StableGain: LP-Backed Stablecoin Yield Fund

[GENERAL] Name and surname of main applicant

The Linkage Finance Team

[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)

5

[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 create a StableGain fund that holds stablecoin LP tokens to generate continuous trading fee returns while guaranteeing a high risk-reward ratio

[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?

No

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

The funding will help to build Linkage Finance which is currently not fully open-source. We are planning on releasing part of the code as open-source under the GNU license.

[SOLUTION] Please describe your proposed solution

Our proposed solution, the StableGain fund, addresses the lack of passive income opportunities within the stablecoin segment in Cardano DeFi. By creating funds that hold liquidity provider (LP) tokens from stablecoin pairs, StableGain leverages the inherent safety of stablecoins and the earning potential of decentralized exchanges (DEXs).

Perception of the Problem:

Most stablecoin holders miss out on earning potential as their assets mostly sit idle. By enabling these holders to earn trading fees through LP tokens, we provide an avenue for enhanced portfolio performance without significant additional risk.

Approach:

Our approach leverages the decentralized nature of blockchain technology and the Cardano ecosystem. By using LP tokens from stablecoin pairs, we ensure that the principal amount remains relatively stable while generating income through DEX trading fees. This method not only utilizes the blockchain for what it's best at—creating transparent, efficient financial tools—but also supports the broader DeFi ecosystem on Cardano. To minimize the risk associated with holding LP tokens, the fund will hold LP tokens from multiple DEX protocols and various stablecoin pairs.

Engagement:

The project will engage current stablecoin holders looking for passive income, crypto investors seeking lower-risk opportunities, and DeFi enthusiasts interested in supporting and expanding the Cardano ecosystem. By participating, they contribute to and benefit from the liquidity and stability of the market.

Demonstration of Impact:

We will measure our impact by tracking the growth in total value locked (TVL) within the fund, the increase in passive income generated for participants, and the enhancement of the overall liquidity on the DEXes we partner with. These metrics will not only prove our concept but also demonstrate real-world utility and benefits to the Cardano community.

Uniqueness and Importance to Cardano:

What sets StableGain apart is its focus on stablecoin LPs within the Cardano ecosystem, a first of its kind. This focus on Cardano is crucial as it leverages its lower transaction fees and robust security features, making DeFi operations more efficient and appealing. Furthermore, by contributing to the liquidity and utility of Cardano’s DeFi landscape, StableGain helps in promoting Cardano’s adoption and growth in the competitive blockchain space.

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

The positive impact of our project, the StableGain fund, on the wider Cardano community can be broadly categorized and measured as follows:

Value to the Cardano Community:

1. Enhanced Liquidity: By investing in liquidity provider tokens, our fund contributes to the liquidity of stablecoins on Cardano's decentralized exchanges (DEXs), thereby facilitating smoother transactions and more robust trading mechanisms.
2. Increased Adoption: By providing a new avenue for rewards within the Cardano ecosystem, StableGain will attract both seasoned investors and new entrants. This increased engagement bolsters the overall activity and utility of the Cardano blockchain.
3. Support for DeFi Growth: Our project directly supports the growth and development of decentralized finance (DeFi) on Cardano, showcasing its capabilities and reliability as a platform for innovative financial solutions.

Measurement of Impact:

1. Quantitative Metrics: We will track the total value locked (TVL) in the fund, the number of active participants, and the annual percentage yield (APY) generated from DEX trading fees. These metrics provide clear, measurable indicators of the fund’s growth and its contribution to the DeFi ecosystem on Cardano.

Sharing Outputs and Opportunities:

1. Transparency Reports: We will publish monthly transparency reports detailing performance metrics of the different LP tokens on the website.
2. Educational Content: To engage and educate the community, we will produce and share educational content about the benefits of DeFi, the role of liquidity in stablecoin markets, and the specifics of LP tokens.

By implementing these measures, we aim to ensure that StableGain not only succeeds as a project but also acts as a catalyst for growth and innovation within the Cardano community.

[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?

Linkage Finance has a dedicated team of experienced developers with a deep understanding of blockchain technology and expertise in building decentralized applications. We are committed to delivering high-quality projects with transparency, accountability, and adherence to best practices.

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

Feasibility Study and Prototype Design

A: Milestone Outputs

1. Comprehensive feasibility study to validate the concept and make a comprehensive risk assessment
2. Detailed design of the prototype, including technical architecture and integration points with selected DEXs on the Cardano blockchain.

B: Acceptance Criteria

1. Feasibility report completed and reviewed by the project team.
2. Comprehensive risk report understanding optimal number of stable coins and DEX partners
3. Prototype design documented with clear specifications for functionalities and user interface.

C: Evidence of Milestone Completion

1. Publication of the feasibility study report on the project website.
2. Detailed prototype design document available for review.

Prototype Development and Testing

A: Milestone Outputs

• Development of the prototype based on the designed specifications.
• Integration of the prototype with Cardano testnet for testing interactions with DEXs.

B: Acceptance Criteria

• Prototype developed and deployed on the testnet.

C: Evidence of Milestone Completion

• Demo version of the prototype accessible on the testnet.

Launch and Project Close-out

A: Milestone Outputs

• Final adjustments and optimizations to the fund based on test results and user feedback.
• Comprehensive project close-out report including lessons learned and future recommendations.

B: Acceptance Criteria

• Final version of the fund operating seamlessly on the testnet.
• Detailed close-out report and promotional video produced and disseminated.

C: Evidence of Milestone Completion

• Publication of the close-out report and video shared through project social media channels
• Links to the Testnet website including the fund

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

Project Manager (Marius, Linkage Team)

Responsibilities:

• Oversee the entire project from inception to completion.
• Coordinate between different team members and stakeholders.
• Ensure that the project meets its deadlines and stays within budget.
• Handle administrative tasks, including reporting and compliance with the Catalyst funding requirements.

Lead Developer (Chris, Linkage Team)

Responsibilities:

• Develop, deploy, and maintain the fund interface and other necessary tools
• Ensure the technical feasibility and security of blockchain integrations.

Developers (To be hired)

Responsibilities

• Additional developers having experience in frontend, backend, Cardano to support the lead developer

Financial Analyst (To be hired)

Responsibilities:

• Design the economic model of the fund, including fee structures and reward mechanisms.
• Conduct risk assessment and manage the liquidity pool efficiently.
• Analyze market data to optimize fund performance.
• Prepare financial forecasts and performance reports.

Community Manager and Outreach Coordinator (Evan)

Responsibilities:

• Build and maintain relationships within the Cardano community.
• Manage communications and marketing, including social media presence and community engagement.
• Gather feedback from community to guide project improvements and adaptations.

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

Project Management: 6,000 ADA

• Details: Includes the overall management, scheduling, compliance, and reporting activities throughout the project lifecycle.

Development: 47,000 ADA

• Details: Covers the costs of blockchain developers who will design, implement, and test the smart contracts and other blockchain integrations on the Cardano platform.

Economic and Risk Analysis: 7,000 ADA

• Details: Involves financial analysis to design the fund's economic model, including simulations and risk assessment strategies to optimize performance and safety.

Marketing and Community Engagement: 4,500 ADA

• Details: Funds the creation and distribution of marketing materials, community management, engage potential participants and educate them about the fund

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

The budget for the project is aligned with the strategic objectives for a successful concept product on the Cardano blockchain

1. Focused Spending: Key investments in development ensure robust infrastructure, essential for asset safety.
2. Market-Based Pricing: Costs reflect market rates for skilled blockchain and financial professionals, ensuring quality and competitiveness.
3. Value-driven Allocation: Funds designated for community engagement not only attract participants but also ensure project credibility.
4. Efficiency and Impact: The budget aims to maximize impact, focusing on high-quality output and user-friendly design to drive adoption and provide tangible benefits to the Cardano community.