Tiamat: Decentralized & Instantly Interoperable Layer 2 for Cardano

[GENERAL] Name and surname of main applicant

Chris M. Hiatt

[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)

By leveraging tx chaining we can speed up the UX to ms, without requiring trust and extensive dispute periods. Instantly interoperable, funds stay on mainnet. Doesn't compete against ADA like others.

[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.”

Building on Blaze and Aiken.

[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

Will be fully open sourced before voting starts, and remain so.

[METADATA] Horizons

L2

[SOLUTION] Please describe your proposed solution

How do you perceive the problem you are solving?

The popular approach to DApp development on Cardano in current year is still to violate its well thought-out design choices, and force the square peg of UTxO into the round hole of Account-based models, with an array of undesirable consequences:

• Needlessly excessive trust in batchers
• Vulnerability to frontrunning and similar exploits
• A worse than necessary user experience (send swap at price X, see price immediately jump from bots frontrunning you, hope for it to return, and otherwise having to pay money again to cancel your pending order, and retry again minutes later at an even worse price).

This is of course not limited to DEXes, but that is the perspective I come from.

It is quite a shame that we do things like so, because with transaction chaining we already have a great tool at our hands to actually unleash the power of UTxO - for example, if you use it as intended, you don't need sequencers - the ordering of the transaction is already ensured by the protocol, as you are signing off the spending of a specific UTxO, which can only happen once. So the worst case scenario is your transaction failing (at no cost to you), instead of i.e. being frontrun. You also don't need to entrust your funds to other systems far less secure than the Cardano L1 main chain.

The biggest problems with transaction chaining in a high-load DApp however are that

• The frontend-instances of different users need a coherent, unambiguous idea of the mempool they are working with (the available UTxOs of yet unconfirmed transactions) at each point in time, such that they may create and sign their own transactions spending those, and
• There is no guarantee that other (potentially bad) actors won't attempt to spend the same mempool-UTxOs, thus potentially interrupting the transaction chain, resulting in bad UX.

As a final note: A huge point of centralization that is almost always overlooked is the reliance on centralized API services like Blockfrost - in order to interact with the chain from a browser or mobile app, someone needs to relay the transaction data. This is achieved via said centralized service in the vast majority of cases. Tiamat solves this by offering a decentralized API and query layer as a passive side effect of its design.

What are your reasons for approaching it in the way that you have?

• By mainly focusing on mempool state management and coherent data delivery thereof, a minimally invasive solution supplementing the Cardano main chain, and inheriting its ample security guarantees, is achieved, instead of twisting it back into resembling its inferior predecessors.
• Instead of providing that service from a centralized server, Tiamat uses a decentralized proof-of-stake system running alongside the Cardano main chain nodes. This further limits the already limited damage potential bad actors could do (mainly boiling down to censorship and malicious data provision).
• Hydra and Hydra-based solutions have their utility, but their benefit comes at the cost of requiring potentially very long dispute periods, or risk exploitation, in order to move the funds back to mainnet or other L2's. In contrast, Tiamat is instantly interoperable with mainnet DApps and other instances of Tiamat or systems like it, even within the same transaction (meaning spending UTxOs both from mainnet, Tiamat#0, Tiamat#1, and so on, at once, atomically). So Tiamat offers a perfect light-weight complement to the heavy caliber of Hydra.

Who will your project engage?

We intend to actively try and get people to use Tiamat, foremost via hackathons, tech support by the lead dev (yours truly), and offers of collaboration to any interested parties. An open source codebase benefits from being used by more people, as subsequently more people are interested in maintaining and improving it.

How will you demonstrate or prove your impact?

An array of demo applications will give you the Solana/Sui experience (minus the botting pandaemonium frontrunning and exploiting honest users). Meaning reaction times in the ballpark of hundreds of milliseconds - you send your transaction, and almost instantly everyone else sees the impact of your action on their own frontends, and can respond to it right away. The 20 seconds we normally have to wait for a transaction to be confirmed by the main chain becomes more akin to the pratice of requiring X onchain confirmations in any given blockchain to really ensure you did pay up, instead of a practical impediment to the rapid flow of end user back-and-forth.

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

In what way will the success of your project bring value to the Cardano Community? 

There has been a lot of seethe and cope about Solana being blazingly fast and "just working" (except when not) in the Cardano community.

Tiamat solves this, without incurring the downsides of that other chain (90% of txes being spam and automated exploitation attempts for one, or your funds being stuck in case of an outage).

In addition, the basic layer 2 infrastructure can be easily augmented to serve as a lightweight sidechain alongside that L2 - think for example a gaming application, where the games themselves run on that sidechain, while the game asset ownership is managed by the L2 and therefore Cardano mainnet. That means we inherit those very strong security guarantees where this is crucial (ownership), while keeping the costs low where it matters; single game moves should after all not cost money, and the worst case outcome in that area is only tied to losing a game, utterly inconsequential.

How will you measure this impact? 

There will be a demo application on testnet with response time in the order of hundreds of milliseconds, likely before voting starts. We can of course - and likely will - also compile an entire suite of vanity metrics.

How will you share the outputs and opportunities that result from your project?

Everything is open sourced and we intend to actively motivate the community to contribute.

[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?

I am fully doxxed ( https://ch.linkedin.com/in/chris-m-hiatt-880187187, https://www.youtube.com/@metadexfi )

I have been demonstrating my loyalty to the ecosystem since the Shelley hard fork in July 2020. My stake pool has been running since then as well (Ticker: METAX) and produced over 1337 blocks. V1 of the DEX (MetaDEX Euclid) I've been working on since early 2021 is live on testnet since beginning of 2024, and the code is fully open source, onchain and offchain both: betadex.netlify.app, https://github.com/metadex-fi. Note that the first link might break down under heavy loads sometimes due to me being cheap with Blockfrost, the demo should be functional otherwise.

I hold a master's degree in CS from KIT (Karlsruher Institut für Technologie), which once was considered a top university in Germany.

By the time you vote on this you'll also be able to examine the currently well-under-way prototype of Tiamat too. I have been working on MetaDEX v2: Keter since around beginning of 2024, and Tiamat is the result of factoring out the dex-functionalities, and making the underlying core engine doing most of the heavy lifting generic and available to the community.

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

Achieve Higher Test Coverage & Bug Fixing:

• Outputs: Increase test coverage to 85% for the existing layer 2 codebase and address critical bugs identified during initial testing. For this we leverage our in-house proptesting framework, which can be examined here: https://github.com/metadex-fi/euclid-offchain. Note that property testing is vastly, categorically superior to regular testing, as it attempts to try as many cases as possible in a fully automated manner, instead of having to rely on the tester's ingenuity.
• Acceptance Criteria: Achieve the specified test coverage percentage and ensure all critical bugs are resolved.
• Evidence: Test coverage reports, updated GitHub repository, and bug fix logs.

Develop Lightweight Gaming Sidechain Feature:

• Outputs: Implement a basic, lightweight sidechain feature functioning for less secure use cases like game mechanics, which smoothly interoperates with - and is tied to, so it won't compete against - the L2 and mainnet.
• Acceptance Criteria: The feature is operational on a testnet, supporting off-chain game moves or similar actions.
• Evidence: Testnet deployment link, demonstration of sidechain functionality, and logs of transactions.

Community Engagement & Documentation Expansion:

• Outputs: Create detailed video tutorials, regular course materials, and organize a community webinar to onboard developers to Tiamat’s architecture.
• Acceptance Criteria: At least two video tutorials and one webinar completed with active participation.
• Evidence: Links to tutorials, recorded webinar, and participant feedback.

Hackathon & Community Incentives:

• Outputs: Organize a virtual hackathon to encourage the development of projects using Tiamat’s technology, offering prize money and support.
• Acceptance Criteria: At least 3 teams participate, and prizes are distributed to winners.
• Evidence: Hackathon event logs, list of participating teams, project showcases, and prize distribution details.

Security Audit (On-Chain & Off-Chain):

• Outputs: Conduct a comprehensive security audit covering both on-chain smart contracts and off-chain components.
• Acceptance Criteria: Audit is completed, all critical issues have been addressed, and all recommendations are implemented.
• Evidence: Audit report, updated codebase, and summary of implemented improvements.

Prepare for Mainnet Deployment & Final Report:

• Outputs: Finalize the Tiamat layer 2 and sidechain features for mainnet deployment, and prepare a detailed final report.
• Acceptance Criteria: Codebase is reviewed and ready for mainnet deployment, and the report summarizes project achievements and future plans.
• Evidence: Final report, readiness checklist, and updated documentation.

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

Me: https://ch.linkedin.com/in/chris-m-hiatt-880187187

This is an area I would kindly ask the community for guidance - I am a developer first and foremost. Nevertheless, I would assume we would benefit from the following:

• A dedicated technical community manager separate from MetaDEX
• Dedicated developers for backend and the smart contracts
• Audits and possibly paid support by various specialized entities on Cardano

If need be, those costs can be deducted from the lead developer's salary (the proposer).

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

| Developer Salary | $25,000   

| Security Audit (On-Chain & Off-Chain) | $40,000   

| Marketing & Graphic Design | $5,000

| Miscellaneous | $5,000     

| Total (USD) | $75,000   

| Total (ADA) | ~227,273 ADA

| Capped (ADA) | 200,000 ADA

This is for the first six months, after which we would probably require a new proposal for ongoing maintenance and development. Also you'll find that the extra developers don't fit into the budget yet. If audit costs exceed the allocated amount, the Developer Salary can be repurposed as well.

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

The costs of this project are directly tied to delivering a robust, scalable, and open-source infrastructure solution that will benefit the entire Cardano ecosystem. Here’s how the budget represents value for money:

Proportional Developer Salaries:

• The developer salary, set below $4.200 per month, is below the typical rates for senior developers in Switzerland, where the average annual salary for someone with a master's degree and 5+ years of experience is over $200,000 USD.
• The costs are also significantly lower than average industry rates for blockchain development in the global market, making the budget efficient while still securing high-quality expertise.

Strategic Investment in Security:

• Security Audit: A comprehensive audit is budgeted at $40,000, which is standard for both on-chain and off-chain blockchain projects of this complexity. Ensuring the robustness of smart contracts and off-chain infrastructure will prevent vulnerabilities and provide confidence to developers building on Tiamat.
• The audit cost reflects the critical importance of security in maintaining trust within the Cardano ecosystem, making this a strategic investment that protects user funds and ecosystem integrity.

Open Source Advantage:

• By releasing the codebase as open source, the project provides long-term value far beyond the initial development period. Anyone in the Cardano ecosystem can build upon the Tiamat layer, adapt it to their needs, and contribute to its improvement, amplifying the return on investment.
• The open-source nature of Tiamat ensures transparency and allows developers to verify the system’s integrity, which is crucial in blockchain projects.
• The budget allocated to marketing and design ensures the seeds for a thriving developer community around Tiamat are sown.

Cost-Efficiency Through Lean Development:

• The project minimizes costs by reducing the number of full-time developers and focusing on core areas that will directly benefit the ecosystem, such as testing, bug fixing, and developing the lightweight sidechain feature.
• This approach ensures that every ADA spent is directly tied to achieving measurable milestones that benefit Cardano’s scalability and user experience.

By prioritizing transparency, community engagement, and high-quality development, the project delivers substantial value for the requested funding, supporting Cardano’s growth while offering a scalable and secure solution to its users.