Optim Custom DeFi Credit Lines - For Protocols Bootstrapping

[GENERAL] Name and surname of main applicant

Ethan Protas

[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)

8

[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)

This protocol enables projects to secure fixed-rate credit against various forms of esoteric collateral by providing highly customizable lending terms and collateral options by isolating pools.

[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

Open Source

[METADATA] Horizons

DeFi

[SOLUTION] Please describe your proposed solution

We propose the development of the Custom Credit Line Protocol, a specialized lending solution for the Cardano DeFi ecosystem. This protocol enables projects and entities to secure fixed-rate credit lines against various forms of esoteric collateral, including real-world assets and project tokens. By providing customizable lending terms and collateral options, the protocol addresses the unique needs of innovative projects and facilitates the integration of real-world assets into the DeFi space.

Key features of the protocol include:

1. Customizable Collateral Assessment: A flexible system for evaluating and accepting diverse collateral types, including real estate tokens, intellectual property rights, and early-stage project tokens.
2. Fixed-Rate Credit Lines: Borrowers can access stable, predictable funding through fixed-rate credit lines, essential for long-term project planning and financial stability.
3. Smart Contract-Based Terms: Lending terms, including interest rates, loan-to-value ratios, and repayment schedules, are encoded in smart contracts, ensuring transparency and automated execution.
4. Risk Management Framework: A robust system for assessing and mitigating risks associated with non-standard collateral, including regular revaluation and collateralization ratio monitoring.
5. Oracle Integration: Fault-tolerant oracle integrations for price feeds on various asset types, ensuring accurate and up-to-date collateral valuations.
6. Liquidation Mechanisms: Efficient and fair liquidation processes tailored to the unique characteristics of each collateral type.

A user-friendly interface will provide transparent visibility into credit line terms, collateral status, and repayment schedules, enhancing user experience for both lenders and borrowers. The system's modular design facilitates easy upgrades and future integrations, ensuring scalability and adaptability to evolving market conditions and new asset types.

Comprehensive security audits and continuous monitoring will safeguard the platform's integrity and resilience against potential vulnerabilities. By offering this specialized lending solution, the Custom Credit Line Protocol will foster innovation, enhance liquidity for new projects, and expand the scope of Cardano's DeFi ecosystem to include a wider range of real-world and digital assets.

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

The Custom Credit Line Protocol will significantly enhance the Cardano DeFi ecosystem by bridging the gap between traditional finance and blockchain technology. By enabling fixed-rate lending against esoteric collateral types, including real-world assets and project tokens, this protocol will foster innovation and growth in several key areas:

1. Project Funding: New and innovative projects within the Cardano ecosystem will have access to stable, predictable funding, accelerating their development and time-to-market.
2. Real-World Asset Integration: By accepting tokenized real-world assets as collateral, the protocol will drive the adoption of blockchain technology in traditional industries, expanding Cardano's reach and utility.
3. Ecosystem Diversity: The ability to collateralize a wide range of assets will attract a more diverse set of projects and users to the Cardano ecosystem, enhancing its overall robustness and appeal.
4. Capital Efficiency: The protocol will unlock liquidity in previously illiquid assets, improving capital efficiency within the Cardano ecosystem and potentially attracting new capital inflows.
5. Innovation Catalyst: By providing flexible funding options for early-stage projects, the protocol will serve as a catalyst for innovation, potentially leading to groundbreaking advancements in various sectors.
6. Financial Inclusion: The ability to collateralize non-traditional assets could provide funding opportunities to individuals and entities typically excluded from traditional financial systems.

By addressing the unique funding needs of innovative projects and facilitating the integration of real-world assets into DeFi, the Custom Credit Line Protocol will significantly contribute to the growth, adoption, and diversification of the Cardano ecosystem. This will not only benefit existing community members but also attract new users, developers, and investors, further solidifying Cardano's position as a leading platform for decentralized finance and real-world blockchain applications.

[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?

Optim Finance boasts a proven track record of delivering innovative DeFi solutions on the Cardano blockchain. Our Liquidity Bonds dApp has safely managed nearly 175 million ADA, securing a position among the Top 10 TVL protocols on Cardano. Our OADA product has managed over 24 million ADA since launch. Our team comprises seasoned experts from prominent organizations such as Minswap, MLabs, and IOHK, underscoring our deep expertise and comprehensive understanding of Cardano's unique capabilities.

To ensure the feasibility and reliability of our project, we implement a multi-faceted validation approach:

1. Rigorous Testing: We will conduct extensive testing on Cardano testnets to identify and rectify any issues before mainnet deployment, ensuring the robustness and reliability of our smart contracts and integrations.
2. Security Audits: Engaging reputable third-party firms, we will perform thorough security audits of all smart contracts and integrations. This proactive measure guarantees the highest standards of security and minimizes potential vulnerabilities.
3. Partner Collaborations: By working closely with Liqwid and LenFi, we ensure seamless and secure integrations. These collaborations leverage their established infrastructures, enhancing the overall reliability and functionality of our lending module.
4. Community Feedback: Actively incorporating feedback from the Cardano community, we will refine and improve our solution. This iterative process fosters transparency, trust, and alignment with the community's needs and expectations.

Our comprehensive approach, combining proven expertise, strategic partnerships, rigorous testing, and community engagement, positions Optim Finance to deliver this project with exceptional trust and accountability. By adhering to these validation strategies, we ensure that our solution is not only feasible but also robust, secure, and highly beneficial to the Cardano DeFi ecosystem.

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

Core Design and Specification:

Develop a design specification for the lending module. Define the basic structure and functionality of the Custom Credit Line Protocol. Create a simple risk assessment framework focusing on one type of esoteric collateral. This milestone lays the foundation for the entire project.

Milestone Outputs:

1. Design Specification Document
2. Simple Risk Assessment Framework

Smart Contract Development:

Build the core smart contracts for the Custom Credit Line Protocol. Focus on implementing basic functionality for creating and managing fixed-rate credit lines.

Milestone Outputs:

1. Smart Contract Code for Credit Lines
2. CLI Deployment in test environment

Simple User Interface:

Create user interface design for borrowers to interact with the protocol.

Milestone Outputs:

1. Basic Borrower User Interface
2. Figma Mockup Feedback from borrower partners and improvements

Security review + main net deployment:

Deploy the protocol on the Cardano mainnet for a soft launch. This final milestone ensures the protocol is secure and operational in a live environment, ready for initial user adoption.

Milestone Outputs:

1. Internal Security Review
2. Mainnet Deployment

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

• Ethan Protas - Product Lead
• Maksymilian Brodowicz / Zygomeb - Tech Lead

Our team members have extensive experience working with Cardano and have contributed to projects like Minswap, MLabs, and IOHK. We have a clear track record of successfully delivering high-quality DeFi protocols to mainnet that are widely adopted.

Website: https://www.optim.finance/

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

Core Design and Specification (30,000 ADA) 

This phase is crucial for laying the foundation of the project. The budget covers:

• Research and analysis of existing lending protocols
• Development of the basic design specification document
• Creation of a simple risk assessment framework

Smart Contract Development (60,000 ADA) 

The largest portion of the budget is allocated to smart contract development, as it forms the core of the protocol. This includes:

• Writing and testing the basic credit line smart contract
• Integration with Cardano's native assets for collateral management
• Code reviews and optimizations

Simple User Interface (35,000 ADA) 

A user-friendly interface is essential for adoption. This budget covers:

• Design and development of a basic borrower interface
• Basic user testing and iterations This investment ensures that users can easily interact with the protocol, enhancing user experience

Security Review and Soft Launch (25,000 ADA) 

The final phase focuses on security and deployment. The budget includes:

• Conducting an internal security review
• Addressing any identified vulnerabilities
• Final testing and preparations for mainnet deployment
• Soft launch on Cardano mainnet

Total Budget: 150,000 ADA

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

The proposed budget of 150,000 ADA represents exceptional value for money for the Cardano ecosystem, considering the transformative potential of the Custom Credit Line Protocol:

1. Ecosystem Expansion: By enabling fixed-rate lending against esoteric collateral, including real-world assets and project tokens, this protocol significantly expands the scope and capabilities of Cardano's DeFi ecosystem. This expansion has the potential to attract substantial new capital and participants to the platform.
2. Innovation Catalyst: The ability to secure funding against non-traditional assets will foster innovation within the Cardano ecosystem, potentially leading to groundbreaking projects that could significantly increase the platform's overall value and utility.
3. Bridge to Traditional Finance: By facilitating the integration of real-world assets into DeFi, the protocol creates a bridge between traditional finance and blockchain technology. This bridge could lead to increased adoption of Cardano in mainstream financial applications, greatly enhancing its real-world impact and value.
4. Risk Mitigation: The investment in risk management systems ensures that the protocol can safely handle complex collateral types, protecting users and maintaining the integrity of the Cardano DeFi ecosystem.
5. Cost-Effective Development: By leveraging our team's extensive experience and existing infrastructure, we can deliver this complex protocol at a fraction of the cost typically associated with such ambitious projects.
6. Long-Term Growth: The protocol lays the groundwork for future expansions and innovations in the Cardano ecosystem, potentially attracting more developers, projects, and users to the platform.
7. Competitive Advantage: This unique lending solution positions Cardano at the forefront of DeFi innovation, potentially attracting users and capital from other blockchain ecosystems.

In summary, the 150,000 ADA investment in the Custom Credit Line Protocol has the potential to generate significant returns for the Cardano ecosystem in terms of innovation, adoption, and overall ecosystem value. The protocol's ability to bridge traditional and decentralized finance while fostering innovation makes it a strategic and cost-effective investment in Cardano's future.