Ikigai + MLABS - Hydra-Auction Update - Fully-backed Bids

[GENERAL] Name and surname of main applicant

MLabs Ltd.

[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

Sam Delaney - sdelaney@ikigaitech.org

Eric Phan - ephan@ikigaitech.org

Dzmitry Shuiski - dzmitryshuiski@mlabs.city

Ilia Rodionov - ilia@mlabs.city

[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)

Make use of Hydra’s new incremental commit/decommit features to support full-backed auctions, allowing integration with existing L1 auction protocols and creating the best user’s experience possible.

[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

Both the Hydra-Auction and Grabbit protocols are either already open sourced or in the process of open sourcing. By the time the proposal has finished, the Grabbit protocol will be fully open source which will allow us to use it as L1 parallelized protocol we want to have. That way the final updated Hydra auction protocol will be fully open sourced and updated with the work outlined here.

[METADATA] SDG rating

NA

[SOLUTION] Please describe your proposed solution

We aim at building the Auction solution that allows for decentralized, contention-less layer 1 auctions, with fast layer 2 throughput on demand by combining two protocols we developed before - Hydra-based auctions and Grabbit L1 auctions. Two things hindered building such a combined auction protocol:

• The absence (or immaturity) of incremental operations in Hydra.
• The fact that Grabbit protocol was not fully open sourced.

Now when both impediments are behind (or in the process of resolving, but we have no reasons to think this won’t be done very soon) it’s the proper time to start moving towards the unified auctions. Our plan is as follows:

• First, we are to implement full-backed bids within Hydra-based auctions.
• Next we are to support parallelized L1 auction protocol by finding a proper way to move such auctions between L1 and L2.
• Finally we will combine two protocols by adopting Grabbit scripts and providing auction state layer switching that can be used in case the auctioneer needs it. 

We are going to preserve the existing Hydra-auction flow as well, so the end user can choose whatever version suits their needs better.

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

Hydra has added many new features which can enable better UX to be developed in Cardano applications. However, dApps still need to adapt to use these features before users can see them in action.

By combining two existing applications, we’ll put these features in users' hands as fast as possible, and help other apps to do the same by providing a robust, open source example to learn from.

[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?

This is a joint submission by the teams behind Hydra-Auction and Grabbit Marketplace - Ikigai Technologies and MLabs. We have successfully created both auction protocols and SDK for building Hydra-based applications.

Ikigai has built and deployed Grabbit — an L1-based auction with a rich user experience and a sophisticated smart contract model that does not require any privileged third parties to process bids and determine the winner (i.e. no batchers).

Together two companies worked on the Hydra-Action Catalyst project in Catalyst Fund10. This work includes a server to be run by Hydra delegates that controls Hydra nodes. As trailblazers in this area we collaborate with the Hydra’s team by providing the feedback and identifying the missing bits (e.g. commit transaction blueprint issue https://github.com/input-output-hk/hydra/issues/1350).

This experience makes Ikigai and MLabs well positioned to continue this work in order to bring fruitful results to the Cardano community.

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

Combined Auction Protocol Specification

Outputs

• Auction combined protocol specification, which explains clearly the way full-backed L2 bids and granular commit/decommit bidders’ operations will be implemented as well as how parallelized L1 auctions protocol will be integrated with L2

Granular Commit/Decommit for Bidders

Outputs

• The latest Hydra version is supported within the delegate server.
• Endpoints to allow bidders to move their funds to/from L2 are implemented and tested.

Fully-backed Bids Auction Flow

Outputs

New auction workflow based on non-parallel L1 approach and full-backed bids:

• Support for multiple auction workflows are added.
• A set of adopted and tested on-chain scripts from Hydra-auction protocol.
• Needed off-chain API endpoints are implemented and tested
• Happy-path test-suite demonstrates the flow, including the use of bidders’ granular operations

L1 Parallel Auctions Interoperability

Outputs

The third auction workflow, based on parallel contention-free L1 approach and full-backed bids:

• Scripts from Grabbit protocol are adopted.
• Necessary modifications are done in Hydra auctions’ on-chain scripts are done.

• New endpoints are implemented.

Update UI SDK

Outputs

• The existing Hydra auctions UI SDK gets modified:
• Commit/decommit operations for bidders.
• Support for new combined protocol’s auction flow.

Documentation, launching, and open-sourcing best practices

Outputs

• Updated Hydra auction platform is launched on testnet.
• Hydra auctions docs updates.
• Close-out video on the combined auction protocol.
• An article is published.
• An announcement is made on social media.

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

MLabs

MLabs has quickly become one of the premier development firms in the Cardano Ecosystem. We are an IOG Plutus Partner and work regularly with IOG to develop the Cardano blockchain and ecosystem. Our team is composed of talented developers who have helped build community projects such as:

• Liqwid
• SundaeSwap
• Minswap
• Optim
• Many others

Through our work with early-stage projects, we have one of the largest groups of Haskell/Plutus developers in the community.

Website: https://mlabs.city/

Ikigai Technologies is a technology company that specializes in creating innovative solutions leveraging Cardano. The team is composed of experienced professionals in the fields of technology, business, and design. Considered a quiet builder, Ikigai has been developing solutions for marketplaces, data solutions, and game development with Grabbit, Logosphere, and GENUN Games.

Core team

• Sam Delaney sdelaney@ikigaitech.org - Design & Specification
• Eric Phan ephan@ikigaitech.org - Frontend Developer
• Cliff Garvis - cgarvis@ikigaitech.org - Backend Developer
• Dzmitry Shuiski dzmitryshuiski@mlabs.city - Blockchain Developer
• Ilia Rodinov ilia@mlabs.city - Project Lead

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

Budget/cost breakdown:

• Milestone 1- Combined Auction Protocol Specification
• 32h - Revise and clarify the specification for Fully Backed Bids on L2 form Fund 10 Hydra Auction project, taking into account the way Hydra’s incremental commit / decommit features are implemented.
• 49h -Identify and research the ways multi-bids parallelized L1 auctions protocols can be used within Hydra Auctions protocol.
• 73h - Prepare the next version of the protocol specification, which will include full-backed L2 bids, parallelized L1 auctions interoperability and UX approaches for combined auctions.
• Milestone 2 - Granular Commit/Decommit for Bidders
• 16h - Bump Hydra dependency in the delegate server.
• 162h - Add support for incremental API operations, implement new operations endpoints and tests within the delegate server. 
• Milestone 3 - Fully-backed Bids Auction Flow
• 41h - Support for multiple auction workflows.
• 41h - L1 non-parallel full-backed compatibility.
• 81h - L2 full-backed bids implementation.
• 20h - Full-backed flow as a whole - debugging and testing.
• Milestone 4 - L1 Parallel Auctions Interoperability
• 57h - Incorporate Grabbit's on-chain scripts & adjust them to fit.
• 170h - Moving parallelized L1 auctions to L2.
• Milestone 5 - Update UI SDK
• 130h - Support for granular operations for bidders within UI SDK.
• 20h - Full-backed bidding changes within the flow.
• Final milestone - Documentation, launching, and open-sourcing best practices
• 16h - Update Hydra auctions docs.
• 32h - Close-out video on the combined auction protocol.
• 20h - Promoting on social media.
• 41h - Preparing and publishing an article.
• 61h - Launching on testnet.

Subtotal: 1110 hours @110 USD/hour = 122,067 USD

Total (122,067 USD USD@ rate $0.296 USD / ADA): 420,921 ADA

**In the interest of full transparency, please note we have applied a conservative USD/ADA exchange rate in pricing this proposal. This is to ensure our operations remain stable regardless of market conditions. Although we firmly believe the future of Cardano is bright, we recognize the price of ADA and all cryptocurrencies is inherently volatile. Our financial obligations are denominated in fiat. Most importantly, this includes the salary of our engineers whose hard work makes projects like this possible. 

In the unlikely scenario of severe negative price movement beyond our forecasted rate, it is possible that MLabs may need to temporarily suspend work on this proposal until the market recovers. Rest assured, this decision would be made solely to protect our business's long-term viability and never taken lightly. 

We appreciate your understanding and support, and we are excited to see what we can achieve together.

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

Hydra has long been promised as one of the pillars of scalability for the Cardano ecosystem. We are well positioned to bring the first actual user-experience improvement from Hydra to the Cardano community. With our proposal, Cardano will have a fast, decentralized use case that could not be done without Hydra to kick off 2025 with.