Ouroboros Capital: Tokenized VC Fund Library Powered by SPOs – Sandbox Pilot for Voltaire Era Decentralized VC Arm

[GENERAL] Name and surname of main applicant

Apparao Patrudu (Appa Patty - Lovelace Club)

[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)

4

[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)

We propose an open-source VC model for SPOs where ADA holders can invest in APAC startups through a stake pool. Staking rewards are converted into SAFTs, turning delegators into angel investors.

[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

Ouroboros Capital will be developed as an open-source framework under the MIT License, promoting transparency, community collaboration, and innovation. This license allows developers to use, modify, and distribute the code, ensuring that the decentralized venture capital model can evolve with community contributions while retaining the original copyright notice.

[METADATA] Horizons

RWA

[SOLUTION] Please describe your proposed solution

The true potential for innovation harnessed within Cardano’s stakepools is not currently being realized. There’s no structured framework that would allow ADA delegators to channel staking rewards into startup investments. This limits the functionality of stakepools and hinders the creation of innovative funding models that are essential for the Voltaire era of Cardano. Venture capital opportunities are not accessible to the average ADA holder which limits exposure to high-potential startup opportunities.

We propose the creation of an open-source venture capital (VC) dao library that will enable SPOs to create DAOs that would convert staking rewards to SAFT (simple agreements for future tokens). This model turns ADA holders into angel investors and unlocks an entirely new, innovative funding model for the Cardano Community. The open-source library will be accessible to anyone that wants to create a decentralized VC arm powered by staking rewards.

How It Works (DAO Creation Library Overview):

1. DAO Creation:
2. The open-source library enables users to create decentralized autonomous organizations (DAOs) using Cardano stake pools. It automates staking rewards allocation into a venture capital investment fund.
3. Stake Pool Integration:
4. ADA holders delegate tokens to the Ouroboros Capital stake pool. The library redirects 99% of staking rewards into the DAO’s VC fund, managing the process through smart contracts.
5. Reward Allocation:

• 80% of rewards are allocated to a startup investment pool, deployed quarterly.
• 20% is reserved for DAO operational costs, all handled via smart contracts.

1. Startup Selection & SAFTs:
2. The DAO, created via the library, evaluates and selects startups for investment each quarter. SAFT agreements are executed through smart contracts, converting staking rewards into tokenized ownership.
3. Tokenization & Revenue Sharing:

• The library tokenizes staking rewards into startup shares, distributed to DAO members.
• Profits and rewards are automatically distributed to DAO members through transparent smart contracts.

Why Focus on APAC Startups?

The APAC (Asia-Pacific) region presents an ideal environment for startup investment due to several key factors:

• Strong Economic Growth: Driven by digital transformation, the region offers numerous opportunities for new ventures.
• Government Support: APAC governments provide significant incentives and policies to reduce risks and boost profitability for startups.
• Tech Hubs: APAC, particularly countries like India and Singapore, are leading in sectors such as AI, IoT, and blockchain, attracting global investment.
• Growing Consumer Market: A rising middle class and increased consumer spending create massive market opportunities for new startups, especially in fintech and e-commerce.
• Accelerator Models: Many APAC startups don’t require huge sums of money to succeed. Accelerator models thrive in this region with check sizes of $15,000–$20,000 USD, making it an ideal ecosystem for early-stage investments.
• Talent Pool and Digital Infrastructure: The region boasts a skilled workforce and strong digital infrastructure, allowing startups to scale rapidly.

By focusing on APAC startups, Ouroboros Capital taps into a thriving ecosystem where smaller investments can yield significant growth, aligning with the democratized VC model.

Here are some pointers for the technical components within the DAO library, highlighting key aspects:

Stake Pool Integration:

• Direct integration with Cardano's staking infrastructure.
• Redirection of staking rewards to fund investments in startups.
• Secure and automated processing of staking rewards into the DAO's fund.

Reward Tokenization:

• Automated conversion of ADA staking rewards into tokenized equity via SAFT (Simple Agreement for Future Tokens) agreements.
• Delegators receive ownership stakes in startups without manual processes.
• Seamless distribution of tokenized equity among stakeholders.

DAO Governance Module:

• Decentralized community voting system for making investment decisions.
• Transparent and immutable on-chain voting ensures community trust and transparency.
• Supports various voting mechanisms like quadratic or weighted voting based on token holdings.

Investment Management:

• A smart contract-driven system for tracking the lifecycle of investments.
• Automates the distribution of returns and rewards to stakers/delegators.
• Real-time monitoring of startup performance and fund allocations.

DAO Deployment Toolkit:

• Open-source toolkit for easy deployment of a venture capital DAO.
• Provides pre-built modules for managing stake pools, governance, and investments.
• Focuses on simplicity, allowing users to quickly set up their own DAO venture fund utilizing Cardano staking rewards.

These components form the technical foundation of the DAO library, facilitating decentralized venture capital funding through Cardano’s staking infrastructure.

Why It Will Succeed:

1. Democratized VC Access: Ouroboros Capital transforms ADA holders from passive stakers into active angel investors, allowing them to participate in venture capital, an industry historically dominated by institutions and the wealthy.
2. Strategic Focus on APAC Startups: With rapid economic growth, a rising middle class, and strong government support, the APAC region offers fertile ground for early-stage investments, increasing the likelihood of high returns.
3. Power of the VC Curve: According to the VC Power Law Curve, a small percentage of startups produce most of the returns. By investing in a diversified portfolio of high-potential startups, Ouroboros Capital minimizes risks while maximizing potential for exponential gains.

Example Investment Scenario (According to VC power law curve):

• Staked ADA: 20 million ADA
• Staking Rewards: 600,000 ADA annually (3% return rate)
• Annual Investment Fund: $170,000 (80% of staking rewards)
• Startup Investment: 17 startups, with an average check size of $10,000 per startup

Total Expected Returns: $250,000 + $250,000 + $80,000 = $580,000

Net Profit: $580,000 − $170,000 = $410,000 profit

This example demonstrates a 3x+ return on traditional staking, creating a lucrative model while driving innovation in the Cardano ecosystem.

Benefits for Stakeholders:

• For ADA Stakers:
• Gain exposure to early-stage, high-growth startups.
• Transform passive staking rewards into high-return investments.
• Diversify holdings beyond staking into equity-like tokens.
• For Startups:
• Access decentralized funding without traditional venture capital constraints.
• Connect with a global community of engaged ADA holders.
• Validate and grow through a decentralized investor base.
• For the Cardano Ecosystem:
• Increase utility and demand for ADA, as staking evolves beyond passive rewards.
• Strengthen network effects by supporting innovative startups within Cardano.
• Align with Voltaire's decentralized governance by integrating it with venture funding.

Conclusion:

Ouroboros Capital represents a transformative approach to staking rewards on Cardano, turning them into strategic, high-potential investments that fuel innovation. Through its open-source VC framework, ADA holders can become angel investors, startups can gain decentralized funding, and Cardano itself can expand its utility and global impact. This model not only democratizes venture capital but also strengthens the Cardano ecosystem, driving growth in the Voltaire era.

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

Value to the Cardano Community:

The Ouroboros Capital library will provide significant value to the Cardano community by enabling SPOs to spin up DAOs that transform staking rewards into startup investments. This creates new revenue streams for SPOs and broadens investment opportunities for ADA holders. By allowing ADA stakers to invest directly in high-growth startups, this library increases engagement with the ecosystem and strengthens the connection between delegators and the projects they support.

Measuring Impact:

The impact of the Ouroboros Capital library will be tracked using both quantitative and qualitative measures:

• Quantitative Metrics: We will track the number of SPOs using the library, the number of DAOs deployed, the number of startups funded, the total amount of ADA invested, and the financial performance of these investments.
• Qualitative Metrics: We will gather feedback from SPOs and ADA holders on their satisfaction with the library, collect success stories from funded startups, and monitor the growth and sentiment of the overall Cardano community.

Sharing Outputs and Opportunities:

We are dedicated to transparency and open communication throughout the library’s development and adoption:

• Regular Updates: We will share progress reports, including how many SPOs have adopted the library, how many DAOs have been created, and how many startups have been funded. These will be shared via our website and Cardano community channels.
• Collaborative Reviews: We will engage with the community for feedback, using this input to refine and improve the library and its functionality.
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This approach ensures all stakeholders stay informed and have opportunities to shape the project’s evolution, reinforcing Cardano’s community-driven ethos while driving the growth of DAOs and startup funding across the network.

[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?

Capability to Deliver:

Lovelace Club boasts a leadership team with significant experience in venture capital, with one of its key members having served a prominent role at Graviton, a leading web3 accelerator in India, and as a research partner at GravityX Capital, a notable web3 institutional fund. This expertise provides a deep understanding of both startup ecosystems and strategic investments, crucial for guiding Lovelace Club’s projects to success.

Steps to Ensure Trust and Accountability  

Proven Track Record: Our successful collaboration with several Cardano projects and the solutions we’ve developed within the ecosystem highlight our ability to deliver complex blockchain initiatives with measurable impact.

Transparent Fund Management: We are committed to industry-leading best practices for fund management, ensuring transparent financial reporting.

Community Engagement: Lovelace Club will prioritize ongoing updates, community-driven feedback loops, and open discussions to maintain transparency and trust within the Cardano ecosystem.

Our commitment to trust, accountability, and technical excellence underscores our ability to deliver projects efficiently and transparently, strengthening the Cardano ecosystem through Lovelace Club’s initiatives.

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

Project Kickoff

A. Milestone Outputs

Project Initiation Report:

• An in-depth evaluation of the current decentralized venture capital landscape.
• Analysis of existing DAO frameworks on Cardano and other blockchain platforms.
• Assessment of similar models integrating staking rewards with venture investments.

B. Acceptance Criteria

Completion of Initiation Report:

• The report thoroughly covers existing implementations and achievements in other blockchain ecosystems.
• Includes a comparative study highlighting Ouroboros Capital’s unique value proposition.

C. Evidence of Milestone Completion

Initiation Report:

• A finalized document submitted to the project repository.

Library Technical Design

A. Milestone Outputs

Technical Feasibility Report:

• Outlines the technical requirements for integrating stake pools with the DAO library.
• Identifies potential challenges and proposes solutions.

High-Level Architectural Design:

• Detailed architecture of the Ouroboros Capital DAO library.

B. Acceptance Criteria

Technical Feasibility Confirmation:

• Validation that the project is technically feasible with clear identification of requirements and solutions.

Architectural Design:

• Architectural design meets the basic needs for a Proof of Concept (PoC).

C. Evidence of Milestone Completion

Technical Feasibility Report:

• A comprehensive report detailing technical aspects and feasibility.

Architectural Design Document:

• A detailed document outlining the architecture.

Technical Prototyping

A. Milestone Outputs

Technical Prototype:

• A functional prototype of the Ouroboros Capital DAO library.
• Demonstrates key features such as stake pool integration, reward tokenization, DAO governance, and SAFT execution.

Sandboxed Environment Setup:

• A secure, sandboxed environment configured to test the DAO library.
• Enable investment processes with real tADA or startup investments.

B. Acceptance Criteria

Successful Prototype Demonstration:

• The prototype effectively showcases basic functionalities, including secure execution of staking reward allocation and DAO governance.

Stable Sandboxed Environment:

• The sandbox operates securely without critical bugs.
• Reliable execution of contracts for testing simple investment scenarios.

C. Evidence of Milestone Completion

Prototype Document:

• Documentation with on-chain evidence of the prototype's capabilities and functionalities.

Sandboxed Environment Documentation:

• Detailed documentation of the sandboxed execution processes and test case outcomes.

Mainnet and Project Close-out

A. Milestone Outputs

Final Project Completion and Closure Report:

• Comprehensive documentation of all project phases.
• Key achievements, lessons learned, and key performance indicators (KPIs).

Mainnet Support:

• Mainnet integration and integration guidelines.

B. Acceptance Criteria

Comprehensive Documentation:

• Detailed closure report covering all aspects of the project, including technical achievements and strategic insights.

Mainnet Support:

• Enable Mainnet support and provide detailed usage guidelines.

C. Evidence of Milestone Completion

Final Project Closure Report and Video:

• A comprehensive report and an accompanying video presentation summarizing project outcomes, KPIs, and achievements.

Mainnet Support:

• Developer guidelines available in Markdown format on GitHub.

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

Apparao Patrudu(Appa patty) Founder Lovelace Club: A seasoned professional in the web3 domain with over five years of experience in the crypto space. He has been instrumental in helping early-stage startups build MVPs, manage communities, and scale effectively. His expertise spans data analytics and web3 development.

Appa Patty has been an active participant in the Australian web3 ecosystem. He has also collaborated with top web3 ecosystems and startups, making significant contributions to their growth and success.

Lovelace Club Labs: instrumental in developing innovative solutions within the Cardano ecosystem, actively collaborating with numerous Cardano projects to push the boundaries of decentralized technology. With a strong development team dedicated to Cardano, it is deeply attuned to the platform’s intricacies and uniquely positioned to harness its potential for creating impactful Cardano focused solutions.

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

Milestone 1: Project Kickoff

• Project Manager: 10,000 ADA
• Senior Cardano Developer: 5,000 ADA
• Operational & Research Costs: 15,000 ADA
• Total for Milestone 1: 30,000 ADA

Milestone 2: Library Technical Design

• Project Manage: 15,000 ADA
• Senior Cardano Developer: 15,000 ADA
• Total for Milestone 2: 30,000 ADA

Milestone 3: Technical Prototyping

• Project Manager: 15,000 ADA
• Senior Cardano Developer: 30,000 ADA
• Total for Milestone 3: 45,000 ADA

Final Milestone: Mainnet and Project Close-out

• Project Manager: 10,000 ADA
• Senior Cardano Developer: 15,000 ADA
• Total for Final Milestone: 15,000 ADA

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

The Ouroboros Capital library represents excellent value for money, as it is developed using a lean cost structure. Our development team is based in India and the APAC region, where costs are significantly lower than in many other markets, allowing us to deliver high-quality solutions at competitive rates.

Justification for Costs:

• Lean Development: Leveraging a highly skilled team in India and APAC, where average wages are more affordable, enables us to maintain a lean budget without compromising on quality.
• Cost-Effective Expertise: Our team consists of experienced blockchain developers who deliver advanced smart contract solutions. The costs reflect regional rates, which are significantly lower than Western markets while maintaining top-tier quality.

Maximizing Value: The costs associated with this project are aligned with achieving long-term benefits for the Cardano ecosystem. By enabling SPOs to create venture capital DAOs, the Ouroboros Capital library provides ongoing value, generating new revenue streams for the community at a fraction of the typical cost for such high-impact projects. This ensures that the project delivers exceptional value for money while fostering innovation within the ecosystem.