Cardano and Midnight Qualified Custody Support

[GENERAL] Name and surname of main applicant

Dustin Plett

[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)

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)

Balance, Canada’s largest qualified custodian, will support Cardano in Q4 2024 and the Midnight network in Q1 2025, facilitating the Night to Midnight swap for institutional investors.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

Yes

[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.”

Midnight must provide full technical documentation for the network protocol by late Q4 2024, for Balance to begin building early Q1 2025 to meet the timelines desired by ecosystem participants.

[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

N/A

[METADATA] Horizons

Infrastructure

[SOLUTION] Please describe your proposed solution

Balance has chosen to support Cardano and Midnight because of the increasing demand from institutional clients seeking to diversify their holdings and gain exposure and participate in the ecosystem of these promising networks. Our institutional-grade custody platform fills a critical gap by allowing these clients to hold, stake, and perform various types of financial transactions involving Cardano and Midnight assets securely. By leveraging our proprietary offline storage solution, we ensure that our clients can manage their Cardano and Cardano-based assets with the same level of safety and regulatory adherence as the rest of the digital assets we support.

The project will engage institutional clients from Canada, the United States, Cayman Islands, British Virgin Islands, and Puerto Rico who are looking for secure, compliant custody solutions for their Cardano and Midnight assets. These include trading desks, private and public funds, single/multi-family offices, broker-dealers, investment advisers, corporate entities, and ultra-high-net-worth and high-net-worth individuals. Additionally, we will engage yield partners to enable clients to stake their Cardano assets securely and will collaborate with developers and partners within the Cardano and Midnight ecosystems to ensure seamless integration and support with various protocols to support any additional use cases clients might require.

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

We will demonstrate our impact through several key metrics, including the number of institutional clients adopting our custody solutions for Cardano and Midnight assets, the growth in assets under custody (AUC) related to these ecosystems, and the volume of staking and financial transactions executed through our platform. We will also measure the number of partnerships with yield providers and other Cardano and Midnight ecosystem participants. 

[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?

Balance has a proven track record of delivering advanced technology solutions since 2017. Our entire custody platform is built in-house by our own team of highly skilled engineers, ensuring full control over development, security, and innovation. This in-house expertise allows us to maintain high standards of trust and accountability, as we are not reliant on third-party providers for critical infrastructure. Furthermore, as a profitable business, we have the financial stability to continue investing in the development and long-term support of our solutions, ensuring our ability to meet the needs of institutional clients with reliability and transparency. Our commitment to security is demonstrated by our SOC 2 Type 2 certification and insurance policies, further underscoring our dedication to trustworthiness in managing digital assets.

Balance has over seven years of successful business operations, which speaks directly to our ability to secure digital assets responsibly. Throughout this time, we have grown to become Canada’s largest digital asset custodian, handling billions in assets for institutional clients while adhering to strict financial controls. In managing the grant funds, we will apply the same level of diligence, leveraging our financial expertise, internal audits, and transparent reporting processes to ensure the proper allocation and usage of the grant. Our long-standing experience running a profitable and compliant business, combined with our internal controls, provides strong assurance that the grant will be managed effectively and responsibly.

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

This project will be completed in two phases, encompassing seven milestones:

Phase 1 - Q4 2024: This phase includes the first four milestones, focusing on the integration and support of Cardano and the Night token.

• Milestone 1: Cardano Support - Integration of Cardano into our platform, enabling secure storage and management of ADA assets for our clients.

• Milestone 2: Cardano Native Assets Support - Expanding our platform to support Cardano native assets, providing clients with a secure way to hold, manage, and transact with these assets.

• Milestone 3: Night Token Support - Building functionality to support the Night token, allowing clients to hold and manage this Cardano ecosystem token within our custody solution.

• Milestone 4: Night Token Airdrop Support - Facilitating the airdrop of the Night token to holders of ETH, BTC, and ADA, seamlessly distributing tokens to eligible users.

Phase 2 - Q1 2025: This phase consists of the final three milestones, extending support to Midnight and staking functionalities.

• Milestone 5: Night to Midnight Swap Support - Developing a secure process for swapping Night tokens for Midnight once the protocol launches, including full support for managing Midnight assets.

• Milestone 6: Cardano Staking Support - Implementing staking support for ADA, enabling clients to participate in the Cardano network and earn rewards through our yield partners.
• Milestone 7: Midnight Staking Support - (If applicable) Introducing staking functionality for Midnight assets, allowing clients to further engage with and benefit from the Midnight network.

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

George Bordianu, Chief Executive Officer: oversees the overall strategy and direction of the project.

Vladimir Li, Chief Technology Officer: ensures the technical execution aligns with the project’s milestones.

Nuno Silva, Chief Product Officer: oversees product management and ensures the seamless integration of Cardano and Midnight protocol support.

Dustin Plett, Chief Sales Officer: Handles sales and event coordination, promoting the integration at Cardano and Midnight ecosystem events.

Kevin Martin, Senior Staff Software Developer: Responsible for the technical implementation, working full-time on the project during key phases to deliver the required functionality.

Strategic Resources:

Fahmi Syed, CFO, IOG

Ian Kane, Head of Partnerships at IOG Midnight

Fahmi and Ian will provide required strategic support and serve as key consultants throughout this project. Their contributions will not impact the project budget, as their costs are already covered by IOG. However, their involvement is acknowledged as a significant benefit in kind, contributing valuable expertise and insights to the delivery team. This support is integral to the project's success and reflects their commitment to the overall goal to expand institutional and custodial support for the Cardano ecosystem. The project will benefit greatly from Fahmi and Ian's direct engagement, as the IOG team is highly motivated to see it succeed and wider support for ADA and all Cardano Native Assets. Without their expertise and active involvement, the project could likely progress at a much slower pace. Their participation is, therefore, crucial, and securing their continued support is a key factor in ensuring the project moves forward efficiently, which is why it requires approval.

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

The cost breakdown for the two phases of the project is as follows:

• Full-Time Software Developer: The cost for each eight-week phase is $64,232, totalling $128,463 across Q4 2024 and Q1 2025.
• Chief Technology Officer (CTO): The CTO’s contribution of one day per week over eight weeks will cost $12,845 per phase, amounting to a total of $25,690 across both phases.
• Chief Product Officer (CPO): The CPO’s involvement for two weeks per quarter will cost $14,300 per quarter, totalling $28,600 over both quarters.

The total resource allocation for the project across both phases amounts to $182,753. This ensures that we have the financial resources necessary to achieve the milestones set for Q4 2024 and Q1 2025.

 

Additionally, we plan to attend three key events hosted by the Cardano and Midnight ecosystems to promote the integration. For these events, we require an additional $45,000 in capital to cover travel, event registration, and accommodations, and the necessary promotional budget, at $15,000 per event.

The total resource allocation for the project, including the events, amounts to USD $227,753. This ensures that we have the financial resources necessary to secure the right expertise, achieve the project milestones, and promote the integration globally.

We are requesting the minimum funding amount of 500,000 ADA for this project category and will commit to cover any additional costs or overages we might incur in the delivery and execution of the above plan from our own treasury.

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

The cost of this project offers substantial value for the Cardano ecosystem by driving institutional adoption and creating a bridge for regulated entities to securely participate in the network and protocol. By supporting Cardano and Midnight, we provide a trusted, insured, and compliant custody solution that enables institutions to confidently hold, stake, and engage with these assets. This facilitates greater liquidity and transaction volume on the Cardano network, while also boosting security through increased staking activity.

In addition to these adoption benefits, the project also represents significant cost efficiency. By leveraging a Canadian-based development team, we take advantage of the high quality of talent available in a trusted financial jurisdiction while keeping costs lower than comparable talent in the U.S. or other expensive markets. Canada is a globally recognized and trusted jurisdiction when it comes to finance, and our in-house team brings years of experience in building secure, scalable infrastructure. The cost-effectiveness of our Canadian team ensures that the project delivers robust outcomes without incurring the premium costs often associated with teams in higher-cost regions.

The combination of these factors - institutional adoption, secure integration, and cost efficiency - ensures that the project delivers strong, long-lasting value to the Cardano ecosystem.