DeltaDeFi: Pioneering High-Frequency Trading on Cardano

[GENERAL] Name and surname of main applicant

DeltaDeFi

[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)

DeltaDeFi is a non-custodial protocol to facilitate high-frequency trading within the UTxO ecosystem. Orders are matched on the order book and are submitted to the blockchain for verification.

[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

All smart contracts and documentation would be open source with Apache-2.0 license.

[METADATA] SDG rating

SDG 8: Decent Work and Economic Growth: By fostering a more efficient and liquid market, the project will contribute to economic growth and provide opportunities for employment within the blockchain and financial technology sectors.

SDG 9: Industry, Innovation, and Infrastructure: Developing an advanced trading platform aligns with the goal of promoting innovation and building resilient infrastructure, particularly within decentralized finance and blockchain technology.

SDG 10: Reduced Inequalities: Enhanced liquidity and reduced barriers to entry in financial markets could potentially contribute to reducing inequalities by providing broader access to trading opportunities.

SDG 17: Partnerships for the Goals: Collaboration and partnerships formed through this R&D project, possibly involving various stakeholders within the blockchain and financial sectors, align with the goal of fostering global partnerships to achieve sustainable development.

[SOLUTION] Please describe your proposed solution

Mass adoption of DeFi heavily depends on the liquidity of the ecosystem. High-frequency trading solutions are efficient in bridging the liquidity between investors and traders, improving trading volume within the Cardano ecosystem. Order management fees and order confirmation are the major blockers in the Cardano ecosystem due to the nature of the UTXO model. 

Our proposed solution is categorized into two parts:

Off-Chain Order Matching

DeltaDeFi develops a virtual order book. Through the off-chain order matching engine, trade execution can be completed instantly, without sacrificing the decentralization benefits of the blockchain as we are a non-custodial platform. This system allows for high transaction throughput, minimizing latency and reducing the order creation, and cancellation costs.

On-Chain Settlements

While the order matching occurs off-chain, all trade settlements are submitted to the Cardano blockchain, ensuring efficiency and security for all transaction

Besides, our virtual order book system introduces a non-custodial, chain-agnostic architecture that supports any UTxO-compatible blockchain, indicating the consideration of scalability and interoperability.

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

Boosting Cardano’s Appeal to Institutional and Professional Traders

What's Happening: We're aiming to bring High-frequency Trading (HFT) to Cardano.

Big Picture: Targeting a slice of the massive $30 trillion global crypto trading pie (even more when the bull market arrives).

Core Benefit: Attract heavy hitters - think institutional and professional traders. This means more trading on Cardano, more growth, more buzz.

Liquidity Surge, Ecosystem Thrive

What's Happening: HFT players trade big, trade fast.

Big Picture: They're the market's oil - making buying and selling smoother for everyone.

Core Benefit: Reduced bid-ask spreads, healthier market, more money flowing. It’s like opening the floodgates for Cardano's DEXes, boosting their trade volume.

Open Source Contributions

Full documentation will be open-source. SDK will be publicly available.

[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?

Our team has strongly committed and experienced members, providing all required skill sets and expertise to successfully implement the proposed solution

Trust and accountability:

• Track record on Cardano ecosystem participation
• Team members have a track record of contributing in Cardano open source such as Mesh feature improvement, research Cardano techniques with sharing on Gimbalabs.
• Leverage the team's blockchain and financial tech expertise
• Team members are professionals across a spectrum of industries, including banking and finance, cyber security and software engineering, with chartered status with different professional bodies.

Approach validation

• Market validation conduction with HFTs
• Our team gets direct connections with multiple hedge funds with AUM up to billions of dollars, where we conduct product interviews and get validations on how the approach could solve their major pain points trading on decentralized networks.

Technical approach feasibility research

• F11 research on Cardano smart contract and transaction logic is performed and validated that the transaction logic is feasible on the blockchain layer.
• Collaboration with Cardano infrastructure providers
• The team would collaborate with infrastructure providers such as Maestro to validate the proposed solution has no technical blockers on an infrastructure point of view

Previous interviews, workshops, and activities: 

https://twitter.com/GoMaestroOrg/status/1770853383559106806

https://twitter.com/_MrHunt_/status/1777370848673902929

https://twitter.com/SIDANWhatever/status/1768592384185811205

https://twitter.com/sidan_lab/status/1777377206274249038

https://twitter.com/_MrHunt_/status/1788228931591540959

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

Milestone 1: Preparation and Organization Setup (1 Month)

Objective: Establish a solid foundation for the project by setting up the necessary infrastructure, assembling the team, and defining project management practices.

Activities:

• Set up legal and administrative frameworks.
• Confirm core team members and advisors.
• Establish project management tools.

Acceptance Criteria & Evidence:

• Legal entity established and operational.
• Public announcement on core team members and advisors.
• Project management tools and systems set up.

Milestone 2: Technical Architecture and Design (1 Month)

Objective: Fine-tune and confirm the initial draft on technical architecture from F11 research.

Activities:

• Develop a detailed technical architecture for both off-chain and on-chain components.
• Confirm the smart contract design
• Design the user interface and experience for the platform.

Acceptance Criteria & Evidence:

• Full documentation on smart contract logic
• Technical architecture document completed and reviewed.
• Updated Gitbook documentation on the technical architecture

Milestone 3: MVP Smart Contract Development & Open Source (1 Month)

Objective: Design and develop DeltaDeFi Cardano smart contracts

Activities:

• Design and develop DeltaDeFi cardano smart contracts

Acceptance Criteria & Evidence:

• Approach commercial smart contract auditors OR initiate community auditing
• Open source the GitHub repository, which includes source code and script specification

Milestone 4: DeltaDeFi API Development (1 Month)

Activities:

• Develop the API for accessing & trading on DeltaDeFi

Acceptance Criteria & Evidence:

• Publicly accessible API documentation via Github or Gitbook, including all necessary endpoints - setting up account, depositing, placing order, withdrawing

Milestone 5: Website Design and Development (1 Month)

Objective: Design and develop the DeltaDeFi website for traders to access

Activities:

• Design the user interface and experience for the platform.
• Development of website frontend

Acceptance Criteria & Evidence:

• Construct the website frontend and deploy it in a public domain

Final Milestone: Application deployment and integration (1 Month)

Objective: Integrate the application with a user-facing website and deploy the API service

Activities:

• Deployment of smart contracts on Cardano preproduction testnet
• Integration of smart contracts with backend service with user-facing website
• Deployment of API service

Acceptance Criteria & Evidence:

• Fully functional website frontend with Cardano preproduction testnet
• Fully functional API service with Cardano preproduction testnet

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

A Hong Kong based Interdisciplinary team.

To ensure that we do not only provide deep and profound knowledge and expertise within the Cardno ecosystem, but also include professional expertise from outside the ecosystem, we have assembled a team of mixed skills and Interdisciplinary experts from both sides, the Cardano Ecosystem as well as from the financial industry in Hong Kong (HK).

Tier 1 - Proposal Leads (The group responsible and in charge of implementing the proposal)

Jackal Leung - Software Engineer

• Over 5 years in full-stack development in creating comprehensive software solution that encompass both front-end and back-end components
• Extensive experience in high-frequency system architecture design and infrastructure development.
• Worked and contributing in a leading FinTech unicorn (Welab bank) in HK
• LinkedIn: https://www.linkedin.com/in/jackalleung/ 

Anson Chui - Cybersecurity Engineer

• Cybersecurity engineering work experience at Huobi, Hex Trust, and Deloitte
• Extensive experience in implementing and monitoring security controls to ensure system hardening, resilience, and integrity of mission critical systems
• Certified Information Systems Security Professional (CISSP) & Certified Information Systems Auditor (CISA) & AWS Certified Solutions Architect
• LinkedIn: https://www.linkedin.com/in/anson-chui-219816158/ 

Hinson Wong - Smart Contract Engineer

• Team member of Gimbalabs, driving Hong Kong community
• Key contributor to MeshJS, a Cardano SDK for DApp development
• Lead developer at Cardano Name Service (CNS)
• Extensive network with Hong Kong based hedge funds and individual HFTs
• Ex-Citi, Chartered Financial Analyst (CFA)
• LinkedIn: https://www.linkedin.com/in/hinsonwong/
• Github: https://github.com/sidanwhatever 

Neal Lam - UIUX & Media Designer

• Digital & Virtual Banking UIUX design experience at Livi bank
• Branding design experience
• Animation designer of a Hong Kong Key Opinion Leader (KOL) - mingjai (653K subscriber, Top 5 KOL in Hong Kong)
• LinkedIn: https://www.linkedin.com/in/neallam/ 

Tier 2 - Proposal Support & Advisory (A supportive layer to advise and consult the Proposal Lead)

Kinson Cheung - Cardano Ecosystem & HFT Advisor

• HK Cardano Community Organiser
• Head of Incubation at Adaverse
• Experience in product marketing
• Extensive network with institutional traders in UK
• LinkedIn: https://www.linkedin.com/in/kinson-cheung-166979103/ 

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

Milestone 1: Preparation and Organization Setup (1 Month)

Activities budget:

• ADA 10,000 - Set up legal and administrative frameworks.
• ADA 35,000 - Confirm core team members and advisors.
• ADA 5,000 - Establish project management tools.
• Total budget: ADA 50,000

Milestone 2: Technical Architecture and Design (1 Month)

Activities budget:

• ADA 15,000 - Develop a detailed technical architecture for both off-chain and on-chain components.
• ADA 15,000 - Confirm the smart contract design
• ADA 20,000 - Design the user interface and experience for the platform.
• Total budget: ADA 50,000

Milestone 3: MVP Smart Contract Development & Open Source

Activities budget:

• ADA 40,000 - Design and develop DeltaDeFi Cardano smart contracts
• ADA 10,000 - Prepare smart contract specification
• Total budget: ADA 50,000

Milestone 4: DeltaDeFi API Development (1 Month)

Activities budget:

• Develop the API for accessing & trading on DeltaDeFi
• ADA 5,000 - Account setup API
• ADA 5,000 - Deposit API
• ADA 5,000 - Withdrawal API
• ADA 25,000 - Order placement API
• ADA 10,000 - Other APIs to enhance UX
• Total budget: ADA 50,000

Milestone 5: Website Design and Development (1 Month)

Activities budget:

• ADA 10,000 - Design the user interface and experience for the platform.
• ADA 40,000 - Development of website frontend
• Total budget: ADA 50,000

Final Milestone: Application deployment and integration (1 Month)

Activities budget:

• ADA 10,000 - Deployment of smart contracts on Cardano preproduction testnet
• ADA 20,000 - Integration of smart contracts with backend service with user-facing website
• ADA 10,000 - Deployment of API service
• ADA 10,000 - Prepare the project close-out report and video
• Total budget: ADA 50,000

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

Investing in high-frequency trading (HFT) infrastructure offers substantial value to Cardano by driving higher adoption among institutional and professional traders, amplifying liquidity within Cardano’s Defi ecosystem, reshaping Cardano as the premier destination for cutting-edge trading. These advancements elevate Cardano DeFi's maturity and market competitiveness, propelling it to the forefront of the industry.