Cardano Music Royalties: Instant, Transparent Payouts

[Proposal setup] Proposal title

Please provide your proposal title

Cardano Music Royalties: Instant, Transparent Payouts

[Proposal Summary] Budget Information

Enter the amount of funding you are requesting in ADA

90000

[Proposal Summary] Time

Please specify how many months you expect your project to last

9

[Proposal Summary] Translation Information

Please indicate if your proposal has been auto-translated

No

Original Language

en

[Proposal Summary] Problem Statement

What is the problem you want to solve?

In music, royalties arrive months late and up to 25% is lost to intermediaries. Artists especially emerging ones lack liquidity, investment, auditable data and fair, timely monetization.

[Proposal Summary] Project Dependencies

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

No

Describe any dependencies or write 'No dependencies'

No dependencies

[Proposal Summary] Project Open Source

Will your project's outputs be fully open source?

No

License and Additional Information

We will share information, documentation, findings, and relevant information throughout the process

[Theme Selection] Theme

Please choose the most relevant theme and tag related to the outcomes of your proposal.

Music

[Campaign Category] Category Questions

Describe what makes your idea innovative compared to what has been previously funded (whether by you or others).

We fuse tokenized royalties (CIP-68 stateful tokens) with verifiable identity (Atala PRISM DIDs/VCs), KYC-gated access, and an income oracle that posts signed statements from collection sources. Pro-rata payouts execute on-chain with reference scripts (CIP-31/32/33). PAGOTIC (founded 2011; >3M users; >1,500 entities; >USD 1B/yr) powers reconciliation and settlement for the pilot. This combines technical and regulatory innovation to compress payout latency from months to days.

Describe what your prototype or MVP will demonstrate, and where it can be accessed.

MVP shows end-to-end: (1) legal wrapper for a royalty pool; (2) issuance of CIP-68 participation tokens; (3) KYC-gated mint/transfer using PRISM; (4) income oracle posting signed revenue; (5) on-chain pro-rata payouts in ADA or stablecoins; (6) artist/investor dashboard. Access via web dApp compatible with CIP-30 wallets; policy IDs and key contracts are published for public verification.

Describe realistic measures of success, ideally with on-chain metrics.

≥100 KYC wallets; one policy ID; ≥10k tokens; ≥3 payout cycles; <7-day latency post-cutoff; ≥₳25k (or stablecoin equivalent) distributed; zero critical security incidents; ≥3 partnerships with labels/aggregators; public on-chain metrics: #holders, #tx, payout volumes, fees, and T2T latency. Off-chain: PAGOTIC reconciliation reports and retention of artists after pilot.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Our solution turns Cardano into a settlement layer for music royalties by reconnecting real-world income to programmable, auditable on-chain distribution. It serves two user groups: artists/rightsholders seeking fair, fast liquidity; and fans/investors seeking transparent participation in future revenues. The pilot focuses on Argentina—one of Latin America’s largest music markets—leveraging PAGOTIC as payments gateway, reconciliation engine and operational verification partner.

Architecture and asset model. Royalty cashflows for one work (or catalog subset) are assigned to a special-purpose vehicle (trust or corporate wrapper, depending on scope) that issues digital participation rights as Cardano native tokens. We use CIP-68 to encode machine-readable state (e.g., terms hash, cutoff windows, percentages, pause flags); CIP-25/27 NFTs are optional for access/utility (fan memberships) but not for financial rights. Policy is closed post-primary to preserve supply integrity.

Identity, compliance and access. We implement verifiable identity using Atala PRISM (Decentralized Identifiers, DIDs, with Verifiable Credentials, VCs). The dApp enforces allow-lists from KYC outcomes and blocks transfers to non-verified wallets. Compliance paths consider local rules (AML/CTF under UIF), and—where the instrument qualifies as a security—disclosure, reporting and custodial separation are observed. PAGOTIC provides KYC orchestration, funds capture and settlement files aligned to local regulation.

**Income oracle. **Each period, the fiduciary/administrator posts a signed income statement (inputs from DSPs and collection partners), including period, gross revenue, fees/withholdings, and net distributable amount. The oracle transaction anchors this record on Cardano and opens a payout window (e.g., T+72h), locking parameters for deterministic distribution.

**_Payout contracts. _**Plutus V2 scripts read token holder balances at a snapshot height and compute pro-rata entitlements: holder_share = (wallet_balance / circulating_supply) × net_distributable. Reference inputs (CIP-31/32) and reference scripts (CIP-33) minimize tx size and fees. Batch payouts distribute to all holders within one or several transactions; receipts include the oracle tx hash, period and amounts for auditability.

Currencies and settlement. Distributions can happen in ADA or Cardano native stablecoins (e.g., DJED); users may choose currency per payout cycle subject to liquidity. PAGOTIC handles fiat rails for top-ups/withdrawals, bank reconciliation and operational verification, providing settlement files that mirror on-chain events. This enables mainstream usability while keeping Cardano as the source of truth.

Security and operations. Admin/oracle keys use multisig and hardware isolation; emergency pause, negative lists and per-cycle limits are enforced. External audits precede mainnet launch. Monitoring includes liveness, oracle freshness, payout completion rates and abnormal flows. Post-mortems are mandatory for any incident.

**_Performance and cost. _**Our design targets sub-₳0.25 cost per individual payment when batched with reference scripts; cycle open ≤₳5. If holder counts grow, we extend throughput with Hydra heads for parallel payout processing while using Mithril proofs to streamline full-node verification for the dashboard.

**_User experience. _**The dashboard displays balances, pending distributions, policy IDs, PRISM status and historical payouts, with CSV/JSON exports for tax/accounting. Artists can list future royalty slices and optionally pair them with non-financial NFTs for fan access, presales or experiences.

Legal wrapper and jurisdiction. For the pilot, a trust (fideicomiso) or simplified corporate vehicle (SAS) will hold cashflows and sign PAGOTIC’s collection/settlement agreements. Documentation includes term sheet, disclosure, and continuous reporting; we maintain portable templates for expansion into other LATAM markets.

Roadmap to MVP and beyond. Phase 1 (testnet) validates end-to-end flow with simulated income and ≥50 KYC wallets. Phase 2 (audited mainnet pilot) runs ≥3 real payout cycles with PAGOTIC reconciliation. Phase 3 opens templates for other catalogs and adjacent verticals (podcasts, audiobooks).

Why Cardano. Low fees, eUTXO determinism, native tokens (no ERC-20 contracts), robust identity (PRISM), and scaling (Hydra/Mithril) make Cardano ideal for regulated, high-volume micro-distributions with public auditability. The stack is published under Apache-2.0 to catalyze reuse across the creative economy.

[Your Project and Solution] Impact

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

The project turns Cardano into the settlement layer for music royalties in a real market. Its impact is expressed through adoption, traceability, liquidity, and technical reuse:

Adoption and on-chain activity. A pilot with ≥100 KYC wallets and ≥10k tokens creates real traffic: income cycles, payout events, and hundreds of transactions per distribution. Over 12–18 months, targets of ≥10 catalogs, ≥1,000 holders, and ≥₳200k distributed position Cardano as the tokenized-royalties standard in Latin America (LatAm).

**Traceability and trust. **Every income and payout event leaves a verifiable footprint. This enables community auditing, comparisons across catalogs, and open analytics (e.g., performance per work, effective yield per holder, end-to-end latency). The evidence reduces information asymmetries and protects the artist.

**Liquidity and cost of capital. **By fractionalizing future cash flows via a primary issuance, artists access capital without abusive recoupment clauses. Programmable payout reduces latency from months to days, improves cash flow, and opens cultural-finance instruments on Cardano.

Technical reuse (open tooling). The stack (payout contract, income oracle, PRISM/KYC scheme, CIP-68 templates) will be reusable by third parties (music, podcasts, audiobooks, UGC). This creates a network effect: more use cases, more data, better oracles and libraries.

**Ecosystem effect. **New users → wallets, PRISM, use of Hydra/Mithril and stablecoins, more fees and visibility for Cardano. The model is exportable to audiovisual rights, ticketing, publishing royalties, and licensing.

Expanded impact metrics. (i) number of KYC wallets and 90/180-day retention; (ii) number and volume of payouts; (iii) T2T time (income→payout) and standard deviation; (iv) percentage of costs/fees vs. the traditional system; (v) PRISM adoption (VCs issued/verified); (vi) open-source contributions (commits, downloads, forks); (vii) partnerships with labels/managers; (viii) percentage of artists who reinvest the capital raised.

This project directly strengthens the Cardano ecosystem: each royalty distribution generates measurable on-chain activity; the artists, investors, and labels onboarded with PRISM identities will remain Cardano users; and the technical stack (Plutus contracts, income oracles, CIP-68 templates) can be reused in other industries such as film, publishing, or ticketing.

All components (Plutus/Aiken contracts, the income oracle, CIP-68 templates, and the dashboard) will be released under the Apache 2.0 license. This ensures the solution remains a Digital Public Good within the Cardano ecosystem, reusable across other creative industries such as film, publishing, or ticketing.

Beyond the technical work, the project includes outreach and community activities: workshops with independent artists, sessions at Catalyst Town Halls, and open reports in forums and social channels. This ensures that both the music community and the Cardano community actively participate in validating and adopting the solution.

[Your Project and Solution] Capabilities & 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 combines Cardano engineering (Plutus/Aiken), SSI (Atala PRISM), oracle design, DevOps, and legal/financial structuring in Argentina. PAGOTIC contributes payments domain expertise, KYC orchestration, mass-collection rails, settlement and operational verification—critical for a compliant, production-grade pilot.

Delivery capability. We run CI/CD pipelines with automated unit and property tests, testnet rehearsals, and infrastructure as code. Contracts are reviewed internally, then audited by a third party before mainnet. We maintain multi-env deployments (preview/testnet/mainnet) with monitoring, alerting and rollbacks.

**Feasibility validation. **We validate (1) technical feasibility via end-to-end testnet runs: oracle post → snapshot → batch payouts in ADA/stablecoins; (2) legal feasibility via external counsel opinions on the wrapper, disclosures and investor gating; (3) operational feasibility via PAGOTIC reconciliation files that match on-chain distributions. Success is measured by clean audits, zero critical incidents, and payout latency under seven days post-cutoff.

Risk management. Key risks and mitigations: data integrity (signed oracle statements and cross-checks), regulatory scope (KYC, investor caps, disclosures), key management (HSMs and multisig), liquidity (stablecoin support and fiat off-ramp), and UX (guided onboarding with clear fee/time estimates). We publish incident response playbooks and perform periodic drills.

Scalability plan. As holders grow, we adopt Hydra for parallel batch execution and integrate Mithril proofs to optimize dashboard data ingestion. Templates and tooling will generalize to other catalogs and territories, growing Cardano usage without rewriting core logic.

All code, contracts, and documentation will be published in a public GitHub repository under the Apache 2.0 license (https://github.com/cardano-music/music-royalties ). This ensures transparency, auditability, and reusability for the Cardano community, and enables other projects to build on top of our components.

[Milestones] Project Milestones

Milestone Title

Legal design, architecture and whitepaper

Milestone Outputs

We will produce the legal wrapper blueprint (trust or SAS) with disclosures, a term sheet and operational policies; the technical architecture for tokens (CIP-68), oracle and payout contracts; the end-to-end sequence diagrams; and a public whitepaper explaining data models, payout math, and compliance flows. PAGOTIC integration scope is defined (KYC, settlement files, reconciliation cadence) with signed letter of intent. All documents are drafted in English and Spanish for LATAM portability.

Acceptance Criteria

Independent legal counsel delivers a written opinion on the pilot structure and investor gating; the whitepaper explains oracle attestations, snapshot logic and distribution math with worked examples; the architecture repo includes proto-schemas and interface definitions; PAGOTIC confirms technical and operational scope in writing; community review feedback is incorporated; risk register is opened with owners and severities.

Evidence of Completion

Signed legal opinion and term sheet; public whitepaper v1.0; architecture document in the repo; meeting minutes and a PAGOTIC integration note; initial risk register with mitigation plans; publication of a project README describing scope, constraints and planned metrics. All artifacts are timestamped and accessible for reviewers.

Delivery Month

1

Cost

12000

Progress

10 %

Milestone Title

Smart contracts (testnet) and oracle prototype

Milestone Outputs

Implementation of CIP-68 token logic, snapshot and pro-rata payout scripts in Plutus V2 with reference scripts; oracle microservice that posts signed income events; comprehensive unit/property tests; and dev tooling (deployment scripts, seed data). A testnet run demonstrates mint, KYC gating, income post, and batch distribution in ADA and in a Cardano stablecoin. Documentation covers parameters (fees, holdbacks, minimum payout, currency choice).

Acceptance Criteria

All contracts compile and pass tests; a full testnet demo executes without manual patching; per-payment fee stays below the target when batched; oracle signatures verify on-chain; payouts reconcile to expected amounts within 1% tolerance; code is peer-reviewed; security checklist shows no critical open items.

Evidence of Completion

Testnet tx hashes for minting, oracle posting and payouts; repository links with passing CI; demo video; a technical report with gas/fee measurements and reconciliation tables; issue tracker showing review and approvals. Reviewers can reproduce the flow using provided scripts.

Delivery Month

3

Cost

18000

Progress

30 %

Milestone Title

Identity (PRISM), KYC gating and dashboard alpha

Milestone Outputs

Integration of Atala PRISM for DID/VC issuance and verification; KYC workflow with allow/deny lists enforced in the dApp; dashboard alpha for artists and investors showing balances, upcoming windows and history; CSV/JSON exports; and bilingual user guides. PAGOTIC KYC orchestration and settlement file formats are wired into back-office services for dry runs of reconciliation.

Acceptance Criteria

≥50 wallets complete KYC on testnet; transfers to non-verified wallets are blocked by policy; dashboard reads chain data and oracle events; exports match on-chain amounts; PAGOTIC files are generated and validated; UX passes heuristic review; privacy policy and consent flows are in place.

Evidence of Completion

Screenshots and a public demo URL (testnet); anonymized KYC metrics; policy IDs; sample settlement/reconciliation files; user guides; privacy documentation; feedback notes from a pilot group of artists. All artifacts are accessible to Community Reviewers.

Delivery Month

5

Cost

24000

Progress

60 %

Milestone Title

Mainnet hardening, security audit and PAGOTIC integration

Milestone Outputs

Refactoring for gas/fee optimization; full threat model; external security audit and remediation; mainnet configuration; PAGOTIC production integration for collections, payouts and reconciliation; runbook for incident response; and legal/compliance checklist finalized for the pilot. Optional Hydra-based batching is prepared behind a feature flag for high-holder scenarios.

Acceptance Criteria

Independent audit reports no critical issues outstanding; mainnet dry-run executes with small amounts; PAGOTIC confirms end-to-end files and operational cadence; monitoring and alerts are live; disaster-recovery drills are documented; legal checklist is signed off by counsel and operator.

Evidence of Completion

Audit report and fixes list; mainnet tx hashes from dry-run; PAGOTIC go-live memo; monitoring dashboards screenshots; incident runbook; signed compliance checklist. Reviewers can verify published policy IDs and endpoints.

Delivery Month

7

Cost

24000

Progress

80 %

Milestone Title

Controlled mainnet pilot and public report

Milestone Outputs

Execution of ≥3 payout cycles with a real catalog; distributions in ADA or stablecoins per holder preference; public metrics dashboard; community sessions (Town Hall + workshop) and a lessons-learned report covering legal, technical and operational outcomes; backlog and roadmap for multi-catalog expansion based on pilot data.

Acceptance Criteria

≥100 KYC wallets; ≥10k tokens outstanding; ≥₳25k equivalent distributed; <7-day post-cutoff latency; zero critical incidents; reconciliation with PAGOTIC matches on-chain totals; community feedback collected and addressed; expansion partners identified.

Evidence of Completion

On-chain tx hashes for income events and payouts; public dashboard link; PAGOTIC reconciliation statements; workshop materials and recordings; final pilot report with metrics and next-steps plan. All evidence remains accessible for the funding cycle.

Delivery Month

9

Cost

12000

Progress

100 %

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

Total: ₳90,000 across 9 months.

• Engineering (contracts, oracle, dashboard): ₳42,000. Plutus/Aiken development, test automation, fee optimization and toolchains.

• Security & Audit: ₳10,000. External audit plus remediation buffer.

• SSI & Compliance: ₳8,000. PRISM integration, KYC workflows, privacy/legal policies.

• PAGOTIC Integration & Operations: ₳12,000. KYC orchestration, settlement file handling, reconciliation systems and pilot ops verification.

• Legal Structuring & Documentation: ₳6,000. Wrapper templates, disclosures, opinions.

• Product, UX & Content: ₳7,000. Dashboards, bilingual guides, workshop materials.

• Infrastructure & Monitoring: ₳3,000. Nodes, telemetry, backups, incident tooling.

• Contingency (approx. 2%): ₳2,000. Risk buffer for unforeseen compliance or infra needs.

Allocation prioritizes reusable open-source components (contracts/oracle/templates) and verifiable deliverables, with lean overhead and clear audit trails for every expense.

[Final Pitch] Value for Money

How does the cost of the project represent value for the Cardano ecosystem?

This project converts a high-margin, high-volume industry into measurable Cardano activity with a realistic budget. Each payout cycle generates verifiable on-chain events, expanding wallet usage, DIDs and stablecoin transactions. By open-sourcing contracts, oracle specs and compliance templates under Apache-2.0, we enable other teams to launch royalty pools at near-zero marginal development cost—compounding Catalyst’s investment.

We channel funds toward code, audits and regulated operations rather than marketing. PAGOTIC’s mature rails de-risk adoption and reduce integration time otherwise spent building payments and reconciliation from scratch. The cost per first-year verified wallet in the pilot is competitive for a fintech-grade use case, and the stack generalizes to other creative verticals (film, publishing, ticketing), multiplying ROI for the ecosystem.

Most importantly, we address a global problem—slow, opaque royalties—while empowering emerging artists and their communities to participate directly. Paying in ADA or stablecoins, with fiat interoperability via PAGOTIC, bridges mainstream users into Cardano without sacrificing decentralization or auditability. This is a credible path to mass-scale disruption of a traditional market, with Cardano at the core.

[Required Acknowledgements] Consent & Confirmation

Terms and Conditions:

Yes