Ouroboros Capital: Decentralized VC arm of Cardano that converts ADA staking rewards into Equity / SAFT in emerging startups.

[GENERAL] Name and surname of main applicant

SriCharan G. (nucast)

[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)

3

[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)

Nucast will build a democratized VC funding model by enabling ADA holders to invest in startups using an SPO model that exchanges liquid staking rewards for SAFT (Simple Agreement for Future Tokens).

[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

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 Goals

8 - Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

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

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.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

[SOLUTION] Please describe your proposed solution

Executive Summary:

Nucast is proposing the creation of a democratized venture capital arm that leverages Cardano's native staking and reward mechanisms. This innovative approach will allow ADA holders to stake to directly participate in the venture capital ecosystem. This transforms traditional staking rewards into strategic investments in high-performing startups building within the Cardano ecosystem.

Introduction:

Venture capital funding has traditionally been the domain of institutional investors and high-net-worth individuals. Nucast aims to deliver a democratized model by enabling ADA holders to stake to become angel investors through a decentralized platform built on Cardano. By staking ADA with the Ouroboros Capital stake pool, holders can directly exchange their liquid staking rewards for token allocations.

Target Demography for Startup Selection:

Why APAC (Asia Pacific Region)?

https://blog.google/around-the-globe/google-asia/apac-startups-global-trends/

1. Economic Growth: Strong growth driven by digital transformation opens numerous opportunities for startups.
2. Government Support: Incentives and supportive policies reduce risks and boost startup profitability.
3. Tech Hubs: APAC, especially India, is a center for AI, IoT, and blockchain, attracting investments.
4. Consumer Market: A vast and growing market offers significant opportunities, especially in fintech and e-commerce.
5. Rising Middle Class: Increased spending by the growing middle class boosts demand for startup services and products.
6. Supply Chain Diversification: With shifts from China, India and Southeast Asia are attractive for startups serving global clients.
7. Talent Pool: A skilled workforce ensures startups have the talent to innovate and grow.
8. Digital Infrastructure: Enhanced infrastructure supports startup growth, including digital payments and services.

Operational Framework:

Staking and Reward Distribution -

• Staking Mechanism:
• ADA holders will stake their ADA to the Ouroboros Capital stake pool.
• The stake pool will operate with a 99% pool margin, meaning that 99% of the standard staking rewards are redirected to support the VC arm’s operations and investments.

• Reward Allocation:
• 80% of the accumulated rewards will be directed into an investing pool. This pool will be strategically deployed every quarter to invest in 3-4 high-performing startups.
• Startups will provide token allocations to the Ouroboros Capital VC arm in exchange for the investment, distributing potential future benefits back to the stakers.

• Operational Expenses:
• The remaining 20% of the rewards will be utilized to cover stake pool operational costs, including staff salaries, platform maintenance, and other administrative expenses necessary to sustain the VC operations.

Example Investment Scenario with Ouroboros Capital:

Note: The below numbers are taken with an assumption of average probable scenario according to current market conditions.

Ouroboros Capital operates a stake pool with a delegation of 20 million ADA. The yearly staking rewards are averaged out at 3%, generating 600,000 ADA annually. With a 99% margin, this translates to 50,000 ADA in monthly rewards, equivalent to $15,000 USD (at a average rate of $0.3 USD) at current exchange rates. Out of this, $12,000 is allocated as investable capital.

Every four months, this accumulates to $48,000, which Ouroboros Capital strategically invests in 4-5 high-performing startups, providing angel investment checks.

As Ouroboros Capital opens additional stake pools, this investment capacity will proportionally increase, enhancing our ability to support more innovative startups.

Investment Cycle

• Selection of Startups:

With a rigorous due diligence process and community involvement we will identify 4-5 promising startups every four months. These startups will be evaluated based on their technological innovation, team and market potential

• Token Allocation:
• In exchange for funding, startups will allocate a portion of their native tokens to the Ouroboros Capital based on their valuation. This allocation allows stakers to indirectly hold a diversified portfolio of emerging startups at a very early stage (low-valuation before token launch).
• Their valuation and ask amounts with all the related documents will be transparently available before the on-chain voting starts.

Why it will succeed?

Let's do a thought experiment based on infamous VC Power Law Curve:

Based on our example scenario above:

Assumptions:

Note: The below numbers are taken with an yearly assumption of average probable scenario according to the calculation mentioned above.

• Total Investment: $144,000 (80% of Annual Staking Rewards) in 15 startups, $10,000 average per startup.

• Distribution based on the curve:
• Top 6% of deals (approximately 1 of the 15 startups, rounding down) produces high returns.
• Half of the startups (about 8) lose money.
• The remaining deals (6 startups) provide moderate returns.

Specific Assumptions for Calculation:

• 1 Top Deal (6% of 15 ≈ 1 deal): 25x return
• 4 Moderate Deals: 5x return
• 3 Moderate Deals: 2x return
• 7 Failures: 0x return

Calculation:

High-Return Deal:

• 1×$10,000×25=$250,000

Moderate-Return Deals (5x):

• 4×$10,000×5=$200,000

Moderate-Return Deals (2x):

• 3×$10,000×2=$60,000

Failures:

• 7×$10,000×0=$0

Total Returns:

$250,000+$200,000+$60,000+$0=$510,000

Net Profit:

$510,000−$144,000=$366,000

Therefore, following the VC power law curve and adjusting for the probability distribution from the chart, the total expected profit is $366,000 (3x than normal staking Rewards)

Benefits for Stakeholders

• For Stakers:
• Stakers are now Angel Investors, invested in high performing startups.
• Transform traditional staking rewards into equity-like investments.
• Gain exposure to a diversified portfolio of startup tokens.
• A new investment instrument on Cardano beyond passive staking and DeFi.

• For Startups:
• Access to funding without traditional venture capital constraints.
• Connection with a community of engaged and supportive ADA stakers.
• Opportunity to validate and refine business models with active users from the Ouroboros Capital's network.

• For the Cardano Ecosystem:
• Bringing more exposure from builders and investors across the globe.
• Increased utility and demand for ADA.
• Strengthened network effects as more users engage with funded startups.

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

Value to the Cardano Community:

Our project will significantly benefit the Cardano community by broadening investment opportunities and enhancing the overall ecosystem's vibrancy. By enabling ADA holders to invest directly in startups, we not only provide these startups with essential capital but also allow stakers to actively engage with the projects they support.

Measuring Impact:

The impact of our project will be assessed using both quantitative and qualitative measures:

• Quantitative Metrics: We will track the number of startups funded, the total amount of ADA invested, the number of ADA holders participating, and the performance of these investments (measured by return on investment metrics).
• Qualitative Metrics: We will gather feedback from ADA stakers regarding their satisfaction and engagement levels, collect success stories from funded startups, and monitor the growth and sentiment of the overall community.

Sharing Outputs and Opportunities:

We are committed to transparency and open communication throughout the project’s development and beyond:

• Regular Updates: Progress reports and findings will be shared via our website and disseminated through Cardano community forums and social media platforms.
• Collaborative Reviews: Engaging with community feedback mechanisms to refine and optimize the ongoing strategy and implementation of the project.

This approach will ensure that all stakeholders are continuously informed and have the opportunity to contribute to the project's evolution, reinforcing the foundational community-driven ethos of the Cardano 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?

Capability and Feasibility

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:

• Experienced Leadership: One of our key team members has significant experience in venture capital, having served in a leading role at Graviton, one of India's prominent web3 accelerators, and as a research partner at GravityX Capital, a noted web3 institutional fund. This background provides a deep understanding of startup ecosystems and investment strategies, which is critical for guiding this project toward success.

  

• Technical Proficiency: The rest of our team consists of professionals who are highly skilled in developing and deploying projects on the Cardano blockchain. Their expertise ensures that we can handle the technical aspects of this venture effectively and efficiently.

• Proven Track Record: Our team has previously collaborated on various projects within the Cardano community, consistently delivering solutions that enhance the blockchain's utility and user experience. This history of successful implementations underlines our ability to execute complex projects.

Validating Feasibility:

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

  

• 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 in major decisions, we build trust and ensure that the project remains aligned with the community’s interests and expectations.

By combining experienced leadership, technical proficiency, and a commitment to transparency and community engagement, our team is ideally positioned to deliver this innovative project and contribute positively to the Cardano ecosystem's growth and development.

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

Full Framework Document

Duration: 1 Month

A: Milestone Outputs

• A comprehensive framework document that will:
• Analyze potential stakeholders (ADA holders, startups, Cardano community members) and their roles and benefits.
• Detail the operational, economic, and strategic aspects of the project, including investment models, reward mechanisms, and engagement strategies.
• Assess the expected numerical outcomes, such as potential returns, participation rates, and growth metrics for the Cardano ecosystem.

B: Acceptance Criteria

• The document will provide a clear and thorough analysis of all aspects mentioned, with well-defined sections and logical flow.
• Stakeholder roles and benefits will be clearly identified and explained.
• Operational procedures, including the staking and reward distribution mechanisms, will be detailed with step-by-step processes.
• Projected numerical outcomes will be supported by realistic assumptions and preliminary analyses.

C: Evidence of Milestone Completion

• A finalized framework document with clear wireframe of the workflow.
• Presentation recording of the framework depicting each every aspect of this model.

Full Legal Framework

Duration: 1 Month (Following Milestone 1)

A: Milestone Outputs

• A comprehensive legal framework document that will include:
• An analysis of the regulatory requirements and legal considerations for operating a decentralized VC fund on the Cardano blockchain.
• Detailed policies and procedures to ensure compliance with relevant laws and regulations, including KYC/AML, securities, and data protection laws.
• Drafted terms and conditions for stakeholder participation, including ADA holders and startups.

B: Acceptance Criteria

• The legal framework will comprehensively cover all regulatory and compliance aspects relevant to the project’s operations.
• Policies and procedures for legal compliance will be clearly articulated and include mechanisms for ongoing monitoring and reporting.
• Terms and conditions for all parties involved will be clear, fair, and drafted in accordance with legal requirements.

C: Evidence of Milestone Completion

• A completed legal framework document based on discussions with legal expert.

Stakepool, Website Launch, Marketing Kickoff

Duration: 1 Month (Following Milestone 2)

A: Deliverables

1. Launch of the stakepool on Cardano blockchain with full functionality.
2. Deployment of a comprehensive website.
3. Initiation of marketing efforts to promote the stakepool and website.

B: Criteria

1. Stakepool and website should be operational with user-friendly interfaces.
2. Marketing efforts should effectively reach target audience.

C: Evidence

1. Public launch of stakepool with user guides.
2. Live website providing project information.
3. Screenshots of marketing tweets
4. Distribution of stakepool demos, report, and marketing materials to engage stakeholders.

Project Conclusion Report

Duration: 1 Month

A: Deliverables - Project conclusion report with insights and next steps.

B: Criteria - Report should detail development insights and future plans.

C: Evidence - Completed project conclusion report.

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

Sricharan Ganta, CEO @ Nucast

Sricharan is a successful entrepreneur and business development strategist with over seven years of experience in business-driven roles and over four years of experience in the web3 domain. He has a successful track record of delivering innovative products on the Cardano Blockchain. As the CEO of Nucast, Charan is extremely passionate about community building and pioneering solutions. He currently leads a dynamic team of 15+ professionals at Nucast Labs. Additionally, he holds a Masters in Computer Science from the University of Central Missouri, USA.

Adnan Khan, Ex-Research Partner, GravityX Capital

Adnan is an experienced professional in the web3 domain with a strong track record of assisting early-stage startups in building MVPs, managing communities, securing grants, and achieving scalability. His expertise lies in data analytics and web3 development, with a particular focus on on-chain analytics. 

Adnan has also served as a research analyst at GravityX Capital, a prominent web3 institutional fund. He has actively collaborated with leading web3 ecosystems and startups such as dYdX, Polygon, Frontier, Bullieverse, among others. Additionally, Adnan is also a three-time Catalyst winner, having completed and closed all proposals successfully.

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

Milestone 1: 

Duration: 1 Month

Personnel and Budget:

Project Manager: 10,000 ADA

Blockchain Developer: 5,000 ADA

Operational & Research Costs: 10,000 ADA

UI Designer: 5,000 ADA

Total for Milestone 1: 30,000 ADA

Milestone 2:

Duration: 1 Month

Personnel and Budget:

Legal Expert: 10,000 ADA

Compliance Officer: 10,000 ADA

Legal Compliance Registrations: 10,000 ADA

Total for Milestone 2: 30,000 ADA

Milestone 3:

Duration: 1 Month

Personnel and Budget:

Project Manager: 10,000 ADA

Blockchain Developer: 15,000 ADA

Total for Milestone 3: 25,000 ADA

Final Milestone: 

Duration: 1 Month

Personnel and Budget:

Web Developer: 5,000 ADA

Project Manager: 5,000 ADA

Technical infrastructure for SPO: 3,000 ADA

Marketing Costs: 2,000 ADA

Total For Final Mielstone: 15,000 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 100,000 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 decentralized VC arm 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.