Mercury: Financials & TB Export

[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)

Design a tool that helps collect and process data available on the blockchain ledger into an organized structure that is compatible with ERP software and make necessary financial reports (BS and P&L).

[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

All software and documentation developed under this proposal will be released under a Creative Commons 4.0 International Attribution License. Meaning that anyone is free to use the software in any way they see fit as long as they credit the original authors.

[SOLUTION] Please describe your proposed solution

Cryptocurrencies are treated as a single line item in the books of accounts for an organization, where they record these assets as a Capital asset in the Balance sheet and treat their value changes as income or Expenses in the P/L Statement, most Organisations/projects keep records just to do their taxes.

We have seen a rapid growth of Organizations whose day-to-day business is conducted on the Blockchain and cryptocurrencies, utilizing cryptocurrencies as functional currencies rather than mere investments. With the restrictions being placed by Financial Institutions and banks on opening and operating a bank account, As a result, we anticipate a rapid increase in such blockchain-operating organizations, leading to heightened demand for robust financial accounting systems capable of managing cryptocurrency transactions.

These type of projects are also dealing with an added complexity of their on-project token, eg. $ADA will be the main currency for any project running on Cardano, but they might have their own tokens like $MIN, $DRIP, $NEWM, etc.

There is a general lack of infrastructure to help a non-crypto native Accountant to help and develop Financial statements and Tokenomics statements for an organization operating on Cardano Blockchain, as people familiar with blockchain infrastructure are not familiar with the general accounting needs, and the people familiar with the Accounting needs are not good with extracting data from the Blockchain.

Even though blockchains are transparent ledgers, interpreting and extracting data remains complex, particularly with Cardano's eUTxO (Extended Unspent Transaction Output) model, which presents significant challenges. If someone is able to Extract the data from Blockchain, they are rarely in a position to understand it due to a lack of context to the transaction, and with a general lack of infrastructure, there is no way to draw parallels between the Blockchain environment, and the traditional financial reporting. 

We have not seen any platform where one can export these transactions in one go, in a CSV format where they get the full details of a transaction including the ADA amount sent to various addresses in a single transaction, Token transaction details with the name of the token available in human-readable form separation of blockchain identifiable transactions like reward, fee and stake pool income, structured in a way that can be used for preparation of financial statements.

In this Catalyst proposal, our objective is to develop a system for the Projects running on Cardano that will help them categorize and structure all transactions done by the Project's wallet, and produce:

Main Report/Trial Balance

Balance Sheet

Profit and Loss Statement

The enhanced information in the form of the Main report/Trial Balance can also be used with standard accounting software or be integrated with a fiat trial balance to generate a consolidated Balance sheet or a Profit and loss statement or help generate any other financial report like a Cash Flow statement or Tokenomics Statement.

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

• Better Data Extraction and Visibility: This tool will provide businesses and projects on the Cardano Blockchain with easy access to comprehensible data that can be used to make financial statements with minimal input requirements
• Efficient Decision-Making: our tool facilitates the formation of financials leading to informed decision-making as the user can analyze financial data to assess performance, understand liquidity, and evaluate solvency.
• Improved Financial Management: Accessible financial statements enable users to gain a clearer understanding of their business operations. This enhances financial management capabilities by offering insights into revenue streams, expenditure patterns, and overall financial health through historical data and they won't just consider the presence of good funding as a singular metric.
• Proactive Risk Management: Comprehensive financial statements allow management to identify potential risks and challenges early on. This proactive approach enables them to mitigate risks promptly and steer the project towards sustainable growth.
• Enhanced Investor Confidence: Transparent and detailed financial statements build trust and confidence among investors. Clear visibility into financial performance and operations fosters credibility, attracting potential investors and stakeholders.
• Cost Savings and Efficiency: The tool reduces the need for extensive systems and infrastructure for recordkeeping, checks, and audits. By leveraging blockchain technology for verifiable transactions and data, projects can achieve cost savings and operational efficiency.
• Streamlined Workflows: Automation of data entry and transaction updates simplifies processes and reduces administrative overhead. This streamlined workflow minimizes manual errors and ensures data consistency across all parties involved. A single transaction update by one party automatically updates records for all parties involved, enhancing efficiency.
• Compliance and Reporting: Proper financial statements facilitate compliance with regulatory requirements. Accurate and accessible financial data simplifies reporting tasks and ensures adherence to financial standards and guidelines.
• Integration with Traditional Finance: Incorporating robust accounting systems into blockchain projects promotes acceptance, understanding, and integration with traditional finance practices. fostering a more seamless integration of traditional financial practices with blockchain technology.
• Purpose of Financial Statements

[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?

Bhanu: Proposer & Project Lead

I hold a Masters in Commerce and a Bachelors degree in Law from the University of Rajasthan, India. My general interests and career experience are adequate in delivering this project, as throughout my career, I have gained extensive experience in preparing Financials, helping companies deal with changing accounting standards and reporting requirements and making tools for due diligence, financial planning, and reporting, with a strong passion for Blockchain technologies. I have also contributed to several open-source projects, including NEWM, DripDropz, and Xerberus.

1. NEWM: In the past two years I have worked with the financial department of NEWM and have helped them in matters relating to finance and accounting. My work with NEWM has led me to observe this lacuna in the blockchain accounting space and have been trying to implement a solution at NEWM for the same.
2. Xerberus: I am a member of the Xerberus Commission, which is a group of 5 people who review the reports by the Xerberus team before they are published, and have reviewed the FACT_WRT case of tokens sale. I am also a regular contributor to the discussions about the way forward.
3. DripDropz: Proposed a system improvement for their Referral reward system.
4. Grant Thornton: I have worked with Grant Thornton for 5 years from the inception of my career, working on large projects such as Vedanta Limited (CFS), OLAM Group, DLF, and other listed entities and also worked on financials of Medanta Hospitals for their IPO.

Cardano Mercury: Incubator & Advisors

The team at Cardano Mercury has agreed to incubate this project under the Mercury brand.

The Cardano Mercury team will provide advice and guidance to our team throughout the lifecycle of this product. Through shared branding, we can help raise awareness and adoption of this project as well as provide valuable accounting and financial feedback to other projects within the Cardano Mercury brand and create a mutually beneficial environment for collaboration.

The Cardano Mercury team consists of Adam Dean and Latheesan Kanesamoorthy who have a long track record of delivering open-source software solutions specifically targeted at business adoption and integration of Cardano.

• Adam Dean developed, manages, and maintains the Cardano Mercury for WooCommerce plugin for the WooCommerce ecosystem. Originally released as open source in July of 2021 the plugin has continued to be developed and evolve.
• Latheesan Kanesamoorthy is currently developing Mercury: Invoice (a Fund 11 Catalyst Proposal), an open source software solution for freelancers and others needing a simple invoice management solution that accepts Cardano ($ADA) and native assets as payment natively.

Feasibility assessment:

• Resource Availability: We possess ample determination and, with Catalyst funding we will secure the necessary resources including budget, time, technology, skills, and personnel for project execution.
• Team Capabilities and Budget Allocation: Our skilled team, including experienced developers and UI/UX resources, ensures efficient fund utilization.
• Iterative Approach: We will develop the Product Requirements Document (PRD) within the first month to identify potential risks, challenges, and constraints affecting project implementation, and take proactive actions to keep the project on track. Establishing clear, measurable objectives aligned with proposal milestones. Make necessary adjustments to optimize project progress and outcomes.
• Informed and timely Decision Making: As a single proposer the decision-making will be concentrated with an individual leading to no conflict of interest the project will have timely and effective decision-making.
• Prototype Development: Initiate development of a prototype for the "Mercury: Financial & Trial Balance Export" system, designing and implementing locally. This prototype serves as a foundation for the proof-of-concept, showcasing functional feasibility.
• Testing and Pilot Implementation: Conduct testing of the prototype around month three, validating the system with diverse user scenarios and projects. Gather feedback for refining and improving the system, enabling real-world performance evaluation and user insights.

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

Product requirement document (1 Month)

Milestone outputs

First of all, we will be sharing the Product requirement document "Mercury: Financial Statements" which will include a thorough evaluation of the current state of these technologies, potential obstacles, how we plan to overcome them, and what will be our workflow for the Tool development.

Acceptance criteria

The report will show a path to the success of the project. and the report might cover topics around Overview, Context, Background and History, Target User, User Flow (Key Features), Dependencies, Legal Requirements, Clarifying what the product is and explicitly stating what it is not, and establishing clear boundaries and expectations.

Evidence of milestone completion

Report submitted as a PDF 

UX/UI Design Draft and Report (1 Month)

Milestone outputs

We will provide a file that will give the UX/UI Design Draft (Mock-ups): These mock-ups provide a visual representation of the Tool's functionality and appearance. This stage will have finalized UI/UX designs of Milestone 3 and onwards as to what the Tool will look like at the final stages, and serve as a reference to the Development side of the project

Acceptance criteria

The submission of the PPT file where the reviewer can check the mock look of the Tool and how the Tool will function on a basic level will be enough.

Evidence of milestone completion

Submit the final designs as a PPT or Figma file.

Proof of Concept Development & Demonstration (2 Months)

Milestone outputs

A POC version of the tool will be available, which will demonstrate that the concept discussed in this proposal is feasible and has the potential to further develop. Users should be able to input a network address and generate a list of transactions for that address. Users should be able to provide some amount of categorization for transactions before exporting the report (CSV)

We will demonstrate the tool by giving a walkthrough about the tool, which will show two things that the tool is working and also serve as a tutorial for the people trying to use it without any Dev or Accounting Background.

Acceptance criteria

A working (self-hosted) prototype of the tool will be available which anyone can use.

Evidence of milestone completion

• A Link (GitHub) to the tool will be provided.
• A Video (YouTube) demonstrating and showcasing the Proof of Concept being used will be provided.

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

Project Lead: The project lead, in coordination with the project manager and graphic designer, defines project needs, and outlines UI/UX requirements, and scopes, refining the application experience, and user flow and oversees the work of the developers to ensure that a quality project is delivered.

Project Management: The project manager ensures that all Catalyst deliverables and milestones are submitted in a timely and correct fashion, and ensures team communication and coordination in the team to implement the proof of concept on both front and backends. 

UI/UX Designer: UI/UX designer will help in developing and enhancing the user interface and experience, create wireframes and prototypes, based on feedback and direction from the project lead..

Developer (Frontend & Backend): The team will hire developers experienced in the Cardano ecosystem. The developers will help in delivering the final project in line with the UI/UX design and under the supervision of the Project Lead and Project Manager.

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

The budget is prepared based on prudent financial principles while taking the ADA price to be 43 Cents as the prices fluctuate in the forties range and 43 cents looks like the new floor and below that 25 cents is a reasonable support price.

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

The requested budget of 78,140 ADA is very reasonable for the scope of work outlined, which includes designing, building, and launching an open-source POC financial tool over 4 months. The breakdown shows efficient use of funds, with the majority going towards development. Operational costs after launch are also budgeted.

This proposal offers a cost-effective solution to create an easy-to-use tooling for financial reporting on the Cardano blockchain strengthening the narrative of high assurance and a secure environment for conducting business in the Web 3.0 ecosystem. This fosters increased adoption and user acceptance among the general public, supporting the long-term relevance and success of Cardano and the projects intending to prepare financials.