Self-Custody with Usernames and Passwords

[GENERAL] Name and surname of main applicant

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

A smart wallet, uniquely identifiable with a username, where users can manage their funds with a password.

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

[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?

[GENERAL] Please provide here more information on the open source status of your project outputs

An on-chain prototype of the solution is already implemented and freely available:

https://github.com/keyan-m/cardano-account

[METADATA] Horizons

[SOLUTION] Please describe your proposed solution

Convenience has proven to be one of the main drivers for adoption. Currently, users who want to take custody of their funds using a blockchain, typically either sign up on a centralized exchange (CEX), or have to go through the process of setting up a wallet, which demands a secure way for storing their seed phrases.

The convenience and familiarity of using a CEX can make them the more attractive of the two routes. But this is a compromise for users as CEXes don't offer self-custody.

A smart wallet that provides a similar onboarding process to CEXes, can be a middle ground for compromising some security in return for convenience, while also ensuring true self-custody.

With this solution, users can setup a wallet by simply providing a username and password, and also benefit from all the infrastructures already in place (such as password managers), to take custody of their funds with a level of convenience comparable with CEXes.

In addition to simplified onboarding, this solution can also be used for services that want to provide wallets for their customers who pay in other currencies. Also, Cardano users who would like to have an additional form of storage for their funds which doesn't demand seed phrase management.

Since setting up a wallet requires some funds, a treasury provides script deployment costs for new wallets. In current vision for this protocol, Catalyst will be the main funding entity for this treasury. The staking rewards from these funds will belong to the platform in order to cover its operational costs, while the delegation rights can be distributed among a few registered entities (during a whitelisting period, potentially for a payment) to ensure the locked funds continue to provide security for Cardano.

To also add some incentive for funds getting back to treasury, all the staking rights of wallets created using treasury funds will belong to their contributors (i.e. those who fund the treasury). But wallets can choose to reimburse their contributors in return for staking rights.

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

With a more convenient onboarding experience, we can pave the way for more capital entering the ecosystem.

[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?

With a background in engineering, and after more than 3 years of activity on Cardano, I've implemented, reviewed, and maintained multiple contracts, protocols, and products.

Furthermore, a prototype of this solution's contract is already implemented and noticed by the community:

https://github.com/keyan-m/cardano-account

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

Prototype Refinement (2 months)

Currently on-chain contracts are mostly complete. However, there are no tests implemented yet. This will provide a higher level of confidence in correctness of contracts.

Milestone outputs:

• On-chain unit and property based tests (Aiken)

Acceptance criteria:

• Successful pass of implemented tests

Evidence of milestone completion:

• Complete guide for running the tests

Front-end Development (6 months)

After correctness, user experience and convenience are at the core of this product, and therefore worth dedicating a significant amount of time for its perfection.

Milestone outputs:

• Beta web application

Acceptance criteria:

• A working front-end for interacting with contracts on a testnet

Evidence of milestone completion:

• Fully documented guide for hosting a local version of the interface

Auditing the Contracts (2 months)

Having the contracts audited by a reputable entity in the ecosystem to increase the confidence in their correctness.

Milestone outputs:

• Audit report

Acceptance criteria:

• Having no unresolved findings in the report

Evidence of milestone completion:

• Public availability of the report

Mainnet Deployment (2 months)

With all the pieces in place, moving from testnet to mainnet won't require much time. However, some spam reduction solutions should be implemented in order to protect the funds.

An extended testnet period can also help increase the confidence in correctness of platform.

Milestone outputs:

• Deployed web application

Acceptance criteria:

• Working web application for registering a username with zero costs for the user

Evidence of milestone completion:

• At least one registered username on-chain

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

Keyan Maskoot – Lead Developer

Experiences:

• Senior Haskell/Cardano Developer at Snapbrillia (now Grav.id)
• Lead Cardano/Front-end Developer at Flux (Astro CNFT lending platform)
• Software / Smart Contract Developer at Anastasia Labs

GitHub: keyan-m

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

Milestone 1: Prototype Refinement (2 months)

Requested Funds: 12,000 ADA

Milestone 2: Front-end Development (6 months)

Requested Funds: 36,000 ADA

Milestone 3: Auditing the Contracts (2 months)

Requested Funds: 50,000 ADA (estimated)

Final Milestone: Mainnet Deployment (2 months)

Requested Funds: 60,000 ADA

• 20,000 ADA to support account registration for ~1,000 users (with an estimated ~20 ADA per user)
• 40,000 ADA to cover development and potential operational costs

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

Auditing: Current market price for top-of-the-class auditing can range from $10,000 to $20,000. With ADA priced at $0.3, 50,000 ADA seems to be a good estimate.

Contract Deployment: To minimize transaction fees for users, we'll need to lock some funds in 2-3 UTxOs containing account scripts for each user, where 1-2 of these scripts will also require registration (which is likely to be alleviated with CIP-112). On top of that, the current design requires an additional ~3 ADA to be locked per username in 2 beacon UTxOs. Based on protocol parameters at this point in time, each user will require a total of estimated ~20 ADA. Initial support for ~1,000 users seems like a good start.

Operational Costs: Purchasing a domain, costs of hosting services, and any potential unforeseen costs. Unspent funds will be diverted for supporting more users.

Development Costs: I've specified the costs for a part time development position.