Minswap Lending Market – Long/Short

[GENERAL] Name and surname of main applicant

Long Nguyen Le Vu

[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)

Integrate Minswap with Cardano lending markets, enabling a seamless process to open long/short positions. This will simplify advanced trading, boost liquidity + accelerate DeFi adoption on Cardano.

[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

All the updates will be reflected on Minswap’s Github repository: https://github.com/minswap/

[METADATA] Horizons

Yield

[SOLUTION] Please describe your proposed solution

DeFi on Cardano is rapidly evolving, yet it lacks the seamless composability between protocols that users have come to expect in mature DeFi landscapes. This limitation stems from the unique architecture of Cardano's eUTXO model, which, while offering enhanced security and determinism, presents challenges for complex, multi-step DeFi operations. Currently, users wanting to engage in advanced trading strategies such as long/short positions must manually navigate between different protocols, resulting in a cumbersome, time-consuming, and potentially error-prone process. The problem is further compounded by the absence of standardized integration protocols amongst DeFi platforms on Cardano. This fragmentation not only hampers UX but also hinders the development of sophisticated financial products, slowing adoption and ecosystem growth. 

Minswap Labs, in collaboration with already existing lending/borrowing protocols such as Liqwid Protocol or LenFi, proposes a solution to bridge this gap and tap the full potential of Cardano DeFi. Our project aims to create a tightly integrated, user-friendly interface that seamlessly combines the liquidity and trading capabilities of Minswap DEX with the lending and borrowing functionalities of Cardano lending protocols.

Primary Components of the Lending Market:

1) Long positions:

• Users can supply assets (e.g., MIN) to Liqwid, receiving qMIN tokens as collateral.
• This collateral can then be used to borrow other assets (e.g., ADA) directly through our integrated interface.
• The borrowed assets can be used to purchase target assets (e.g., SNEK) on Minswap DEX.
• All of these steps will be executed in a user-friendly transaction flow.

2) Short positions:

• Users can supply assets (e.g., ADA) to Liqwid, receiving qADA as collateral.
• This collateral enables borrowing of target assets (e.g., SNEK) for shorting.
• The borrowed assets can be sold on Minswap DEX.
• Later, users can buy back the assets at a lower price (if the market moves in their favor) and return them to Liqwid/LenFi, all through our integrated interface.

3) Off-chain integration mechanism:

• We will develop a cross protocol integration mechanism to facilitate direct communication between Minswap and the lending protocol(s) of choice.
• This mechanism will handle the complex token flows required for long and short positions, including supplying assets, borrowing, and executing trades.
• All the integrations are off-chain. We will have the off-chain component to integrate current Liqwid/LenFi Smart contract to Minswap DEX V2 Smart contract.
• We aim to optimize transaction efficiency and minimize fees, by leveraging Cardano's native assets and the eUTXO model's parallel processing capabilities, we aim to optimize transaction efficiency and minimize fees.

4) United and intuitive user experience:

• A sleek, user-friendly interface that simplifies complex DeFi operations.
• Users will be able to execute long or short positions in just a few clicks, with the interface handling all intermediate steps.
• Step-by-step guides and tooltips to educate users about advanced trading strategies.

5) Open-Source Development:

• Comprehensive documentation will be provided to facilitate adoption and potential expansion to other protocols.
• All integration code will be open-sourced, fostering transparency and enabling further innovation within the Cardano ecosystem.

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

The Minswap Lending Market is poised to deliver transformative benefits to the Cardano ecosystem, catalyzing growth and innovation across multiple fronts:

1) Showcasing what’s possible on Cardano DeFi:

• By enabling advanced trading strategies like long/short positions, we're bringing Cardano's DeFi offerings on par with, and potentially surpassing, those of competing blockchains.
• This advancement will attract sophisticated traders and institutional investors, significantly boosting Cardano's Total Value Locked (TVL) and overall ecosystem activity.

2) Interoperability + Composability:

• Our project sets a precedent for seamless integration between Cardano DeFi protocols.
• This model of composability will inspire other projects to create interconnected DeFi legos, leading to a more robust and versatile ecosystem.

3) Network Utility, ADA Demand & Sustainability:

• As the activity on Cardano grows, as more people on Cardano have the means to perform advanced trades seamlessly, the number of transactions on Cardano grows simultaneously and substantially.
• As we see more transactions coming along, more fees are collected that go to the Cardano Treasury thus sustaining the ENTIRE ecosystem longer.
• Increased DeFi activity will drive higher demand for ADA, both for transaction fees and as collateral in lending protocols.
• This heightened utility can contribute to long-term value accrual for ADA holders and the broader Cardano network too.

4) UI/UX & Accessibility:

• We aim to simplify complex DeFi operations into user-friendly interfaces, thus we're making advanced financial strategies accessible to a broader audience.
• This democratization of DeFi tools will accelerate adoption and user engagement within the Cardano ecosystem.

5) Driving innovation, attracting talent:

• The open-source nature of our integration will provide a valuable resource for developers, spurring further innovation and refinement of DeFi products on Cardano.
• Our comprehensive documentation will lower the barrier to entry for new developers looking to build on Cardano.

6) Institutional Interest:

• The ability to execute sophisticated trading strategies efficiently will make Cardano more attractive to institutional investors and trading firms.
• This influx of institutional capital can provide greater liquidity and stability to the Cardano DeFi ecosystem.

7) Education:

• Through our intuitive interface and educational resources, we'll be upskilling the Cardano community in advanced DeFi concepts and strategies.
• This knowledge dissemination will create a more informed and capable user base, benefiting the entire ecosystem.

8) Strengthening Cardano's Competitive Position:

• Cardano has the ability to support complex, composable DeFi operations; our goal is to prove that as we enhance its position relative to other smart contract platforms.

[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?

Minswap Labs understands the critical importance of trust and accountability when building in Cardano. We've established ourselves as a leader within the Cardano ecosystem through our unwavering commitment to these values.

Proven Track Record of Excellence:

Our success speaks for itself. Minswap Labs is the team behind Minswap DEX (https://minswap.org/), currently the dApp boasting the highest Total Value Locked (TVL) on Cardano. Not only this, but we’re also progressing great on ALL of our approved proposals from past Catalyst Funds. These achievements demonstrate our capability to execute complex DeFi projects with the utmost security and transparency.

Validating Feasibility: A Multi-Pronged Approach

We don't just rely on past success; we meticulously validate our approach before development begins. Here's how:

• Deep Expertise in Cardano Development: Our team comprises several highly experienced Plutus engineers that have been working on developing Plutus-based Smart Contracts for more than 3 years.
• Community Collaboration: We believe in open communication. Throughout the development process, Minswap Labs will actively engage with the Cardano community. By soliciting feedback from users, developers, and other stakeholders, we can ensure the final product aligns with the needs and expectations of the community, fostering widespread adoption and trust.
• Building on Transparency: Open-sourcing further reinforces our commitment to transparency. This allows the community to scrutinize the code. Developers can contribute to the project's ongoing evolution, accelerating innovation within the Cardano DeFi ecosystem.

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

Integration for Long Positions (4 weeks)

• Milestone Output: Off-chain integration enabling long position operations through Minswap and the chosen lending protocol on Cardano (either Liqwid or Lenfi).
• Acceptance Criteria:
• Off-chain integration successfully enables asset supply, borrowing, and purchasing for long positions.
• Seamless integration between both Minswap and the lending protocol.
• Transactions are optimized for efficiency and minimized fees.
• Evidence:
• Open-source code repository.
• Transaction Link of an example order.

Integration for Short Positions (4 weeks)

• Milestone Output: Off-chain integration enabling short position operations through Minswap and the chosen lending protocol integration on Cardano (if Liqwid is not possible, we use LenFi).
• Acceptance Criteria:
• Off-chain integration successfully facilitate asset supply, borrowing, selling, and repurchasing for short positions.
• Integration handles the complexities of short positions, including interest calculations and liquidation scenarios.
• Integration with both Minswap and the possible lending protocol is seamless and efficient.
• Evidence:
• Open-source code repository.
• Transaction Link of an example order.

UI Integration for Long Positions (4 weeks)

• Milestone Output: User-friendly interface for executing long position strategies.
• Acceptance Criteria:
• Users can initiate and manage long positions through a single, intuitive interface.
• Latest data feeds provide accurate information on asset prices, lending rates, and position health.
• Evidence:
• UI screenshots showcasing the long position interface.
• Proof of concept demonstrating a complete long position transaction.

UI Integration for Short Positions (4 weeks)

• Milestone Output: User-friendly interface for executing short position strategies.
• Acceptance Criteria:
• Users can initiate and manage short positions through a single, intuitive interface.
• Educational resources explaining short position mechanics and risks are integrated into the interface.
• Evidence:
• UI screenshots showcasing the short position interface.
• Proof of concept demonstrating a complete long position transaction.

Final Report and Video

• Milestone Output: Final Report and Video
• Acceptance Criteria:
• Final closeout report is publicly available
• Final closeout video is publicly available
• Evidence:
• Link to the final closeout report
• Link to final closeout video at https://www.youtube.com/@MinswapDEX

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

This Lending Market is being spearheaded by Minswap Labs, a passionate and experienced team dedicated to empowering the Cardano DeFi ecosystem. Our team comprises talented individuals with diverse backgrounds, united by a common goal: to create innovative and user-friendly DeFi solutions on Cardano and take it to the next level.

Leadership with a Vision:

Long Nguyen (Co-founder): A DeFi native and visionary leader, Long’s expertise has been instrumental in shaping Minswap DEX into the leading dApp within Cardano DeFi. His experience and insights gleaned from interviews like at Cardano Summit 2023 will guide the Lending Market’s development.

Technical Brilliance:

Our team consists of highly skilled developers and project managers with a deep understanding of Cardano’s architecture and security best practices. The team is strategically based in the US, Asia and Europe. These talented individuals will ensure the Lending Market is performant, and integrates seamlessly with the existing Minswap DEX infrastructure.

https://www.youtube.com/watch?v=QKXPONr6XRY

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

Our total budget request is 420,000 ADA ($147,000 @ 1 ADA = $0.35), allocated across the following milestones:

Milestone 1: Contract Level Integration for Long Positions (4 weeks)

• 2 Senior Developers: (2 devs 160 hours $82/hour) = $26,240
• 1 Project Manager: (1 PM 80 hours $70/hour) = $5,600

Subtotal: $31,840 (90,971 ADA)

Milestone 2: Contract Level Integration for Short Positions (4 weeks)

• 2 Senior Developers: (2 devs * 160 hours * $82/hour) = $26,240
• 1 Project Manager: (1 PM * 80 hours * $70/hour) = $5,600

Subtotal: $31,840 (90,971 ADA)

Milestone 3: UI Integration for Long Positions (4 weeks)

• 2 Frontend Developers: (2 devs * 160 hours * $70/hour) = $22,400
• 1 UX/UI Designer: (1 designer * 80 hours * $65/hour) = $5,200
• 1 Project Manager: (1 PM * 80 hours * $70/hour) = $5,600

Subtotal: $33,200 (94,857 ADA)

Milestone 4: UI Integration for Short Positions (4 weeks)

• 2 Frontend Developers: (2 devs * 160 hours * $70/hour) = $22,400
• 1 UX/UI Designer: (1 designer * 80 hours * $65/hour) = $5,200
• 1 Project Manager: (1 PM * 80 hours * $70/hour) = $5,600

Subtotal: $33,200 (94,857 ADA)

Additional Costs:

• Quality Assurance and Testing: (2 QA engineers * 120 hours * $55/hour) = $13,200 (37,714 ADA)
• Documentation and Educational Content: (1 Technical Writer 80 hours $45/hour) = $3,600 (10,286 ADA)

Total Project Cost: $146,880 (around 420,000 ADA)

This breakdown aligns with our funding request of 420,000 ADA and accounts for a 4-month project timeline with each milestone lasting 4 weeks.

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

The 420,000 ADA investment in this project represents exceptional value for the Cardano ecosystem:

1) Ecosystem Multiplication Effect: With this project, we’re enabling advanced trading strategies, thus we anticipate a significant increase in Cardano's Total Value Locked (TVL). Currently Cardano TVL is at ~$52 million as of October 2024, which is ranked 28th among Chains despite being a Top 10 market cap cryptocurrency.

2) Innovation Catalyst: As an open-source project, our work will serve as a foundation for future innovations. The potential for new projects and features spawned from this integration could easily surpass the initial investment value many times over.

3) Competitive Edge: This integration positions Cardano at the forefront of DeFi innovation, potentially attracting users and capital from other blockchain ecosystems. The value of this market position far exceeds the project cost.

4) User Acquisition + Retention: Improved UX and advanced features are expected to significantly boost user numbers. Considering the lifetime value of each new user (in terms of transaction fees, ecosystem participation, and potential ADA appreciation), even a modest increase in user base would justify the investment.

5) Developer Magnet: By demonstrating Cardano's capacity for complex DeFi operations, we make the platform more attractive to developers. The value of additional talent and projects drawn to Cardano could be immeasurable.

6) Educational Dividends: The project's educational components will upskill the Cardano community, fostering a more sophisticated and engaged user base. This knowledge dissemination has long-term value that extends beyond the immediate project scope.

7) Long-term Network Effects: Increased utility and capabilities of the Cardano network contribute to its long-term value proposition. The compounding effects of network growth could yield returns far exceeding the initial investment.

8) Cost-Effective Development: Leveraging the expertise of established teams ensures efficient development and reduces the risk of project failure, maximizing the return on investment.

In essence, this project is a strategic investment in Cardano's DeFi future. The potential returns, in terms of ecosystem growth, user adoption, and Cardano's competitive positioning, promise to deliver value that far outstrips the initial cost.