µgraph: Instant, Untraceable Payments in Cardano

[GENERAL] Name and surname of main applicant

Cainã Costa (cfcosta)

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

Individual

[GENERAL] Requested funds in ada

300000

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

9

[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 build the first MVP of the µgraph protocol, a standard for instant, private payments in Cardano, built on top of Hydra Heads, effectively scaling Cardano as a payment platform.

[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.

The project will be greatly simplified once incremental commits and decommits are available on Hydra, but it is designed to work without them.

[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

The project is fully open-source, and will always be, under both the MIT and Apache 2.0 License (meaning the user can choose either of them, depending on their needs), and is available here.

Furthermore, both project roadmap and updates (via Github Projects) and Communication (via Discord) will be open for anyone. Contributions will be welcomed, as long as they are aligned with the goals of the project.

[SOLUTION] Please describe your proposed solution

µgraph is our interpretation on how cryptocurrencies could be used to enable real-world payments between people. We think blockchains can be great agents for change, to bring back economic power to the people, but it seems that all the things we do are for ourselves, not for the average Joe.

You can see it easily in the wild, most "real-world" crypto businesses still have to do most or all of their payments in Fiat, and the most proeminent commerce use-cases are usually things related to privacy, like VPNs. For many years now, [Travala](https://travala.com) is probably still the only travel provider selling plane tickets that you can pay using crypto.

ZeroHedge explains this phenomena perfectly, in their article "What Happened to Bitcoin?":

At the same time, new technologies were becoming available that vastly improved the efficiency and availability of exchange in fiat dollars. They included Venmo, Zelle, CashApp, FB payments, and many others besides, in addition to smartphone attachments and iPads that enabled any merchant of any size to process credit cards. These technologies were completely different from Bitcoin because they were permission-based and mediated by financial companies. But to users, they seemed great and their presence in the marketplace crowded out the use case of Bitcoin at the very time that my beloved technology had become an unrecognizable version of itself.

In our point of view, there are five main problems we need to tackle if we want to make crypto widely available for anyone:

1. Volatility: Because of their nature (as well as the lack of government price controls or regulations), crypto assets are much more volatile than most currencies.
2. Scalability: No blockchain today is scalable enough for global payment
3. Privacy: Having to make your own financial identity public just to send a payment is a price that many won't pa
4. Ease of Use: You shouldn't need to read the Bitcoin Paper and watch all of Charles Hoskinson videos just to send and receive payments.

We think that, while there has been at least some very solid attempts at covering volatility and scalability, there are still lots of work to be done to make it a proper global payment network. This is our attempt to tackle them, in a way that guarantees human rights like the right to self-custody of their own wealth, and financial privacy on all layers.

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So those are the goals for µgraph:

• It must be anonymous, because it is paramount to us to safeguard users' financial privacy.
• It must be fully custodial, meaning that users should never lose control of their funds.
• It must be easy to use, else it won't be good enough to embrace the globe.

In a sense, µgraph is a very constrained application of the upcoming Hydra Tail protocol: it scales Cardano by creating "proxies", which act as the user and guarantee the lack of double spending and the maintainability of the ledger invariant rules (don't create value, don't spend what you don't own).

It is not meant to be isomorphic, and the protocol is very simplified on purpose: it is meant to fill only one use-case, and this simplicity can allow for more complex structures to be built on top of it.

I have been talking with the Hydra Team, together with other members of the community about this project, and there are no conflicts at all with those projects, the opposite, we have much to gain from each other, as both ideas develop together and exchange information.

There is way more documentation about it on the main repository, please go take a look!

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

We think that, by having a proper payment network, we can on-board a much larger audience and communities, inherently bringing more people to both our chain and all the philosophies we share.

Payments are very under-served (ironically) in the crypto ecosystem, even if they can be the primary reason for someone to adopt a new platform or not, so we think that building a small, self-contained engine do to just this well might be a game-changer.

[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?

I have been a software engineer for 15 years, with the last 7 or so in the realm of Distributed Systems, blockchain or otherwise.

I have developed multiple high-throughput systems for companies with huge userbases and heavy access patterns, and have in the past built Credit Card payment systems for a living, so I think I'm technically well equipped to handle the problem.

µgraph is (and will always be) open and transparent from the beginning, as this is meant to be a sustainable community project for others to build on. All steps, roadmaps, goals, changes, will be open to the public for scrutiny at all times.

Beyond that, the protocol has been mercilessly simplified over and over, with more than 80 different previous iterations of the same design, such that it can be reliably implemented by one person and in a timely manner.

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

The first milestone is to develop the infrastructure to start processing payments, which includes the Node Software, and Zero-Knowledge Proofs. At the end of it. the project will be complete enough to be able to trustlessly send payments between users inside the same Node. This does not (yet) include Vaults or the connection to the Cardano blockchain itself.

This is what can be expected for this milestone:

1. The Zero-Knowledge Circuits necessary to generate proofs to be transacted between the users and the nodes.
2. A installable node Docker image to be run by nodes, which blindly approves transactions, as long as users have valid Zero Knowledge Proofs.
3. A runnable specification of the protocol, so alternative clients and nodes can start to be developed.

The second milestone is to allow the "bridging of assets" between the Cardano Network and the µgraph.

This milestone includes the Plutus Smart Contracts to:

1. Deposit ADA and Native Cardano assets into a Vault on the Cardano blockchian allows users to mint those funds in running network nodes.
2. Withdraw those ADA and Cardano assets, with the Vault's Acknowledgement.

The third milestone is to implement Cross-node payments, similar to the Lightning Network, so no transactions need to reach the Cardano Blockchain to be confirmed, regardless of the nodes participating. It does that by "routing" transactions using Hydra Channels between nodes.

This milestone includes the mechanism to make those transfers, built as an extension to the protocol.

Milestone 4 is about the Mobile Wallet, used for interacting with the network.

After the wallet is released, users will be able to:

• Send and receive funds via QR Codes or messages.
• Pay and be paid using a Google/Apple Pay-like process (via NFC)

Milestone 5 is about preparing the protocol and the wallet for release. This will include:

• Protocol Specifications
• Implementation Documentation
• User Documentation
• Reference Material
• Technical Whitepapers
• Presentation Material

And the final milestone for this project will be the release of the Version 1.0 of the protocol to the global Cardano community, as well as ironing out any possible problems before this happens.

The outputs for this final milestone will be:

• A project post-mortem about all what happened inside the project, and laying down the next steps.
• A video about all that has been accomplished, aimed at both backers of the project as well as new users just getting to know it.
• A working product, ready to be build upon by developers, and used by the masses.

IMPORTANT: it is very important to note that this does not mean it will be live on the Mainnet, but it does mean it will be live on the Testnet. There are many steps before a project can be considered production-ready, and this takes sometime extra time after a project has been finished, specially after user feedback and scrutiny.

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

The team is made up (currently) of only one person, Cainã Costa, which is both the sole developer and the team lead.

• Twitter: https://twitter.com/cfcosta_
• Github: https://github.com/cfcosta
• LinkedIn: https://twitter.com/cfcosta_

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

There are no special requirements for this project. The full amount will be used to pay for a full-time developer (myself) to be able develop it in a full-time capacity.

The project is planned to take 6 months, from start to v1.0, and the total requested amount is 180k ADA, or (at the submission exchange rate) a total of 80,000 USD, or approximately 13k USD/30k ADA per month.

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

The amount asked is (in my experience) in the same ballpark as one Senior Engineer, working full-time on similar projects in the Blockchain space.

Any extra funds from this round not used in the protocol development will be used, in this order:

1. Hiring front-end and mobile developers to improve the wallet and user experience.
2. Financing other projects built on top of this, like ecommerce platforms.
3. Generating educational and promotional material for users and other developers, to get them to build and use the platform.
4. Training new developers to work on this, and fostering community events when possible.