Library for Anonymizing the Source of Transactions for Privacy-Focused Use Cases

[GENERAL] Name and surname of main applicant

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

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

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

We introduce an on-chain library to enhance transaction privacy on Cardano, using a mixer smart contract and random account generation to combine UTXOs and enable seamless, untraceable distributions.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

[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?

[GENERAL] Please provide here more information on the open source status of your project outputs

The project will be open source under MIT License. This will allow anyone to do whatever they wish with the original code, as long as the original copyright and license notice is included either in the distributed source code or software.

[METADATA] SDG rating

SDG rating:

SDG Goals

9 - Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

17 - Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development

SDG Subgoals

17.19 - By 2030, build on existing initiatives to develop measurements of progress on sustainable development that complement gross domestic product, and support statistical capacity-building in developing countries

17.3 - Mobilize additional financial resources for developing countries from multiple sources

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

9.3 - Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets

9.b - Support domestic technology development, research and innovation in developing countries, including by ensuring a conducive policy environment for, inter alia, industrial diversification and value addition to commodities

Key Performance Indicator (KPI)

9.1.1 - Proportion of the rural population who live within 2 km of an all-season road

9.1.2 - Passenger and freight volumes, by mode of transport

9.3.1 - Proportion of small-scale industries in total industry value added

9.3.2 - Proportion of small-scale industries with a loan or line of credit

9.b.1 - Proportion of medium and high-tech industry value added in total value added

17.3.1 - Foreign direct investment, official development assistance and South-South cooperation as a proportion of gross national income

17.3.2 - Volume of remittances (in United States dollars) as a proportion of total GDP

17.19.1 - Dollar value of all resources made available to strengthen statistical capacity in developing countries

17.19.2 - Proportion of countries that (a) have conducted at least one population and housing census in the last 10 years; and (b) have achieved 100 per cent birth registration and 80 per cent death registration

[SOLUTION] Please describe your proposed solution

Solution Overview

We are introducing an on-chain library designed to enhance privacy for transactions on the Cardano blockchain. This solution utilizes a combination of a mixer smart contract and random account generation to anonymize the distribution of ADA by merging and redistributing UTXOs (Unspent Transaction Outputs).

Key Components

• Mixer Smart Contract: This contract is responsible for receiving ADA transactions, merging UTXOs, and distributing them in a non-traceable manner every defined PrivEpoch.

• PrivEpoch: A dynamic interval determined by the completion of 50 transaction.

• Off-chain Transaction Building Script: This script builds transactions that adhere to the requirements of the smart contract, particularly sending ADA in whole number. The script creates a unique instance for each transaction and encrypts output wallet addresses on client-side to ensure anonymity.

• Fee Calculation Script: Computes the transaction fees upfront, which are then paid by the user in the first transaction to cover all operations in the complete cycle.

• Random Wallet Generator: Generates additional random wallets for enhanced privacy post-mixing, if the user opts for this feature.

Workflow

Here’s how the user workflow is structured, step by step:

• Input and Output Wallets:
• The user starts by providing an input wallet address from which ADA will be sent.
• The user must specify a minimum of four output wallet addresses. These addresses will receive the mixed ADA at the end of the process.

• Fee Computation:
• Before any transaction begins, the fee calculation script computes the total fees for the upcoming set of operations, including mixing and redistribution.
• The user is prompted to pay this computed fee in the first transaction to ensure smooth processing throughout the PrivEpoch.

• Transaction Initiation:
• Using an off-chain transaction building script, the user sends ADA to the mixer smart contract. This script ensures all ADA sent is in whole numbers.
• The transaction marks the start of a new PrivEpoch if it is the first of the set of 50 transactions.

• Mixing Process:
• Once 50 transactions are recorded, or the PrivEpoch ends, the mixer contract activates.
• The contract merges all the UTXOs received during this epoch and prepares them for distribution.

• Random Wallet Distribution (Optional):
• If the user opts for additional random wallets, the random wallet generator creates these wallets.
• These wallets are used as intermediate steps to further anonymize the distribution before the final amount reaches the user's specified output wallets in that particular instance.

• Final Distribution:
• The mixer smart contract distributes ADA to the specified output wallets and any additional random wallets created in the process.
• This distribution is done in a randomized way into all the output addresses ensuring anonymity.

Example

Let's walk through a simple example:

• User Setup:
• Input Wallet: addr1...
• Output Wallets: addr2..., addr3..., addr4..., addr5...

• Fee Computation:
• Suppose the fee calculation script determines that the fee for the transaction and the mixing process is 2 ADA.

• Sending ADA:
• The user wants to send 50 ADA (48+2) ADA to the mixer contract.
• The off-chain script facilitates this by ensuring the transaction is rounded to whole numbers and initiates the transaction.

• During the PrivEpoch:
• More users send ADA to the contract, and transactions are recorded until the 50 transaction limit is reached.

• Mixing and Distribution:
• The mixer contract activates, merging all UTXOs.
• The user opts for two additional random wallets, so the random wallet generator creates randAddr1... and randAddr2... .

• Final Receipt:
• The mixer distributes the ADA among addr2..., addr3..., addr4..., addr5... after passing the amount randomly between randAddr1 and randAddr2.
• Each receives an unpredictable portion of the total mixed ADA, ensuring privacy.

Note: This library is well-suited for dApps that have a significant number of inflow and outflow transactions. The smart contract is designed to merge UTXOs once the PrivEpoch conditions are met, ensuring complete privacy.

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

Impact on the Cardano Community

Value to the Cardano Community

Our project aims to significantly enhance privacy for all participants in the Cardano ecosystem. By enabling a higher degree of anonymity in transactions, we provide the following benefits:

• Enhanced Privacy: Users can transact without exposing their financial activities to public scrutiny, which is a critical aspect of personal and enterprise-level financial security.
• Increased Adoption: By providing robust privacy measures, Cardano becomes more attractive to users who prioritize confidentiality, thereby increasing the overall adoption of the Cardano blockchain.
• Support for Financial Autonomy: Our project empowers users to maintain control over their financial information, aligning with the blockchain ethos of decentralization and self-sovereignty.

Measuring Impact

• Quantitative Metrics: We will measure the impact by tracking the number of transactions processed through our mixer smart contract, the total ADA mixed, and the increase in unique users over time.
• Qualitative Feedback: We will gather user feedback through surveys and community engagement on forums and social media to assess the perceived improvement in privacy and overall user satisfaction.

Sharing Outputs and Opportunities

• Documentation and Tutorials: We will publish comprehensive guides and tutorials on how to integrate and use our privacy-focused library.
• Open Source Contributions: The library will be open-sourced, allowing other developers to contribute to its development and extend its functionality.
• Partnerships: We will seek partnerships with other dApps and platforms within the Cardano ecosystem to broaden the use of our library and enhance its impact.

By focusing on these areas, we aim to create a robust and positive impact on the Cardano community, fostering a more anonymous and secure environment for all users.

[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?

Capability to Deliver

Our team is uniquely equipped to deliver this project with high levels of trust and accountability, thanks to a blend of direct experience and technical expertise within the Cardano ecosystem:

• Proven Track Record: Our team has been building products and solutions for Cardano under Lovelace Club brand since past two years that required meticulous planning and robust technical implementation, recognized for their innovation and impact.

• Development Team: Our developers have extensive experience in blockchain development, particularly on the Cardano platform. They have contributed to successful Cardano-based projects and are proficient in cardano dApp development.

• Established Brand Presence: We have built a recognized brand within the Cardano community, the Lovelace Club, where we successfully ran an on-chain randomized lottery platform. This experience highlights our capability to manage and execute blockchain-based projects effectively.

• Expertise and Experience: Our team possesses extensive experience in blockchain development and cryptography, providing us with a profound understanding of the complexities involved. We have successfully developed several products and brands within the Cardano ecosystem, including:
• An on-chain randomized lottery protocol (https://alpha.lottery.lovelaceclub.com/),
• A staking protocol (https://staking.lovelaceclub.com),
• An on-chain communication platform (https://v1.adaconnect.io).

With a collective experience of over 20 years in the blockchain domain, our team is well-equipped with the necessary expertise to develop and deliver this project. This blend of experience and proven success in the Cardano ecosystem ensures that we are prepared to bring this concept to fruition, enhancing the Cardano blockchain's capabilities and community engagement.

Validating Feasibility

To ensure our approach is feasible and to refine our project concept, we will:

• Concept Testing: Initially, we will develop a low-fidelity prototype to test the core concepts and gather early feedback from a small group of ADA holders and startups.

• Community Feedback: We will engage with the wider Cardano community through forums and interactive sessions to validate our approach and adapt based on community input.

• Iterative Development: By adopting an agile methodology, we will iteratively develop and enhance the prototype, ensuring each stage is aligned with user needs and project goals.

Trust and Accountability in Fund Management

We are committed to managing funds with transparency and responsibility. Here are the key steps and processes we will implement:

• Transparent Reporting: We will provide regular, detailed reports on fund allocation and project progress, available to all stakeholders through our website and community forums.

• Stakeholder Engagement: By maintaining open lines of communication and involving stakeholders like founders and developers, we build trust and ensure that the project remains aligned with the community’s interests and expectations.

This comprehensive capability and robust track record position us to deliver this proposal on Cardano, driving forward the blockchain's evolution and expanding its use cases for a global audience.

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

Milestone 1: Designing the Architecture of the Library

Duration: 1 Month

A: Milestone Outputs

• A comprehensive architectural design for the Library, including:
• Architecture and components for enhanced transaction privacy.
• Specifications for the Mixer Smart Contract.
• Details on PrivEpoch and its role in triggering mixing.
• Off-chain transaction and fee calculation script designs.
• Design for the Random Wallet Generator for added privacy.

B: Acceptance Criteria

• Complete blueprint with defined modules and interfaces.
• Clear Mixer Smart Contract functionality and Cardano integration.
• Efficient data handling and privacy measures.
• Aligning PrivEpoch, scripts, and Wallet Generator with privacy goals.

C: Evidence of Milestone Completion

• Finalized architecture document.

Milestone 2: Development of the Library

Duration: 2 Months

A: Milestone Outputs

• Development of the Library, including:
• Implementation of the Mixer Smart Contract.
• Off-chain transaction building script.
• Fee calculation script development.
• Random Wallet Generator integration.

B: Acceptance Criteria

• All necessary modules and tools included.
• Feedback-incorporated functionality and user experience.
• Unit and component tests ensuring module performance.

C: Evidence of Milestone Completion

• Complete Library ready for testing.
• Demonstrations showcasing library features and integrations.

Milestone 3: Testing of the Library

Duration: 1 Month

A: Milestone Outputs

• Extensive testing of the Library:
• Testing strategies to ensure functionality and security.

B: Acceptance Criteria

• Comprehensive testing of all paths and modules.
• Library handles transactions with privacy and performance.
• Final adjustments from testing feedback for user readiness.

C: Evidence of Milestone Completion

• Comprehensive testing report with methodologies and outcomes.
• Feedback reports from early testers documenting experiences.

Milestone 4: Open-Sourcing and Launch with Project Closure Report

Duration: 1 Month

A: Milestone Outputs

• Open-sourcing and launch of the Library:
• Library published on GitHub with licensing, guidelines, and documentation.
• Launch event to introduce the library to the Cardano community.
• Project closure report detailing:
• Overview of achievements and learnings.
• Insights and feedback from launch phase.
• Future development pathways and enhancements.

B: Acceptance Criteria

• Library fully open-sourced with clear documentation.
• Effective promotion with community interest and engagement.
• Closure report offering clear future guidance and community feedback.

C: Evidence of Milestone Completion

• Public repository links.
• Press releases and community updates on the launch impact.
• Detailed closure report with feedback and a future roadmap.

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

Adnan Khan - Tech Lead, Lovelace Club | Product Owner, SyncAI

Adnan is a seasoned web3 professional with 5 years experience in building MVPs, product development, and achieving scalability for early-stage startups. He is graduated with a bachelors in Data Science and Machine Learning. His expertise includes data analytics and web3 development, particularly on-chain analytics. Adnan has served as a research analyst at GravityX Capital and collaborated with top web3 projects like dYdX, Polygon, Frontier, and Bullieverse. He is also a three-time Catalyst winner with a track record of successful proposals.

Uzair Anwar - Growth and Operations Lead, Lovelace Club

Uzair is driving Lovelace Club's product and business growth since it's inception He excels in strategic business development, operational efficiency, and leveraging DeFi and NFT landscapes for growth.

Lovelace Club Our team has over 20 years of collective experience in blockchain development and cryptography. We have successfully developed products within the Cardano ecosystem, including:

• An on-chain randomized lottery protocol (https://alpha.lottery.lovelaceclub.com/)
• A staking protocol (https://staking.lovelaceclub.com)
• An on-chain communication platform (https://v1.adaconnect.io/)

Our expertise ensures we are well-prepared to develop and deliver innovative solutions that enhance the Cardano blockchain's capabilities and community engagement.

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

Milestone 1:

Total Duration: 45 Days

• Senior Cardano Developer: 20000 ADA
• Smart Contract Developer: 20000 ADA
• Solution Architect: 5000 ADA

Total: 45000 ADA

Milestone 2:

Total Duration: 45 Days

• Senior Cardano Developer: 20000 ADA
• Smart Contract Developer: 20000 ADA
• Solution Architect: 5000 ADA

Total: 45000 ADA

Milestone 3:

Total Duration: 30 Days

• Senior Cardano Developer: 15000 ADA
• Smart Contract Developer: 15000 ADA
• Solution Architect: 10000 ADA

Total: 40000 ADA

Final Milestone:

Total Duration: 30 Days

• Senior Cardano Developer: 10000 ADA

Total: 20000 ADA

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

The cost of the project, set at 150,000 ADA, represents significant value for money for the Cardano ecosystem, taking into account the following factors:

Expertise in Cardano: The project necessitates skilled professionals with specialized knowledge of the Cardano blockchain & ecosystem.

These skills are in high demand and command premium rates. The budgeted costs are aligned with industry standards for such expertise.

• Efficient Resource Allocation: The proposed costs for developing and deploying the Privatizing TX library on the Cardano blockchain are carefully evaluated to ensure efficient resource allocation. By leveraging existing infrastructure and expertise within the Cardano community, the project minimizes unnecessary expenditures while maximizing the impact of the investment.

• Community-driven Development: The costs are justified by the extensive user feedback and low-fidelity prototype development process. This ensures that resources are allocated towards building a solution that resonates with the needs and preferences of the Cardano community, maximizing the likelihood of adoption and success.

• Feasibility Assessment: The costs are determined based on a thorough feasibility assessment, taking into account factors such as development complexity, regulatory considerations, and market dynamics. This rigorous evaluation process minimizes the risk of budget overruns and ensures that the project remains financially viable throughout its lifecycle.

• Value Proposition: The costs of the proposal are justified by the potential value it brings to the Cardano ecosystem. By democratizing access to venture capital and fostering innovation within the community, the project has the potential to unlock new opportunities for growth and development, ultimately delivering significant long-term value for stakeholders.

In summary, the costs associated with the proposal are justified by the efficient allocation of resources, community-driven development approach, thorough feasibility assessment, and the potential value proposition for the Cardano ecosystem.