zkFold x Defy: Cross-border payment infra using ZK tech

[GENERAL] Name and surname of main applicant

Sebastien Picard

[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

• zkFold
• Vladimir Sinyakov

[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)

Develop a cross-border banking payment channel leveraging Cardano network, Plutus smart contracts, and a ZK KYC verification protocol for emerging markets.

[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

BSL 1.1. license - Source Available. The code will be available on GitHub.

[SOLUTION] Please describe your proposed solution

Existing financial service solutions in emerging markets do not truly understand and address underserved communities' unique challenges and varied needs. The problems include low digital literacy, high transaction costs, lack of compliance, privacy, and financial infrastructure, resulting in a financial inclusion gap.

Our solution introduces a Cardano Blockchain-based system for an affordable alternative to cross-border payment while adhering to regulatory standards. Using Zero-knowledge proofs (ZKPs), our service can comply without compromising sensitive user information.

When a user undergoes KYC, we mint a token on Cardano with the hash of their data. The actual KYC data will be stored with the company (Defy Financial). The token proves that the KYC procedure was performed at a particular date and time. The KYC token helps track the evolution of the user’s KYC data.

We will create zero knowledge circuits based on real-world banking requirements. These circuits encode the requirements and enable the company to prove that the users’ KYC data satisfies those requirements.

Examples:

check that the transaction does not involve sanctioned countries

check that the user is more than 18 years old

check that the transaction has been signed with enough “signing power.”

We will also develop proof generator software (backend) and proof verifier software (backend). Given the transaction details, proof generator software will generate the proof of validity, and proof verifier software will verify the proofs.

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

The Cardano community has always been focused on solving real-world problems and using Blockchain for Good. Our solution attempts to carry on the novel mission of banking the unbanked.

. This proposal leverages Zero-Knowledge Proofs (ZKPs) on Cardano to provide secure and inclusive finance. Prioritizing user privacy, data triangulation, and regulatory compliance fosters trust and transparency, attracting new users and developers to the Cardano ecosystem.

Unlocking Financial Inclusion:

• Unbanked and Underserved Populations: The solution expands financial access for those lacking traditional banking services. Integrating ZKPs ensures user privacy while enabling secure transactions and KYC verification through triangulation.

• Increased Trust and Transparency: Immutable transaction records and automated regulatory compliance through smart contracts build trust within the network, attracting more users and developers.

Boosting the Cardano Ecosystem:

• Onboarding Users: Cardano establishes itself as a robust and reliable platform for secure and compliant financial transactions. This can help us attract new users, developers, institutions, and investors.

• Real-world Impact: The solution fosters financial inclusion and economic development in emerging markets, showcasing Cardano's potential.

This proposal will help Cardano become the leading chain in driving financial inclusion and sustainable economic development through innovative blockchain solutions.

[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?

ZKFold is the company that works on L1 and L2 scaling for Cardano using zero-knowledge proofs. It aims to release the first version of zkFold Symbolic (the zero-knowledge smart contract language) in Q3 2024. The zkFold team consists of expert Haskell, Rust, and ZKP developers. The founder of zkFold, Vladimir Sinyakov, previously completed a Project Catalyst Fund 6 grant leading the ENCOINS team. ENCOINS is a DApp on Cardano recently launched on the mainnet. Also, zkFold is consistently delivering Fund 11 proposal milestones.

Defy status records

The Defy initiative has made significant strides in its development and partnerships.

• The prototype for encryption key management has been completed, marking a crucial step in ensuring secure data management.
• Simultaneously, discussions with several regulatory bodies to enter their regulatory sandbox signify Defy's commitment to compliance and regulatory alignment.
• Collaborations with GCC countries demonstrate Defy's dedication to fostering a supportive ecosystem.
• Discussions with several international organizations to explore opportunities in countries excluded from the global financial system are ongoing, highlighting Defy's inclusion goals.
• Defy team has solidified its financial support with an MoU signed with a VC fund, showcasing confidence in Defy’s vision.

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

Ability to mint KYC token with the hash of the user's KYC data

Zero-knowledge circuits based on real-world banking requirements. These circuits will be used to generate proofs.

Developing a proof-generator software (backend). This software will use Zero Knowledge circuits to build ZK proofs to prove user data without disclosing it.

Developing a Proof verifier software (backend). The verifier will be able to verify the generated proof, allowing institutions or banks to verify information without having access to the data.

A video, documentation, and a whitepaper illustrating the MVP functionality

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

The zkFold team consists of expert Haskell, Rust, and ZKP developers. ZKFold's team members participated in the development of several successful projects on different blockchains, including Cardano, Polkadot, and Near. The zkFold team won the EMURGO BUILD Hackathon on the zero-knowledge track and took 3rd place in the Battle of the Builders at the Cardano Summit 2023 in Dubai. Also, all zkFold's Fund 11 proposals have been accepted by the community.

Vladimir Sinyakov

Founder and CTO,

https://www.linkedin.com/in/vladimir-sinyakov/

Founder and protocol architect of ENCOINS. Ph.D. in Computational Mathematics. Prior experience includes five years of postdoc in applied mathematics (Control Theory), publishing in top journals in the field. Previously completed a Project Catalyst Fund 6 grant leading the ENCOINS team. ENCOINS is a DApp on Cardano that has been recently launched on the mainnet.

Stanislav Marycev

Co-founder, Business Development. 

https://www.linkedin.com/in/stanislav-marycev/

Bachelor degree in Business Management. Cardano Blockchain Certified Associate (CBCA). PMP and agile professional with 12+ years of experience in worldwide IT and blockchain projects. Stanislav has experience in leading multicultural international teams (30+ countries) and working closely with top level stakeholders in finance.

Ilya Eriklintsev

ZKP researcher,

https://www.linkedin.com/in/ilya-eriklintsev-3a296852/

Techlead at vSelf, an SSI solution on NEAR blockchain. More than six years of experience in the blockchain industry. Former researcher in Computational Fluid Dynamics.

Eitan Chatav

Developer

PhD in mathematics, expert in advanced mathematics and physics; probability and statistics, algebra, real and complex analysis. 5+ years of experience with blockchain, NFT, Haskell

Vladimir Morozov

Developer

B.Sc. in Applied Mathematics and Computer Science, PhD in Computational Biology. 6+ years of experience with Haskell and Python

Other zkFold’s developers will contribute to this proposal on request.

Defy

The Defy team consists of Sebastien, product owner and CEO, Jingles, CTO, Julia, Chief Regulatory Officer and Eelee, Chief of Staff, responsible for institutional partnerships. Defy’s team members have 45+ experience in building and running Fintech and DLT projects. Defy’s team members have also a strong experience in nurturing partnership with regulators and international organizations involved in promoting financial inclusion. 

Sebastien Picard

CEO 

www.linkedin.com/in/zebpic

PhD, MBA and MSc in Business Management, Sebastien founded, co-founded and advised startups in France, China, The Bahamas, and Cayman Island in various sectors : Crypto, Education, Fashion, Digital news and Cognitive and behavioral R&D. He also worked as a strategic builder for corporates' venturing arm in banking and vaccines industries. Sebastien has published papers on ethics and compliance in top academic journals.

Hongjing (Jingles) Khok

CTO 

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

PhD in Machine Learning & Neuroscience from Nanyang Technological University, Jingles has a decade of experience as a machine learning engineer specializing in natural language processing, recommendation systems, and signal processing. Founder of Mesh SDK and Andamio, Jingles design and oversee technology operations at Defy, identifying product strategies and synergies.

Eelee Lua

CoS

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

With a BBA in business, Eelee is a risk management and FinTech expert, SID Accredited Board Director. She has an extensive start up experience working alongside founders to develop, communicate and execute strategic plans to achieve business objectives. An advocate for diversity and inclusion, involved in SFA Women in FinTech, WIA Chapter Lead, Eelee excels in nurturing institutional partnerships.

Julia Chin

CRO 

https://www.linkedin.com/in/pekyee-julia-chin/

With over 25 years of experience in compliance and financial crime prevention, including roles at HSBC and Standard Chartered, Julia is an expert in correspondent in Banking, Securities Services, Fintech. She oversees regulatory and compliance affairs within Defy, ensuring full compliance with laws, regulatory requirements, policies, and procedures.

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

KYC token: 26,000 ADA

1 software developer @ $3,000 per month for 2 months = $6,000 (~13,000 ADA)

1 ZKP researcher @ $3,000 per month for 2 months = $6,000 (~13,000 ADA)

Zero knowledge circuits from real-world banking requirements: 109,000 ADA

3 software developers @ $3,000 per month for 4 months = $36,000 (~77,000 ADA)

1 software developer @ $3,000 per month for 2 months = $6,000 (~13,000 ADA)

1 ZKP researcher @ $3,000 per month for 3 months = $9,000 (~19,000 ADA)

Proof generator software (backend): 38,000 ADA

2 software developers @ $3,000 per month for 3 months = $18,000 (~38,000 ADA)

Proof verifier software (backend): 38,000 ADA

2 software developers @ $3,000 per month for 3 months = $18,000 (~38,000 ADA)

Documentation and Project Management: 89,000 ADA

1 technical writer @ $3,000 per month for 3 months = $9,000 (~19,000 ADA)

1 project manager @ $2,000 per month for 6 months = $12,000 (~25,000 ADA)

1 whitepaper writer @ $3,000 per month for 1 months = $3,000 (~6,000 ADA)

1 Compliance and legal @ $3,000 per month for 4 months = $12,000 (~26,000 ADA)

1 Partnership with regulators and entities @ $3,000 per month for 2 months = $6,000 (~13,000 ADA)

Total: $141,000 = ~ 300,000 ADA

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

The project requires a deep understanding of Cardano smart contracts, blockchain backend infrastructure as well as expertise in zero-knowledge cryptographic protocols. As we pay competitive salaries to our developers and researchers, we've arrived at the budget breakdown above. Ultimately, the project's cost is comparable to other Cardano projects of similar scale.

Our proposed solution will utilize Zero-Knowledge Proofs (ZKPs)