stakers, the total value locked in pools, and the degree of participation in governance activities. These metrics will provide concrete evidence of the effectiveness of our system and its acceptance by the community.

Unique Aspects of Our Solution:

• Complete Decentralization: Unlike many existing solutions that rely on some centralized components, our system achieves full decentralization in every operational aspect—from the execution of staking contracts to the enforcement of governance decisions. This ensures that the platform remains resilient against various forms of tampering or control by any single entity.
• Community-Controlled: The power in our system is fully vested in the community, which is fundamental for genuine decentralized governance. This aligns very well with the decentralized ethos of DeFi and Cardano’s broader goals.
• Scalable and Adaptable Framework: The modular design of our smart contracts allows for easy adaptation and scalability. This flexibility ensures that our system can accommodate a variety of applications within the DeFi space, making it a versatile foundation for future expansions and innovations.

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

Our project will significantly enrich the Cardano ecosystem by promoting greater decentralization in Cardano DeFi. By introducing a completely decentralized farming solution that eliminates reliance on centralized components, we provide a robust platform suitable for DeFi DAOs, which in turn enhances the ecosystem's overall trust and security.

Value to the Cardano Community:

1. Trustless Farming: Our solution facilitates trustless operations in DeFi farming, which greatly increases the attractiveness and security for liquidity providers. This trustless environment is essential for fostering a stable and reliable DeFi ecosystem on Cardano.
2. Enabling DAOs: By providing a fully decentralized farming system, we assist both existing and newly founded platforms in transitioning to DAO structures. Farming is a critical component of DeFi protocols, and our system ensures that these operations can be managed in a truly decentralized manner, which is a fundamental requirement for any genuine DAO.
3. Reusability of Developed Solutions: The on-chain contracts and the corresponding off-chain infrastructure developed for this project will be open-sourced. This allows other projects within the ecosystem to adopt and integrate these solutions without the need to develop similar systems from scratch, thus saving resources and fostering innovation.
4. Fostering Transparency: The open-source nature of our project, complemented by thorough documentation, ensures transparency. This visibility into the workings of our system will build greater trust and accountability within the community.

Measurement of Impact:

We will employ a combination of quantitative and qualitative metrics to measure the impact of our project:

• Quantitative Metrics: Metrics will include the number of DAOs adopting our farming solution, the total value locked (TVL) in these farms, and the growth in the number of liquidity providers participating in the ecosystem.
• Qualitative Metrics: We will conduct surveys and gather feedback from users and developers regarding the usability and effectiveness of our solution. Community engagement metrics, such as participation in governance and contributions to forums and discussions, will also be tracked.

Sharing Outputs and Opportunities:

To ensure that the Cardano community fully benefits from our project, we will implement several strategies for sharing our outputs and findings:

• Open-Source Repositories: All developed code and documentation will be made available on platforms like GitHub. This will facilitate continuous access, use, and contribution by developers across the ecosystem.
• Regular Updates: We will actively share updates on the project's development progress, sharing insights and discussing future enhancements.

By implementing these measures, we aim to ensure that our project not only succeeds in enhancing the decentralization and functionality of DAO governance on Cardano but also serves as a foundational model for open, transparent, and community-focused management and development within the ecosystem.

[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 MuesliSwap Team is well-known in the community and credited with delivering high-tech solutions. We started the first DEX on Cardano, months before its competition launched and to date provides the only hybrid AMM-Orderbook DEX with integrated DEX Aggregator.

In particular, MuesliSwap Team members are known to be particularly strong in developing secure smart-contract-based dApps, pioneering the development of DeFi protocols since the early days of SCs on Cardano. The described decentralized farming solution hence falls fully into our area of expertise. The developer team has a high level of technical expertise. Among others, the it consists of both the creator and a contributor to the python-based SC language OpShin, which will be used to implement the contracts required for this project.

The Team has also already completed multiple projects funded in Catalyst among which is e.g. an off-chain governance solution used by multiple Cardano projects. As a large team of dedicated techies, we have the competence, capacity, and motivation to also completing this additional DeFi infrastructure project in time and with high quality.

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

Milestone 1: Research

A: Milestone Outputs:

• Design a decentralized staking system structure, detailing the specific roles and interactions of three main contract components: staking contracts, top-pools contracts, and governance-based farms.
• Perform a comparative analysis with existing solutions, highlighting improvements our system offers such as enhanced decentralization and security.
• Develop and publish a blog post that outlines research findings and provides a detailed plan for system implementation.

B: Acceptance Criteria:

• Completion of a conceptual framework for the decentralized staking system that includes detailed specifications for staking contracts, top-pools contracts, and governance-based farms.
• Documentation of a comparative analysis that clearly demonstrates the advantages of the proposed system over existing ones.
• Publication of a blog post on the project’s official site detailing the research outcomes and implementation plan.

C: Evidence of Milestone Completion:

• Submission of a comprehensive research document including system design and comparative analysis.
• Link to the published blog post.

Milestone 2: On-chain Components

A: Milestone Outputs:

• Implementation of on-chain code for the staking contracts, top-pools contracts, and governance-based farms using the OpShin programming language.
• Conduct an internal security audit to ensure code robustness and security for all three components.
• Publish findings and details of the on-chain components in a dedicated blog post.

B: Acceptance Criteria:

• Successful deployment and testing of on-chain contract components in a controlled environment.
• Completion of an internal security audit with documented findings.
• A blog post detailing the on-chain implementation and audit results is made publicly available.

C: Evidence of Milestone Completion:

• Code repositories containing the implemented smart contracts for staking, top-pools, and governance-based farms.
• Internal audit report.
• Link to the published blog post discussing the on-chain components and audit insights.

Milestone 3: Off-chain Infrastructure

A: Milestone Outputs:

• Development of off-chain code for managing staking contracts, top-pools contracts, and governance-based farms, and facilitating transactions enabling their interaction.
• Extensive testing of the interplay between off-chain and on-chain code.
• Provide evidence of successful testnet transactions for staking, reward distribution, maintenance of top-pools, and votes on governance-based farms.

B: Acceptance Criteria:

• Successful integration and function of off-chain code with on-chain components as evidenced by testnet operations.
• Documentation of all test cases and results from the testnet demonstrating successful operations.

C: Evidence of Milestone Completion:

• Code repository links containing the off-chain code.
• Testnet results documenting successful transactions and operations.
• A summary report detailing the testing phase and outcomes.

Milestone 4: Finalization and Audit

A: Milestone Outputs:

• Implementation of necessary adjustments based on feedback from the internal audit and community input.
• Conducting an external security audit by a reputable third party to ensure the highest level of security and reliability for the staking contracts, top-pools contracts, and governance-based farms.
• Publishing a detailed report on the findings of the external audit.

B: Acceptance Criteria:

• Successful incorporation of all suggested modifications and improvements.
• Receipt of a security audit report from the external auditor affirming the security and efficiency of the system.

C: Evidence of Milestone Completion:

• Documentation of changes made post-internal feedback.
• External audit report.
• Link to the published report on audit findings.

Final Milestone: Release and Maintenance

A: Milestone Outputs:

• Official launch of the fully implemented farming system on MuesliSwap.
• Provision of comprehensive documentation for other developers or platforms wishing to implement the staking contracts, top-pools contracts, and governance-based farms.
• Commitment to ongoing supervision of the repository and integration of user feedback into future updates.

B: Acceptance Criteria:

• Successful launch and operation of the system on MuesliSwap.
• Availability of detailed documentation for system deployment.
• Establishment of a feedback collection and integration mechanism.

C: Evidence of Milestone Completion:

• Announcement of the system launch on MuesliSwap.
• Links to the deployment documentation.
• Description of the feedback mechanism implemented for ongoing improvements.

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

Our project team comprises highly skilled and experienced individuals, each bringing specialized expertise to ensure the success of our proposal. Below are the roles and responsibilities of each team member:

1. Lead Developer: The Lead Developer is responsible for overseeing the high-level design of smart contracts, conducting internal auditing, and coordinating the entire project. With extensive experience in blockchain development, particularly within the Cardano ecosystem, the Lead Developer is a founding member of the MuesliSwap team and a key contributor to the OpShin smart contract language.
2. Smart Contract (SC) Developer: This team member focuses on the development and implementation of the smart contracts. As a long-time member of the MuesliSwap team, the SC Developer has a proven track record of implementing multiple successful smart contract projects in OpShin. Responsibilities include coding the primary contract logic, optimizing contract efficiency, and ensuring security best practices.
3. Backend Developer: The Backend Developer is tasked with developing the off-chain infrastructure that interacts with our on-chain components. This role requires a strong background in software engineering, particularly in building scalable and secure backend systems. The Backend Developer will integrate the off-chain services, manage data flow, and ensure the robustness of the interaction between on-chain and off-chain components.
4. Marketing and Documentation Coordinator: This team member is responsible for all marketing, community engagement, and documentation. The role involves creating marketing strategies to promote project adoption, coordinating community outreach efforts, and developing comprehensive documentation and user guides for the system. Background in marketing within the tech industry, especially with blockchain projects, is essential.

Resource Allocation and Team Expansion: If the project's initial resource allocation does not suffice, additional developers from the MuesliSwap team will be allocated to ensure project completion and success.

Engagement and Verification:

• All current team members have confirmed their roles and are fully committed to the project.
• We have a reliable partnership with an external auditor who has consistently delivered high-quality results in our previous collaborations.
• We actively engage with our community and technical groups on platforms like Discord and Telegram to ensure ongoing dialogue and feedback.

Our team's composition not only reflects deep technical expertise but also a proven track record of successful collaboration, ensuring that all aspects of the project from development to community engagement are expertly managed.

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

Our project budget is structured to cover all necessary costs across five key milestones, totaling 135,000 Ada. Below is the detailed cost breakdown aligned with each milestone's specific needs and the resources required to achieve our objectives.

Milestone 1: Research - 20,000 Ada

• Resource Allocation:
• Research materials and access to existing solutions for comparative analysis.
• Compensation for team members conducting research and developing the initial system concept.
• Production of a comprehensive report and a blog post outlining our findings.

Milestone 2: On-Chain Components Development - 30,000 Ada

• Resource Allocation:
• Development tools and platforms for smart contract creation.
• Internal security auditing resources.
• Compensation for developers coding the smart contracts.

Milestone 3: Off-Chain Infrastructure - 30,000 Ada

• Resource Allocation:
• Development environments and tools for off-chain components.
• Testing infrastructure, including costs associated with deploying to testnets.
• Compensation for backend developers and testers involved in the iterative testing and debugging process.

Milestone 4: Finalization and External Audit - 40,000 Ada

• Resource Allocation:
• Fees for external security auditors to ensure the robustness and security of our smart contracts.
• Resources for collecting and integrating community feedback.
• Compensation for team members making necessary adjustments based on audit findings and community input.

Final Milestone: Release and Maintenance - 15,000 Ada

• Resource Allocation:
• Marketing and community engagement activities to promote the launch.
• Development and distribution of comprehensive documentation and user guides.
• Ongoing maintenance and updates post-launch, ensuring the system remains robust and responsive to community needs.

External Audit:

• Third Party Services: Costs for third-party code auditing services, which are critical for ensuring the security of our smart contracts.

Alternative Sources of Funding: Should the allocated budget prove insufficient, the MuesliSwap team will cover the remaining costs to bring the project to completion.

Each budget element has been carefully considered to ensure effective and transparent use of resources throughout the project lifecycle.

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

The budget for our project is strategically structured to ensure efficient and effective use of resources, directly correlating with the essential milestones to achieve the project’s objectives. Each allocation within the budget is determined based on the complexity and necessity of the tasks required at each stage.

Cost Justification:

• Development Costs: Compensation for developers reflects the necessary skill level and expertise to handle the technical complexities of developing decentralized smart contracts for Cardano.
• Auditing and Security: The budget for internal and external security audits represents a critical investment. High-quality auditing is indispensable for ensuring the security and reliability of our smart contracts, safeguarding user assets, and building trust within the Cardano ecosystem.
• Community Engagement and Marketing: Adequate funds for community engagement and marketing are vital for promoting the adoption of our system. This engagement helps in fostering a robust user base and contributes directly to the vibrancy and growth of the Cardano ecosystem.

Value for Money:

This project offers substantial value for money by enhancing the Cardano ecosystem with a fully decentralized farming solution that is secure, scalable, and community-governed. The open-source nature of the project allows for widespread adoption and further innovation, amplifying the impact and utility of the initial investment across the community.

Overall, our budget is aligned with the project’s ambitious goals to strengthen and expand the capabilities of the Cardano DeFi landscape, ensuring a high return on investment through increased ecosystem robustness and user participation.