Orcfax staking: rewarding good behaviour

[GENERAL] Name and surname of main applicant

Christian Koch

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

Entity (Incorporated)

[GENERAL] Co-proposers and additional applicants

Peter Van Garderen

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

6

[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)

Orcfax will research staking mechanisms for Web3 networks, design an architecture stack of relevant tools and protocols, and develop a proof of concept for testing in our validator network.

[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

Apache 2.0 for the proof-of-concept source code.

Creative Commons for the research report and design documentation.

All project deliverables will be made available in a public Github repository.

[SOLUTION] Please describe your proposed solution

This is a research and development project that will produce: 

• An analysis report that evaluates existing Web3 staking protocols and tools.
• An opinionated architecture design that selects specific protocols and tools to implement as a staking mechanism for use in the Orcfax validator network. This will include use case descriptions and architecture diagrams. The design will be applicable to other Cardano projects implementing a Layer2 reward mechanism.
• Proof-of-concept software with a test case suite that demonstrates how a validator node operator can deposit stake, be rewarded stake for conformant (good) behaviour and be slashed stake for non-conformant (bad) behaviour.

Staking is a mechanism based on game theory that seeks to encourage actions that support the operation and maintenance of a Web3 network while discouraging actions that work against its shared objectives.

The Orcfax oracle network will employ a network of validator nodes to collect and verify source data. These validators will hold Orcfax $FACT tokens as a deposit while performing these functions. They will be rewarded with more $FACT tokens if their node participates as expected during Orcfax’s data publication cycles. Otherwise if a node reports irregular data or has networking issues, for example, their stake will be deducted from their deposit balance, i.e. “slashed”.

One of Web3 and blockchain’s major breakthroughs was to employ game theory to incentivize the operation and maintenance of a decentralized network in the absence of a central, coordinating party. This is a powerful new model that has yet to reach its full potential while also experiencing new developments. Cardano projects are poised to lead the next wave of Web3 innovation but this needs to be based on a solid understanding of the most current research and developments in game theory and how it is being applied to staking and rewarding models. 

This project will deliver an architecture design and proof-of-concept software demonstrating how a best-practice staking model can be implemented in a Cardano-native platform.

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

This project will report on current Web3 staking best practices and demonstrate how the Cardano-native Orcfax project can implement it. The resulting design documentation and proof-of-concept software will be open-sourced and shared with the Cardano community to inform and inspire further developments and implementation of staking mechanisms across projects in our 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?

For the past two years the Orcfax team has been researching and developing a comprehensive solution to the oracle problem for Cardano-native dApps and smart contracts. We have developed an open oracle publishing protocol and have been using it to publish an ADA/USD price feed to Cardano Mainnet since early 2024.

We have an active Discord and Twitter community where our ideas, requirements and deployment progress are scrutinized and debated. We participate widely in conferences such as Cardano Summit and Rare Evo to raise awareness about our mission and product offering.

We expect to discuss and share the findings and deliverables of this project in the same community-driven way to ensure trust and accountability.

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

Web 3 staking protocol research

A: Milestone outputs - Research report evaluating current Web3 staking protocols and tools available to Cardano projects.

B: Acceptance criteria - PDF file posted to Orcfax Github repository.

C: Evidence of milestone completion - PDF file is retrieved from Github repository.

Staking model design

A: Milestone outputs - Economic model report. Use case descriptions. Network architecture diagrams.

B: Acceptance criteria - Design artifacts are posted and updated in the public Github repository.

C: Evidence of milestone completion - Design artifacts are retrieved from Github repository.

Proof-of-concept software

A: Milestone outputs - Software code that demonstrates how a validator node operator can deposit testFACT stake, receive testFACT rewards and be slashed testFACT for non-conformant behaviour.

B: Acceptance criteria - Software code is posted in the public Github repository, including test cases.

C: Evidence of milestone completion - The software tests install and run successfully.

Close-out report and video

A: Milestone outputs - PDF report and MP4 video.

B: Acceptance criteria - close-out report and video accepted by Project Catalyst.

C: Evidence of milestone completion - Close-out report shared on Github. Close-out video shared on YouTube.

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

System Analyst: Peter Van Garderen

Peter is the CEO and Founder of Orcfax. He worked for two years in the field of digital archives and electronic record-keeping. Peter is the creator of the free and open source Archivematica and Access-to-Memory (AtoM) software applications, the most widely deployed archives management solutions in the world. His area of expertise is applying records management standards and archival science research to requirements for fully decentralized architectures, including the Orcfax oracle platform.

https://www.linkedin.com/in/petervangarderen/

System Analyst: Christian Koch

Christian is an analyst, researcher and information systems professional who holds a Masters Degree in Archival Science with a focus on blockchain technology. Christian serves as the primary liaison between the development team, Orcfax clients and our community management team.

https://www.linkedin.com/in/christian-mk/

Software Engineer: Ross Spencer

Ross is Orcfax’s senior systems architect and leads the development and implementation of the Orcfax architecture infrastructure. Ross has over two decades experience developing and maintaining open-source digital preservation software that is in use at major memory institutions worldwide.

https://www.linkedin.com/in/ross-spencer-b6b9b758/

Software Engineer: Dominic Wallis

Dominic is a former research scientist with a doctorate from the University of Bath. He gained valuable experience as a Cardano dApp developer working on a variety of platforms and tools. Dominic now applies this expertise Orcfax’s on-chain architecture. https://www.linkedin.com/in/dominic-algernon-wallis-123b42187/

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

To accommodate for the fluctuation in ADA price, which creates a conversion risk and a potential budget shortfall, we used the 12 month historical low of $0.25 in October 2023 to establish a budget base price of $0.35 ADA for calculating our expenses.

We will employ 2 software engineers ($100/hr = 285 ADA/hr) and 2 system analysts ($75/hr = 215 ADA/hr) to complete this work over a three month period. The systems analyst role includes requirements analysis, documentation, user acceptance testing, reporting and community management.

Milestone 1 (30 days): ₳32,875

Software Engineer: 55 x hrs x ₳285 = ₳15,675

Systems Analyst: 80 x hrs x ₳215 = ₳17,200

Milestone 2 (30 days): ₳31,450

Software Engineer: 50 x hrs x ₳285 = ₳14,250

Systems Analyst: 80 x hrs x ₳215 = ₳17,200

Milestone 3 (30 days): ₳34,575

Software Engineer: 110 hrs x ₳285 = ₳31,350

Systems Analyst: 15 x hrs x ₳215 = ₳3,225

Milestone 4 (10 days): n/a

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

Given how important incentive models are for the ongoing operation of decentralized networks, the budget for this project represents a small cost for significant ecosystem-wide value. The research report, architecture design, and proof-of-concept software will save time and money for the many other projects in the Cardano space that we know are assessing the same staking requirements for their own L2 networks. Our work will allow other Cardano projects to confidently steer a path to their own staking solutions and kick-start their own development initiatives.