[Proposal setup] Proposal title

Please provide your proposal title

PROTOFIRE - Cardano Cross-Chain Interoperability Protocol

[Proposal Summary] Budget Information

Enter the amount of funding you are requesting in ADA

100000

[Proposal Summary] Time

Please specify how many months you expect your project to last

5

[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?

Cardano's isolation from other networks blocks critical flows of data and assets. This lack of interoperability severely limits ecosystem growth, dApp innovation, and access to new liquidity.

[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?

Yes

License and Additional Information

On-chain & off-chain codes will be in public repos.

[Theme Selection] Theme

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

Cross-chain

[Campaign Category] Category Questions

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

Our innovation lies in creating a highly flexible and standardized framework, not just another monolithic bridge. The core of this is the Project Configuration Contract, which allows any dApp to define its own unique cross-chain logic using a simple on-chain entry identified by an NFT. This multi-tenant design means projects don't need to build their own bridges; they can simply plug into our universal protocol. It enables deep customization while maintaining a single, secure, shared infrastructure for the entire ecosystem to leverage.

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

The final deliverable of this project will serve as our MVP. It will be a fully functional, end-to-end cross-chain messaging system deployed on the Cardano testnet. It will demonstrate the ability to send a data packet from Cardano, have it processed by our off-chain module, simulate its arrival on another network, and vice-versa. This will validate the core architecture, including the Master contracts and the Project Configuration Contract. All source code, documentation, and a final demonstration video will be publicly accessible via our project's GitHub repository.

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

Our success will be measured in two stages: delivery and adoption.

Adoption Success (Long-Term On-Chain Metrics):

• Transaction Volume: Number of transactions interacting with the Master Outgoing and Master Incoming contracts.
• Ecosystem Integration: Number of unique dApps creating a Project Configuration Contract to integrate their specific use case.

Delivery Success (Short-Term):

• Successful completion of all 3 project milestones on time and within the proposed budget.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Solution Architecture Overview

On-Chain Components

1. Master Incoming Contract: Receives messages destined for the Cardano network.
2. Master Outgoing Contract: Sends messages to other networks.
3. Project Configuration Contract: Stores project-specific configurations as UTXOs, each identified by a unique NFT token.

Off-Chain Components

1. Message Processing Module: Handles message processing and creates corresponding transactions for both incoming and outgoing messages based on the project configurations stored in the Project Configuration Contract.
2. Project Configuration Info: Each project or use case will have a unique UTXO with configuration info that defines the logic for creating specific transactions based on the received messages.

Messaging Flow

Outgoing Messages from Cardano:

1. Users create a transaction that generates a new UTXO in the Master Outgoing Contract, specifying the source address using the unique NFT token of the target project.
2. The Message Processing Module detects the change, retrieves the corresponding project configuration from the Project Configuration Contract, and processes the message accordingly.
3. If required, the module creates a transaction on the Cardano network before sending the message to the destination network (e.g., burning tokens for a Burn and Mint scenario).

Incoming Messages to Cardano:

1. Messages from other networks are sent using the channels provided by existing cross-chain protocols, creating an entry in the Master Incoming Contract, specifying the destination address using the unique NFT token of the source project.
2. The Message Processing Module detects the change, retrieves the corresponding project configuration from the Project Configuration Contract, and processes the message accordingly.
3. The module creates a transaction on the Cardano network based on the message (e.g., minting tokens for a Burn and Mint scenario).

Off-Chain Infrastructure

The Message Processing Module will be part of the off-chain infrastructure maintained by the existing cross-chain protocols. This infrastructure is typically supported by a network of nodes and validators, ensuring a decentralized solution if the module's logic is integrated into these nodes.

Transaction Creation Complexities:

• UTXO System: Cardano's deterministic and specific UTXO system requires careful handling when creating transactions. The off-chain module will construct specific transactions based on the project configuration values and the message being processed.
• If the transaction needs to consume UTXOs from a Cardano wallet, the private key must be encrypted using an internal system public key and attached to the message. The off-chain module will decrypt the private key using the corresponding internal private key and use it to sign the created transaction.
• If the transaction needs to consume UTXOs from a contract with restricted access to a specific wallet, an extra signature will be attached to the message. Users will sign the message before creating it and attach the signature to the message, then sign the transaction itself that stores the message in either the Master Outgoing or Master Incoming Contract.
• Message signing can be performed using Cardano wallets or any EVM wallet (e.g., Metamask). The smart contract from which funds are to be consumed must have the public key (EVM or Cardano address) of the wallet stored in the UTXO to be consumed, allowing for verification and consumption.

Message Structure

Messages will contain the following fields:

• Date
• Source Network
• Source Address
• Destination Network
• Destination Address
• Message: Any encoded information
• Signatures: Attached signatures for the entire message block
• Processed Flag: Indicates whether the message has been processed by the off-chain module

Project Configuration

Each project or use case will have an entry UTXO in the Project Configuration Contract, identified by a unique NFT token. The datum of this UTXO will contain all the necessary fields for configuring the project. The smart contract will ensure that only authorized wallets can update the datum.

The Project Configuration datum will include:

• Scripts: List of UTXOs with scripts to be referenced when building transactions.
• Redeemers: List of redeemers with their fields and default values or values to be generated using variables. Each redeemer will have a unique name or type for identification.
• Datums: List of datums with their fields and default values or values to be generated using variables. Each datum will have a unique name or type for identification.
• Transactions: List of possible transactions with their configuration and logic

Transaction Configuration

For each transaction, the following should be specified:

• Flag indicating if it should be used for outgoing, incoming, or both
• Query to Activate: Query applied by the off-chain module to determine if the logic should be applied to the message
• Scripts: Script hashes to be used in the transaction. They will be attached to the transactions or read from the UTXO where they are stored. It will search for the script hash in the JSON configuration file.
• Inputs: List of inputs to be added to the transaction, either specific UTXOs or using the intelligent selector to find UTXOs in a particular address. For each input to be consumed from a smart contract, a redeemer must be specified, including its type, which will be searched for in the list of redeemers in the configuration file. The complete redeemer will be constructed based on the declaration, using default values, variable-filled values, or specific values set for fields at this point.
• Reference Inputs: List of reference inputs to be added to the transaction, either specific UTXOs or using the intelligent selector to find UTXOs in a particular address.
• Minting/Burning: Specification of tokens to be minted or burned, including the token, amount, and a redeemer.
• Outputs: List of outputs to be added to the transaction, including destination address, tokens, and possible datum (new or updated). To create the datum, the type must be specified and searched for in the list of datum declarations. If it is an UPDATE operation, the datum to be updated must be specified by selecting the index of the input from which the datum should be read. Specific fields can be updated using a formula, such as {amount: input.amount + message.amount}.

Intelligent UTXO Selector

The intelligent UTXO selector can be configured to:

• Select one or more UTXOs that possesses a specific NFT
• Select one or more UTXOs that possesses more than a certain amount of FT tokens
• Select one or more UTXOs that possesses a specific datum or a type of datum
• Select one or more UTXOs that possesses a specific value or condition in a field of its datum
• Select one or more UTXOs that possesses a reference script with a specific hash
• Select one or more UTXOs to satisfy a specific aggregated condition (e.g., total amount of tokens between them)

Redeemers and Datums

Redeemers and datums have declarations in the UTXO in the Project Configuration Contract. In the redeemer and datum declarations, fields, default values, variable-filling values, and a type for identification are specified.

Cost Efficiency

The transaction fees incurred by the off-chain module can be handled in two ways:

1. For outgoing transactions, users can pay additional ADA when creating the message transaction in the master contract to cover the fees. If not all the ADA is used, a mechanism should be in place for users to collect the remaining balance.
2. For incoming or outgoing transactions, the master contract or a separate smart contract can lock ADA to pay for the transactions. Different possibilities include each project having an entry in the contract, each user having an entry, or the cross-chain protocol itself providing ADA. The specific approach can be determined based on the requirements and preferences of the projects and users involved.

Reliability and Fault Tolerance

To ensure reliability and fault tolerance, the following mechanisms can be implemented:

1. Retry Mechanism: If a transaction fails due to network issues or other transient errors, the off-chain module can retry the transaction after a certain interval to ensure that temporary failures don't result in lost messages.
2. Rollback Mechanism: In case of critical failures or inconsistencies, implement a mechanism to roll back the state of the master contracts and the off-chain module to a previously known stable state, preventing data corruption and ensuring the integrity of the cross-chain messaging system.
3. Monitoring and Alerts: Implement monitoring and alerting systems to detect and notify administrators of any errors, failures, or anomalies in the message processing flow, enabling prompt action to investigate and resolve issues.

Governance and Updates

The integration and update of off-chain modules and components are the responsibility of the cross-chain protocol adopting this solution. They should incorporate the off-chain module into their existing decentralized infrastructure of nodes and validators.

User Experience

To enhance the user experience, the solution includes a flag in the outgoing or incoming messages to indicate whether they have been processed by the off-chain module. Leveraging the existing tracking systems of the cross-chain protocols allows users to monitor the progress of messages across different networks.

Conclusion

This hybrid on-chain/off-chain solution enables seamless cross-chain messaging on the Cardano network. With the help of the master contracts for message storage and an off-chain message processing module, the solution facilitates efficient token transfers and other cross-chain operations.

It opens up new possibilities for cross-chain applications and use cases, enhancing Cardano's interoperability with other blockchain networks.

[Your Project and Solution] Impact

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

More users, Dapps, and capital

Web3 is now a multi-chain landscape. There are hundreds of blockchains, layer-2 networks, sidechains, subnets, appchains, parachains, and other environments for developers and users to choose from. While the launch of new on-chain ecosystems has driven innovation and adoption, it has also fragmented applications, on-chain assets, and market liquidity across different, disconnected blockchains.

In such an environment integration of Cardano with CCIP will allow other communities to get much easier access to Cardano, for example, if a big player considers coming into Cardano it will make it easier if Cardano is connected to EVM-compatible networks. One example is Circle deploying USDC on Cardano, if they could rely on CCIP for burning & minting (or locking & unlocking) USDC that integration would be much easier & more flexible.

Aside from the obvious difference, Cardano being connected to EVM-compatible networks is like Bitcoin and his spot ETF, this enabling infrastructure allows capital to flow from traditional financial systems (EVM-compatible networks) to Bitcoin (Cardano).

Moreover, new use cases that require, or want, to be multi-chain can onboard the Cardano ecosystem, like gaming, specific DeFi applications (borrowing in one network and collateralizing in another), cross-chain NFT collections, and so on.

More users, Dapps, and capital will flow to Cardano if this project is approved!

[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 capability to deliver the project with high levels of trust and accountability stems from the experience, expertise, and organizational processes we have in place. Here's why we are well-suited to execute this project:

1. Protofire's Track Record: Protofire, which is spearheading this project, has an established reputation for building decentralized infrastructure, protocols, applications, and developer platforms. Its specialized skills in enhancing developer adoption and network usage are crucial for the success of this project.
2. Skilled Team: Our team is composed of professionals with diverse backgrounds, including blockchain development, smart contracts, security, data analytics, and project management. This ensures a multidisciplinary approach to problem-solving and guarantees the employment of best practices in execution.
3. Cardano Development experience: we have a team that has worked for more than 2 years in Cardano smart-contract development.
4. We have successfully delivered two Catalyst-funded proposals: Dev Studio (completed) and SmartUTXO (completed). These projects demonstrate our ability to execute Cardano development tools effectively.
5. Dev Studio: https://projectcatalyst.io/funds/11/cardano-open-developers/cardano-developer-studio
6. SmartUTXO: https://cardano.ideascale.com/c/cardano/idea/110478
7. ChainLink partnership: ChainLink is a long-term partner of Protofire. We have worked together for many years.
8. Previous Contributions: Protofire has a history of making meaningful contributions to the blockchain community. This indicates not only technical capabilities but also a commitment to the advancement of decentralized technologies.
9. Transparent Communication: We will maintain open lines of communication with the community through regular updates and engaging in forums. This transparency is essential for building trust.
10. Robust Financial Management: We will implement strict financial controls and regular auditing to ensure that funds are used efficiently and for the intended purpose. This includes having a clear budget allocation, milestones-based disbursements, and financial reporting.
11. Scalable Solutions: Protofire’s experience ensures that the solutions we develop are scalable and able to adapt to the evolving needs of the Cardano ecosystem. This speaks to our capability to deliver not just a project, but a sustainable and evolving solution.
12. Feedback and Iterative Development: We will incorporate feedback from the community and users, and employ an iterative development process. This ensures that the project adapts and improves based on real-world input and requirements.

Our accumulated experience, transparency, and commitment to best practices and community engagement make us not only capable but trustworthy stewards of this project.

[Milestones] Project Milestones

Milestone Title

Architecture Design and Specification

Milestone Outputs

The outputs for this milestone establish the complete technical blueprint for the project.

They include:

• Detailed architecture diagram.
• Comprehensive specification document.
• Initial project structure and documentation in the GitHub repository.

Acceptance Criteria

The milestone is successfully completed when:

• The architecture diagram clearly illustrates all components and their interactions.
• The specification document is comprehensive and covers all aspects defined in the deliverables.
• The GitHub repository is set up with the initial project structure and documentation.

Evidence of Completion

Completion will be demonstrated with the following public artifacts:

• A link to the detailed architecture diagram.
• A link to the comprehensive specification document.
• A link to the GitHub repository containing the initial project structure.

Delivery Month

1

Cost

20000

Progress

20 %

Milestone Title

Smart Contract Development

Milestone Outputs

This milestone focuses on creating the on-chain backbone of the framework.

The key deliverables are:

• Core Protocol Contracts: The coded and tested Cardano smart contracts for the Master Incoming, Master Outgoing, and Project Configuration functionalities.
• Sample Integration Contracts: Functional sample smart contracts that demonstrate how a third-party project would integrate with and use the core protocol.
• Comprehensive Unit Tests: A full suite of unit tests to ensure the reliability and correctness of the on-chain logic, covering all functions and edge cases.

Acceptance Criteria

The milestone is successfully completed when:

• The on-chain contracts are fully developed according to the specifications from Milestone 1.
• The unit tests cover all critical functionalities and achieve a high level of code coverage.
• The contracts behave as expected on a testnet, as proven by the test results and successful interactions with the sample contracts.
• The code is well-commented and pushed to the public GitHub repository.

Evidence of Completion

Completion will be demonstrated with the following public artifacts:

• A link to the GitHub repository folder containing the final smart contract code and the full unit test suite.
• A link to Continuous Integration (CI) logs or test run reports showing that all tests have passed successfully.
• A short video demonstration showing the deployment of the contracts on the Cardano testnet and a successful interaction.

Delivery Month

3

Cost

40000

Progress

60 %

Milestone Title

Off-Chain Module Development

Milestone Outputs

This milestone delivers the complete open-source off-chain Message Processing Module. This module is the engine that connects Cardano to other networks and executes the logic defined by integrating projects.

• Functional Message Processor: The core application that scans for on-chain events on Cardano and processes both incoming and outgoing messages.
• Intelligent Transaction Builder: A key component that uses the rules from the Project Configuration Contract to dynamically build and sign transactions.
• Reliability Features: Implementation of essential features for robust operation, including transaction logging, retry mechanisms for network failures, and general fault tolerance.

Acceptance Criteria

The milestone is successfully completed when:

• The module correctly processes messages according to the specifications from Milestone 1.
• It successfully builds and submits transactions based on rules in the Project Configuration Contract on a testnet.
• The reliability features (logging, retries) are functional and can be demonstrated.
• The well-documented code is available in the public GitHub repository.

Evidence of Completion

We'll demonstrate completion by providing:

• A link to the GitHub repository with the complete source code for the off-chain module.
• A video demonstration showing the module running and processing a transaction from end-to-end.
• Log files from a test run that show the module detecting events, building transactions, and correctly handling potential errors.

Delivery Month

5

Cost

40000

Progress

100 %

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

Roles and Hourly Rates

The hourly rates for each role remain unchanged:

• Project Manager: 67 ADA/h
• Technical Architect: 80 ADA/h
• Blockchain Developer: 93 ADA/h
• Full Stack Developer: 93 ADA/h
• DevOps Engineer: 80 ADA/h
• Quality Assurance Specialist: 67 ADA/h

Cost Breakdown by Milestone

• Milestone 1: Architecture Design and Specification
  • Cost: ₳20,000
• Milestone 2: Smart Contract Development
  • Cost: ₳40,000
• Milestone 3: Off-Chain Module Development
  • Cost: ₳40,000

Grand Total: ₳100,000

[Final Pitch] Value for Money

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

We, at Protofire, are thrilled to submit our proposal for the Catalyst Grant Program, highlighting our strong determination to contribute to the Cardano ecosystem as +80 Engineer Company.

We will outline our approach, emphasizing the importance of quality, adherence to timelines and milestone-based projects, and our proven track record in diverse markets.

While profitability is undoubtedly a critical aspect of any project, we know that onboarding Cardano requires a long-term vision that extends beyond immediate financial gains. We understand that investing in this new technology may initially result in costs that surpass our break-even point.

However, we firmly believe that by strategically positioning ourselves within this ecosystem, we will eventually become a main character that can drive and produce great value for everyone.

So for Cardano, this proposal represents a world-class team working on an open-source tool for half the cost. It's definitely a good deal!

The cost of the project represents value for money for the Cardano ecosystem in several ways:

1. Innovation and Scalability: The project focuses on enhancing the capabilities of smart contract cross-chain interactions with the Cardano blockchain. By offering an efficient and scalable integration to CCIP.
2. Integration with other Networks by official providers: To maximize the impact, we aim to integrate our system with existing CCIP providers like ChainLink or CryptoLink.
3. Increase accessibility in the Cardano Network: The foremost goal is to build a system that enables users to access contracts on the Cardano network without the need to move digital assets by centralized third parties.
4. Enhance Security and Trust in the Cardano Ecosystem: By increasing transparency, we aim to build a more secure environment within the Cardano ecosystem where users can make informed decisions.
5. Knowledge Sharing and Documentation: With comprehensive documentation and examples, the project acts as a knowledge base for Cardano developers who want to integrate with other networks and for non-Cardano developers to integrate with the Cardano blockchain. This education can accelerate the adoption of Cardano technology and attract more talent to the ecosystem.
6. Expand Developer Adoption: By providing tools that make Cardano contracts more accessible, we hope to lower the barriers to entry for new developers and users alike.

[Required Acknowledgements] Consent & Confirmation

Terms and Conditions:

Yes