Nova Finance V2 - Smart Lending

[GENERAL] Name and surname of main applicant

Nova Finance

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

Entity (Not 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)

Smart Lending introduces an order book lending model on Cardano that allows partial loan fulfillment, eliminates transaction contention, and removes the need for batchers by utilizing multiple UTxOs.

[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

The smart contracts are mostly ready and completely open source at:

https://github.com/nova-finance/nova-finance-v2-smart-contracts

[METADATA] Horizons

Lending

[SOLUTION] Please describe your proposed solution

Our proposed solution is to introduce an order book lending model on Cardano that solves the inefficiencies of current peer-to-peer and pooled lending platforms. Existing solutions either limit borrowing to peer-to-peer connections or rely on pooled models, which generate high transaction contention and require batchers to settle loans, leading to delays and inefficiencies.

By utilizing an order book model, we enable lenders to place offers that borrowers can partially fulfill, allowing for flexible loan amounts without needing single UTxOs. This eliminates transaction contention and removes the reliance on batchers. Additionally, the platform will algorithmically match loan requests, ensuring transparency and efficiency.

Reasons for this approach:

• Flexibility: Borrowers can fulfill loans partially, which is not possible in current platforms, enabling more efficient use of liquidity.
• Efficiency: Eliminating batchers and using multiple UTxOs removes transaction bottlenecks, streamlining the lending process.
• Fairness: The algorithm prioritizes loan offers based on a weighted randomization that considers both time and size of offers, encouraging early and larger contributions.

Engagement and impact:

Our project will engage lenders and borrowers who seek more flexible and efficient decentralized lending options. We will target DeFi users on Cardano and grow the ecosystem by increasing liquidity, reducing contention, and offering more competitive loan terms.

Unique aspects:

The solution is the first of its kind on Cardano, combining the best aspects of pooled and peer-to-peer lending into a more transparent, flexible, and efficient order book model. By proving its benefits through metrics like lower transaction costs, faster settlement times, and increased liquidity, we will demonstrate its positive impact on the Cardano DeFi ecosystem.

This solution is critical to Cardano because it addresses the fundamental scalability and flexibility issues that current decentralized lending platforms face, ultimately contributing to a more vibrant and accessible DeFi environment.

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

Our project will have a significant positive impact on the Cardano community by providing a more efficient, scalable, and flexible lending platform. This will enhance the DeFi ecosystem on Cardano, attracting more users, increasing liquidity, and reducing transaction congestion.

Value to the Cardano Community:

• Increased Liquidity: By enabling partial fulfillment of loans, the platform will allow more funds to be utilized, encouraging more participation from both lenders and borrowers.
• Reduced Transaction Contention: The order book model and use of multiple UTxOs eliminate transaction bottlenecks, leading to a smoother and faster user experience, directly benefiting Cardano’s overall transaction efficiency.
• Enhanced Accessibility: By removing the need for batchers and enabling more flexible loan structures, the platform lowers barriers to entry for new users in the Cardano ecosystem.
• Fostering Innovation in DeFi: Our unique order book model will showcase the capabilities of Cardano’s eUTxO system and demonstrate how advanced DeFi solutions can be built on the platform.

Measuring Impact:

We will measure the project’s success through:

1. Quantitative Metrics:

• Platform Usage: Number of loans issued, total liquidity provided, and number of users participating as lenders or borrowers.
• Transaction Efficiency: Reduction in average transaction times compared to pooled lending platforms, and lower contention rates.
• Cost Savings: Reduction in fees due to the elimination of batchers.
• Growth in TVL (Total Value Locked): A key DeFi metric reflecting the total value of assets in the platform.

  

1. Qualitative Metrics:

• User Feedback: Gathering insights on user experience, platform usability, and satisfaction through surveys and community engagement.

Sharing Outputs and Opportunities:

• Open-Source Contributions: We will publish the smart contracts, code, and technical documentation on GitHub, allowing the community to audit, contribute, and build upon our work.
• Community Engagement: Regular updates will be shared through Cardano community channels (Twitter, Reddit, Catalyst Discord), as well as workshops and AMAs to educate and onboard users.
• Partnerships and Integrations: We will seek partnerships with other DeFi projects in the Cardano ecosystem to foster collaboration and create new opportunities for integration.

By fostering a transparent, efficient, and flexible lending platform, our project will directly contribute to Cardano’s goal of becoming a leading DeFi ecosystem, delivering tangible value to both users and the wider community.

[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?

Our team has a proven track record in delivering decentralized lending solutions. We successfully launched Nova Finance V1, a peer-to-peer lending platform, which has been running non-stop for nearly a year. This long-term, uninterrupted performance demonstrates our capability to build robust, secure, and reliable financial solutions on the Cardano blockchain.

Capability to Deliver:

1. Experience in DeFi Development: Having built and deployed Nova Finance V1, we are well-versed in the development and management of decentralized financial platform

  

1. Operational Excellence: The successful operation of Nova Finance for nearly a year showcases our ability to maintain high-uptime systems with minimal disruption

1. Security and Reliability: Given that Nova Finance handles users’ financial assets, security has always been a top priorit

1. Community Trust and Engagement: The success of Nova Finance has built trust within the Cardano communit

Validating Feasibility:

1. Testing and Auditing: We will implement rigorous testing processes including internal unit tests, integration tests, and third-party security audits to ensure the robustness and security of the smart contract
2. Prototype Development: Before deploying the final version, we will release a prototype of Nova Finance V2 to a select group of users for testing in a real-world environmen
3. Iterative Development: Based on lessons learned from Nova Finance, we will follow an iterative approach, allowing for incremental improvements and adjustments throughout developmen

Trust and Accountability in Fund Management:

• Transparent Fund Allocation: We will provide regular reports detailing how the funds are being utilized at each stage of development, with a focus on transparency and accountability.
• Milestone-Based Releases: The funds will be released based on clear milestones, ensuring that progress aligns with the proposed timeline and deliverables. Each milestone will be validated through tangible outputs, such as completed audits, feature implementations, and community testing.
• Open Communication: We will maintain regular updates with the Catalyst community, providing detailed progress reports through Ideascale, social media, and direct communication in Catalyst town halls.

Our past success, combined with our structured, transparent approach to development, positions us as a reliable and capable team to deliver Nova Finance V2, a groundbreaking lending platform that will bring significant value to the Cardano DeFi ecosystem.

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

Milestone 1: Integration of Smart Contracts and Frontend Development

Duration: 4 weeks

• Integrate Smart Contracts with Frontend (2 weeks):
• Connect the existing smart contracts to the frontend, ensuring seamless interaction and functionality.
• User Interface Enhancement (2 weeks):
• Optimize the frontend design and user experience, focusing on usability and accessibility features.

Milestone 2: Comprehensive Testing and Quality Assurance

Duration: 4 weeks

• Conduct Testing and Bug Fixing (4 weeks):
• Execute extensive testing, identify issues, and implement necessary fixes to ensure a stable platform.

Milestone 3: Launch Testnet and Collect User Feedback

Duration: 3 weeks

• Deploy on Testnet (1 week):
• Launch Nova Finance on the Cardano testnet for real-world testing.
• User Feedback Collection (2 weeks):
• Engage with early users to gather feedback, assess usability, and identify areas for improvement.

Milestone 4: Implement Improvements and Prepare for Mainnet Launch

Duration: 6 weeks

• Iterate Based on Feedback (2 weeks)
• Analyze user feedback and implement necessary changes to enhance the platform's functionality and user experience.
• Prioritize and address critical issues identified during the testing phase.

• Smart Contract Audit (2 weeks)
• Engage a reputable third-party auditing firm to conduct a comprehensive security audit of all smart contracts.
• Review audit findings and prioritize identified vulnerabilities.
• Implement fixes and optimizations based on audit recommendations.
• Conduct internal testing to verify the effectiveness of implemented fixes.

• Final Preparations for Mainnet (2 week)
• Perform a final round of testing to ensure all audit-related fixes are working as intended.
• Complete final checks and optimizations to ensure readiness for the mainnet launch.
• Prepare deployment scripts and finalize the mainnet launch strategy.

Final Milestone: Project Close-out Report and Launch Video

Duration: 1 week

• Produce Launch Video (2 days):
• Create a video presentation showcasing the project milestones and the official launch of Nova Finance.

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

Our project is being led by an experienced team at Nova Finance, comprised of talented developers and blockchain enthusiasts from diverse backgrounds. The NEXUS stake pool operator has been in the development team since inception. We need however to expand the team to be able to fulfill on the promise of launching v2 to mainnet.

Our dedication to enhancing the lending landscape on Cardano is underscored by the successful deployment of Nova Finance's v1, which has been operational without interruption for nearly a year. This robust platform has garnered positive feedback from users and has established a solid reputation for security and reliability.

Currently, Nova Finance is positioned as a frontrunner in peer-to-peer lending solutions within the Cardano ecosystem, setting a benchmark for innovation and user engagement.

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

Nova Finance V2 Project Budget

For the successful execution of the Nova Finance V2 project, we have outlined a revised budget that allocates funds towards essential development resources, a crucial smart contract audit, and increased community engagement efforts.

Development Team:

We will be hiring the following key personnel:

1. Senior Blockchain Developer for 6 months at $6,000 per month (103,000 ADA)
2. Frontend Developer for 6 months at $5,000 per month (87,000 ADA)

Total Development Budget: 190,000 ADA (~$66,000) at $0.35 ADA/USD.

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

The proposed budget for the Nova Finance V2 project reflects significant value for the Cardano ecosystem due to the following reasons:

Enhancing Financial Accessibility: By developing a robust lending platform, we facilitate greater access to financial services for users within the Cardano community. This not only empowers individuals but also strengthens the ecosystem by integrating decentralized finance solutions.

Foundation for Future Development: Nova Finance V2 will establish a scalable infrastructure that other projects can utilize for their own lending and financial services. This promotes collaboration and innovation within the ecosystem, ultimately attracting new developers and projects.

Efficient Use of Resources: We have carefully calculated our costs based on market research, which indicates that the proposed wages for our developers align with industry standards and average salaries in our region. This ensures that we engage high-quality talent while maximizing the value of our investment.

Long-Term Ecosystem Growth: By increasing the functionality of the Cardano network through Nova Finance V2, we anticipate attracting new users and liquidity to the platform, which will contribute to the overall growth and adoption of Cardano.

In conclusion, our commitment to delivering a secure and efficient lending solution, alongside strategic planning and resource allocation, positions this project as a valuable investment for the Cardano ecosystem. We aim to ensure that every ADA spent contributes to tangible benefits and long-term sustainability.