[Proposal setup] Proposal title

Please provide your proposal title

🇻🇳IndexCapital: First Hydra Integrated DeFi ETF on Cardano

[Proposal Summary] Budget Information

Enter the amount of funding you are requesting in ADA

160000

[Proposal Summary] Time

Please specify how many months you expect your project to last

12

[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 DeFi lacks diverse yield-generating products. Layer 1 limitations (fees, congestion) hinder user access to new, efficient financial models.

[Proposal Summary] Supporting Documentation

Supporting links

• https://indexcapitalcardano.vercel.app/
,
• https://docs.google.com/document/d/173zz74u4FHxGkMnlhh_y8vLt_a-CN63pOZr6rOtnNxE/edit?usp=sharing
,
• https://www.figma.com/design/jLMayeFdduUeCVmpwUfbca/index-captital?node-id=0-1&t=JIPuTjTE5aExmt2m-1
,
• https://drive.google.com/drive/folders/1wHVmFOZEXCH1KAkW8iCFtiKHtY09H78X?usp=sharing

[Proposal Summary] Project Dependencies

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

Yes

Describe any dependencies or write 'No dependencies'

Our project has technical dependencies on the following infrastructure components to ensure the Hybrid model works: Oracles (e.g., Charli3, Orcfax): Necessary to provide reliable price data for Smart Vault to calculate NAV and for Operator to detect off-chain weight discrepancies. DEX Liquidity (Minswap, Spectrum): Our Hydra-to-L1 Batcher module depends on the liquidity of these DEXs to execute the swap of the net difference after internal matching.

[Proposal Summary] Project Open Source

Will your project's outputs be fully open source?

No

Please provide details on the intellectual property (IP) status of your project outputs, including whether they will be released as open source or retained under another licence.

The project adopts a Closed Source model for three key reasons: IP Protection: The Hydra-based netting engine is our core technology. Limiting access prevents uncontrolled forking before market maturity. Security: Keeping off-chain logic private shields the Operator Bot from potential exploits before it is battle-tested. Sustainability: As a SaaS model for DAOs, this approach secures the revenue needed to maintain long-term development.

[Theme Selection] Theme

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

DeFi

[Campaign Category] Category Questions

Describe what makes your idea innovative compared to what has been previously launched in the market (whether by you or others).

IndexCapital's innovation lies in pioneering the application of Hybrid Hydra Netting architecture for asset management, radically solving the bottleneck of the current Batcher model.

1.Overcoming On-chain Batcher limitations:

• Current state: Current DeFi projects on Cardano (like Minswap, Spectrum) rely on a Batcher model operating entirely on L1. When the network is congested, gas fees rise and high latency leads to severe slippage for fund rebalancing transactions.
• Innovation: IndexCapital uses Hydra as a high-speed sub-ledger. We collect user intents and perform internal matching inside the Hydra Head with zero fees. Only the net difference is batched and sent to L1. This helps reduce up to 90% of redundant transactions.

2.Creating natural liquidity:

• Current state: Traditional ETFs on Blockchain often have to dump assets on DEXs to rebalance, causing negative Price Impact.
• Innovation: Our system prioritizes matching between Redeemers and Minters right within Hydra. This turns user cash flow into liquidity for each other, minimizing reliance on external liquidity and protecting the fund's NAV better than any previous solution.

3.Factory model instead of a single product:

• We are not asking for funding to build one investment fund. We are building the infrastructure to create thousands of funds. This is a shift from product to platform infrastructure, enabling Permissionless Innovation from the community.

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

Our MVP (delivered at Milestone 4) will be a fully functional dApp on the Cardano Pre-prod Testnet. It demonstrates the complete Hybrid Hydra Netting lifecycle:

• Basket creation: Users (Managers) can initialize a new Index ETF (e.g., Cardano DeFi Index) by selecting assets from the Whitelist and defining weights via the creator studio UI.
• Intent-based investment: Users (Investors) can Mint/Redeem index tokens instantly. These intents are processed by our off-chain Hydra Engine, demonstrating near-zero gas fees and high-speed finality compared to traditional L1 interactions.
• Automated operations: Users can observe the system automatically detecting portfolio drift and executing smart rebalancing or settling batched transactions to L1 without manual intervention.

The MVP will be publicly accessible via a web URL, allowing the community to verify the system's efficiency with provided testnet tokens.

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

Since the project operates on a closed-source model, On-chain Metrics are the most important evidence to affirm success and transparency.

1.Adoption metrics:

• Active basket index: > 20 Basket Contracts (Dynamic NAV index) deployed and active on Mainnet in the first 6 months of mainnet deployment.
• Active users: > 100 Wallet addresses interacting with the protocol (Mint/Redeem) in the first 6 months of mainnet launch.

2.Performance & technical metrics:

• Intents processed: > 500 intents (User Orders) successfully processed by the Operator. This indicates system load capacity.
• Settlement time: Average time to complete a Round-trip from sending intent to receiving tokens is < 5 minutes, significantly faster than current manual processes.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Ecosystem analysis & uniqueness

1.Ecosystem research: The Cardano ecosystem currently has solid liquidity pieces (DEXs like Minswap, Spectrum). However, we see a large gap: The absence of an effective asset management layer. Current funds often operate manually or entirely on-chain, leading to high operational costs and network latency susceptibility. No solution has successfully utilized Hydra to solve this due to liquidity barriers on L2.

2.Value proposition & uniqueness: IndexCapital does not compete with DEXs; we are an optimization layer sitting on top of DEXs. Our uniqueness is the hybrid hydra architecture:

• Not replacing, but optimizing: Instead of trying to bring DEX liquidity into hydra (which is risky and complex), we use hydra as a liquidity buffer to process orders before L1.
• Netting mechanism: We are the first protocol to perform P2P matching (buyer meets seller) inside Hydra with zero fees. This turns user cash flow into liquidity for each other, reducing DEX dependency.

Infrastructure problem

Running an on-chain Index Fund/ETF currently faces three major barriers:

• Resource waste: If 100 users want to buy fund certificates at once, the current system creates 100 individual transactions, causing congestion and high fees.
• Slippage: When rebalancing on L1, 20-second block latency can cause prices to change before the transaction is confirmed.
• Technical barriers: DAOs wanting to create funds must build complex smart contracts and bots themselves, incurring high audit and operational costs.

Protocol solution: IndexCapital - Hybrid asset management protocol

Our solution is IndexCapital: a decentralized ETF Factory, open-source, audited, and designed Hydra-native. We are not just building a dApp. We are building an infrastructure layer providing standardized contracts and operational services. This protocol allows anyone-from individuals to DAOs-to deploy their investment strategies securely, quickly, and decentrally.

Protocol architecture

The protocol architecture is divided into three distinct layers:

Layer 1: Core contracts (On-chain L1 validators)

This is the immutable heart of the protocol, executing logic and storing all user assets on L1.

• Asset risk oracle contract: This is the security gateway of the entire system. It is an initial on-chain validator managed by the team's multi-sig maintaining a whitelist of verified assets. An asset only enters the ARO if it meets the conditions: (1) Has a reputable Oracle price feed (e.g., Charli3) and (2) Has abundant liquidity on DEXs (both L1 and L2/Hydra).
• Basket factory validator: The main factory contract. Its sole role is to clone and deploy new baskets. It reads data from the ARO Contract to validate the user's input portfolio.
• Dynamic NAV validator: Acts as a smart vault cum proxy. It is capable of receiving deposits (Intents) from users, locking them temporarily for the Operator to process in Hydra, and then receiving the final settlement result to update balances. This is the only place storing real user assets.

Layer 2: Operational services (the hybrid engine)

Internal netting engine (Hydra-native):

• Instead of sending every order to L1, the Operator collects intents into a Hydra Head.
• Here, the algorithm performs internal netting. For example: If A wants to buy 1000 ADA and B wants to Sell 900 ADA, the system directly matches 900 ADA between A and B right inside Hydra (fees ≈ 0).

Hydra-to-L1 batcher:

• Only the net imbalance (e.g., 100 ADA missing) is packaged into a single transaction sent down to minswap/spectrum on L1.
• Efficiency: Reduces up to 90% of on-chain transactions, maximizing gas fee savings.

Layer 3: Intent-based interface (Frontend) users interact via a simple interface, only needing to sign to confirm investment intent. The system automatically routes orders to find the optimal path (via Hydra netting or L1 fallback).

Core technical processes (Interaction flows)

Flow 1: Creation flow

(Goal: A DAO wants to initialize a Cardano AI Index basket comprising 50% AGIX and 50% IAG) This is the foundation setup process, performed entirely on Layer 1 to ensure maximum security.

1.Send request (Layer 3): DAO connects wallet, selects basket configuration (50% AGIX, 50% IAG) and signs initialization transaction.

2.ARO validation (Layer 1):

• Basket factory validator receives request and calls to ARO Contract.
• ARO checks if AGIX and IAG are in the liquidity whitelist (eligible for Hydra netting or batching).

3.Deployment (Layer 1): If valid, Factory deploys a new Dynamic NAV validator contract.

4.Activation (Layer 2): Rebalancing operator service detects the new contract, automatically adding it to the tracking list of the Head Cluster.

Flow 2: Hybrid mint/redeem via netting

(Goal: User A wants to Mint 1000 ADA. User B wants to Redeem tokens worth 900 ADA. System processes with optimal fees)

This process replaces direct swapping on DEX with Internal Netting mechanism inside Hydra.

1.Collect Intents (Layer 3 -> Layer 1):

• Users A and B sign transactions sending their assets/tokens to the Dynamic NAV Validator address on L1, accompanied by metadata describing the intent (Intent: mint or redeem).
• Assets are now in pending settlement state.

2.Commit & match (Layer 1 -> layer 2 hydra):

• Operator collects UTxOs containing this intent and commits them to Hydra Head.
• Internal netting engine (inside Head) runs matching algorithm: It takes 900 ADA from A and transfers directly to B (to pay for redeem).
• Result: B is paid. A has a remainder of 100 ADA unprocessed (Net imbalance).

3.Handle discrepancy & batching (Layer 2 -> External L1):

• For the surplus 100 ADA (User A needs to buy basket tokens), Hydra-to-L1 Batcher will create a single swap transaction on Minswap/Spectrum (L1).
• Purchased tokens will be sent back to Dynamic NAV validator.

4.Settlement & state finalization (L1):

• Hydra head packages the final state and decommits to L1.
• Dynamic NAV validator updates ledger: User A receives basket tokens, User B receives ADA.
• Efficiency: Instead of 2 separate swap transactions incurring fees, the system only executes 1 small transaction or even 0 transactions (if 100% matched).

Flow 3: Smart rebalancing

(Goal: Basket is weight-imbalanced because AGIX price increased. Need to sell some AGIX to buy IAG). Instead of dumping immediately causing slippage, the Bot uses a Natural Liquidity strategy.

1.Detection & calculation (Layer 2):

• Bot monitors Oracle prices and detects basket deviation > 2%.
• It calculates 1000 AGIX need to be sold.

2.Intent queueing (Layer 2): Instead of swapping immediately, Bot checks the Queue to see if any user wants to Mint with IAG or wants to Redeem for AGIX.

3.Priority matching (Natural netting - hydra):

• If there is a user wanting to Redeem for AGIX, Bot will transfer this 1000 AGIX directly to that user (instead of selling on DEX).
• This helps the fund avoid slippage and the user receives desired assets without swap fees.

4.Fallback (Layer 1): Only when no counterparty is found within a time window, the Bot gathers the amount to be sold and executes Batch swap on L1 DEXs via Hydra-aware aggregator.

5.Completion (Layer 1): New weight state of the basket is updated to Dynamic NAV validator on the main chain.

Link to system architecture and flow process: https://www.figma.com/board/bhjlKoh0Nil9za3Gao9t1u/SystemArchitechtureDiagram-Indexcapital?node-id=0-1&t=4Lk6WixYKnSwBuIg-1

[Your Project and Solution] Impact

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

Benefit for Cardano

The Index Capital project not only introduces a new financial product but also solves the Resource Efficiency problem plaguing DeFi protocols on the eUTxO model. Our impact is defined through three main pillars:

1.Reducing L1 congestion & optimizing block space (impact on scalability)

This is the most critical technical impact of the hybrid hydra netting architecture:

• Problem: Current on-chain batcher models (like Minswap, Spectrum) often get congested when transaction volume rises, leading to high gas fees and high latency.
• Hybrid solution: By using Hydra as a pre-processing layer, Index Capital is capable of netting counter-orders from users right inside the Hydra Head.
• Reducing dust Txs: Instead of sending 100 small individual transactions to the main chain, we only send 1 single aggregated Batch transaction containing the net difference. We estimate we can reduce up to 80-90% of redundant transactions needed for fund management, helping free up block space for other applications.
• Lower gas fees: Users save significantly on network costs because internal matching transactions in Hydra have near-zero fees.

2.Creating natural liquidity sources & protecting investors (Impact on Capital efficiency)

IndexCapital changes how investment funds interact with the market:

• Natural liquidity: Through the Internal Netting algorithm, we turn user inflow (Mint) and outflow (Redeem) into liquidity for each other. This reduces reliance on external liquidity.
• Minimizing slippage: When rebalancing, instead of dumping assets causing negative Price Impact on DEXs, our Bot will prioritize matching with new user buy demand. This protects the fund's NAV and helps users buy/sell at better prices than the open market.
• High quality volume for DEX: Although transaction count decreases, transaction quality sent to DEXs (Minswap, Spectrum) will increase. Batch transactions from Basket.Finance will have large values, helping Liquidity Pools operate more efficiently without being spammed by small orders.

3.Standardizing asset management infrastructure (Impact on ecosystem growth)

We provide an audited infrastructure Blueprint for Open Permissionless Innovation:

• For DAOs & community: Currently, technical barriers for a DAO to self-operate an ETF are too high (must build Batcher, manage security risks). Basket.Finance provides a ready-made Factory and Operational Service. A Meme community can create a top Meme Index basket in minutes without writing a line of code.
• Diversifying financial products: The project will pave the way for an explosion of on-chain financial products: AI Baskets, RWA (Real World Assets) Baskets, Stablecoin Yield Baskets... attracting new capital (TVL) into the Cardano ecosystem.

Impact metrics (KPIs)

• On-chain KPI (Target: >20): Number of Dynamic NAV (basket contracts) successfully created from Basket Factory Validator after 6 months of launching the project on mainnet.
• System KPI (Target: <1 minute): Average time from detecting a weight mismatch (>2%) to the Rebalancing Operator completing the rebalancing transaction (via Hydra).
• Number of transactions: 500+ transactions on the platform (mint, redeem, rebalancing events) after 6 months of launching the project on mainnet.
• Community KPI: 100 of wallets interacting (create/mint/redeem) after 6 months of launching the project on mainnet.

Sharing results with the community

We will share project outcomes with the community through the following channels:

• We will build a public "Explore" dashboard that transparently shows the TVL, performance, and composition of all generated baskets.
• Progress reporting via PoA (Proof of Achievement) throughout the project implementation.
• Publishing updates on social media on X.
• Participating in Cardano events/conferences to present and gather feedback.

[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 is composed of seasoned developers and blockchain educators with a strong background in AI, Cardano, and decentralized technology. We have consistently secured funding from multiple Catalyst rounds, demonstrating our ability to execute innovative projects within the Cardano ecosystem. Some of our notable projects include:

• The Moderntensor project won 1st prize in the Cardano Blockchain Hackathon 2025.

• Top 5 student tracks at the VIETNAM APTOS HACKATHON competition at GMVN 2025.

• Team won first prize in the student track at the SOLANA CONSUMER HACK 13 competition.

Our project funded:

Fund 10 Funded Project: "🇻🇳 Vietnam Cardano Catalyst - NFT Exchange testing and development environment helps young people approach with the Web3.0 platform" (Link: https://projectcatalyst.io/funds/10/startups-and-onboarding-for-students/vietnam-cardano-catalyst-nft-exchange-testing-and-development-environment-helps-young-people-approach-with-the-web30-platform))

Fund 11 Funded Projects:

• "Dualtarget for ADA-Holders (Staking and increasing assets) with a decentralized automated trading bot" (Link: https://projectcatalyst.io/funds/11/cardano-use-cases-concept/dualtarget-for-ada-holders-staking-and-increasing-assets-with-a-decentralized-automated-trading-bot))
• "🇻🇳 The Complete Aiken Course Cardano: From Zero to Expert!" (Link: https://projectcatalyst.io/funds/11/cardano-open-ecosystem/the-complete-aiken-course-cardano-from-zero-to-expert))

Fund 12 Funded Project: "Open source dynamic assets (Token/NFT) generator (CIP68)" (Link: https://projectcatalyst.io/funds/12/cardano-use-cases-concept/open-source-dynamic-assets-tokennft-generator-cip68))

Fund 13 Funded Project: “[BUTC] Fueling Growth: Cardano Hackathons to Inspire Startup Success” (Link: https://projectcatalyst.io/funds/13/cardano-open-ecosystem/butc-fueling-growth-cardano-hackathons-to-inspire-startup-success))

Fund 14 Funded Project: “PyCardano: The Ultimate Course for Python and AI Developers” (Link: https://projectcatalyst.io/funds/14/cardano-open-ecosystem/pycardano-the-ultimate-course-for-python-and-ai-developers))

These achievements not only provide a solid foundation for the current proposal but also affirm our capacity to effectively manage funded initiatives and deliver tangible value to the Cardano ecosystem.

Comprehensive blockchain expertise

Our team possesses deep knowledge and practical experience in blockchain development, AI, and decentralized solutions. Beyond project execution, we have contributed to Cardano through practical implementations and recognized research, such as:

Article 1: "Students Scientific Research with Cardano Blockchain" (Link https://www.cardano2vn.io/docs/Cardano4uni/sv-dh-gtvt-gckh?fbclid=IwZXh0bgNhZW0CMTAAAR3-8Gf6y_sw09Jd0_AgSkPkxrbT39Cvu6zqZbayocyBB52gE5KuJgPdLW8_aem_AQBvI88c6QxKNn_OQgj8hLlWx4q4FuI0BvlZhwpvZy-sJALUw-JL9huzrCkZcDh5G_TTsACALky2A27Jb-fa2yhc))

Article 2: "Students Scientific Research with Cardano Blockchain" (https://uba.edu.vn/sinh-vien-nghien-cuu-khoa-hoc-voi-blockchain-cardano/))))

Article 3: "Scientific research results of students of the University of Transport and Communications 2024" (https://forum.cardano.org/t/k-t-qua-nghien-c-u-khoa-h-c-c-a-sinh-vien-tr-ng-d-i-h-c-giao-thong-v-n-t-i-2024/131620))

Article 4: "Cardano Blockchain Hackathon Vietnam 2024”

This blend of technical skill and active engagement in the Cardano community equips us with the competence and vision to successfully execute this project. (https://forum.cardano.org/t/cardano-blockchain-hackathon-vietnam-2024-22-9-2024-recap/136286))

[Milestones] Project Milestones

Milestone Title

Hybrid architecture design & L1 core contracts (ARO & Factory)

Milestone Outputs

1.Technical specification: PDF document detailing hybrid netting architecture, including Data Flow diagrams from Intent collection on L1 to Internal Netting processing on Hydra.

2.Asset Risk Oracle (ARO) Contract: Develop, compile, and deploy to Testnet the whitelist gatekeeper contract (only allowing Admin to add/remove Token IDs).

3.Basket Factory Validator (v1): Develop, compile, and deploy to Testnet the factory contract for initializing new funds, integrating cross-check logic with ARO.

Acceptance Criteria

1.Docs verification: Technical document must contain full flow diagrams for 3 core processes: Mint, Redeem, and Rebalance.

2.ARO contract verification: Contract on Testnet must correctly execute permission logic: Accept token addition transactions from Admin wallet and Reject any transactions from unauthorized wallets.

3.Factory contract verification: Contract on Testnet must correctly execute business logic: Accept basket creation if asset is in ARO whitelist and automatically cancel transaction if junk asset is detected (not in whitelist).

Evidence of Completion

1.Evidence for technical docs: Public link to specification PDF.

2.Evidence for ARO contract:

• On-chain verification: List of Transaction Hashes (TxID) on Pre-prod Testnet proving successful Admin token addition and Link to Script Address.
• Video demo: Screen recording link of command line interaction (CLI/Script interaction) illustrating security features (Negative test: Stranger wallet tries to add token and fails).

3.Evidence for factory contract:

• On-chain verification: List of transaction hashes (TxID) on Pre-prod Testnet proving successful initialization of a sample basket (Genesis Basket).
• Video demo: Screen recording link of command line interaction (CLI/Script interaction) illustrating cross-check logic: Try creating basket with junk token (rejected) and then with valid token (successful).

Delivery Month

3

Cost

29000

Progress

20 %

Milestone Title

Develop Dynamic NAV Validator & Intent Collection Mechanism

Milestone Outputs

1.Dynamic NAV Validator (smart vault) contract: Develop, compile, and deploy to Testnet the core asset-holding contract. This version is upgraded with smart vault features to receive deposits with intent metadata (Intent Datum) from users.

2.Batch Settlement Logic: Implement validation logic in the contract, allowing an authorized address (Operator) to update balances for multiple users simultaneously in a single transaction.

3.Integration test suite: An automated toolkit (CLI scripts) to simulate the full lifecycle: User sends Intent -> Operator Settles -> User withdraws funds.

Acceptance Criteria

1.Smart vault verification: Contract must correctly identify and categorize deposited assets based on Datum. Example: Sending ADA with Mint datum must be locked in pending state; Sending wrong format must be rejected.

2.Settlement logic verification: Contract must accept a complex Batch transaction (1 Input from Operator -> N Outputs for Users) and correctly update corresponding token amounts for each user.

3.Security testing: Any attempt to execute Settlement transaction from a wallet that is not the Operator must be immediately rejected by the Contract.

Evidence of Completion

1.Evidence for smart vault contract (vault proofs):

• On-chain verification: List of Transaction Hashes (TxID) on Pre-prod Testnet for Deposit transactions with different datums (Mint Intent / Redeem Intent).
• Video demo: Screen recording link of command line interaction (CLI/Script interaction) illustrating sending assets with datum and checking locked state on explorer.

2.Evidence for Settlement Logic (Settlement Logic Proofs):

• On-chain verification: Specific Transaction Hash (TxID) of a successful batch settlement transaction (clearly showing 1-to-Many structure on Explorer).
• Video demo: Screen recording link of command line interaction (CLI/Script interaction) illustrating Operator signing and sending Batch transaction, and illustrating stranger wallet attempting and failing (Negative test).

3.Evidence for testing script:

• Test report: Link to download Test Log file (Pass/Fail status).
• Video demo: Screen recording link of automated Script running process (from start to "all tests passed" message).

Delivery Month

3

Cost

27000

Progress

40 %

Milestone Title

Internal netting engine & Hydra-to-L1 Batcher

Milestone Outputs

1.Internal netting engine (core logic): Develop closed-source netting engine software. This is the off-chain brain executing the Matching Algorithm for Counter Buy/Sell orders before creating on-chain transactions.

2.Hydra-to-L1 Batcher module: Develop intermediary module functioning to receive results from Engine (Net Imbalance) and package it into a valid Swap transaction (CBOR format) to interact with Minswap/Spectrum on L1.

3.Simulation & Report environment: Setup local server environment to run Stress-test simulation with large input data.

Acceptance Criteria

1.Netting engine verification:

• Success case: When loading 10 orders (5 Buy, 5 Sell) with crossing values, Engine must output correct matching result (Who receives whose money) and calculate correct missing balance needing Swap.
• Fail Case: Engine must report error and refuse processing if input data is invalid (e.g., Negative token amount, wrong format).

2.Batcher module verification: Module must create a valid Raw Tx Body structure. When signed and sent to Testnet, it must successfully execute Swap on DEX.

3.Performance verification: System must process a batch of 100 orders in under 5 seconds (in simulation environment), proving superior speed compared to manual processing.

Evidence of Completion

1.Evidence for netting engine:

• Video demo: Screen recording link of Terminal/Console. Video divided into 2 parts. Part 1, Run Engine with standard data -> Show Order Matching Log. Part 2, Run Engine with error data -> Show Error Log (Error Handling verification).
• Log sample: Text file extracting log of a successful run session (sensitive info redacted).

2.Evidence for batcher module (Batcher Proofs):

• On-chain verification: Transaction Hash (TxID) on Pre-prod Testnet of a Swap transaction created by Batcher and successfully sent to Minswap/Spectrum Testnet (Proving Batcher works compatibly with DEX).
• Video demo: Link to video recording flow: Batcher receives data -> Batcher creates Tx -> Send Tx to chain -> Explorer shows successful Tx.

3.Evidence for performance:

• Performance report: Link to download PDF report of Stress-test results (order count, processing time, resource consumption).
• Video demo: Screen recording of dashboard or terminal showing realtime processing speed when loading 100 orders into the system.

Delivery Month

8

Cost

42000

Progress

60 %

Milestone Title

Hybrid system integration & public testnet launch

Milestone Outputs

1.Rebalancing operator service (Live Integration): Deploy Backend service connecting L1 contract and L2 Engine. This service automatically listens for events from contract, activates netting engine, and sends Settlement transaction back to chain.

2.Develop frontend integration hydra, smartcontract(full system): A single web application integrating full features for different roles:

• Investor view: Allows viewing fund list, connecting wallet and sending Intents (Mint/Redeem), viewing details of own portfolio.
• Manager view: Interface allowing creation of new Baskets, managing and tracking details of asset baskets.
• Admin view: Dashboard satisfying system-related operations such as monitoring system parameters, managing adding/removing AROs.

3.Public testnet deployment: Deploy full system (Full Stack) to Cardano Pre-prod Testnet.

Acceptance Criteria

1.Operator service verification:

• Automation: Operator automatically detects new Intents on L1 and completes Settlement process returning to user wallet without manual intervention.
• Integration: Cash flow data going from L1 -> L2 (Engine) -> L1 is processed correctly, with no balance loss.

2.dApp(UI) verification: The interface works with the features described in the output.

3.Deployment verification: dApp system and Backend API operate stably on public environment, any user can access via URL.

Evidence of Completion

1.Evidence for operator service:

• On-chain verification: List of Transaction Hashes (TxID) of Settlement transactions executed by Operator on Testnet.
• Video demo (system log): Screen recording of server log illustrating closed loop: Log detects event -> Log calculates Netting -> Log sends successful Tx.

2.Evidence for dApp(Frontend proofs):

• Live URL: Public Testnet dApp access link.
• Video Demo (User journey): The interface works with the features described in the output.

3.Evidence for deployment: Link to Script Address on Cardanoscan/Preprod Explorer, showing continuous transaction history from various test wallets.

Delivery Month

10

Cost

37000

Progress

80 %

Milestone Title

Comprehensive Testing & Mainnet Launch (Ready for Operation)

Milestone Outputs

1.Comprehensive system testing report: Execute a large-scale testing campaign (Stress-test & Security-check) including:

• L1 logic: Check attack scenarios on Contract (Double-spending, Unauthorized access).
• L2 Engine: Check load capacity of netting engine when processing thousands of simultaneous orders.
• Integration: Check data integrity in settlement flow.

2.System optimization & bug fixes: Based on testing results, execute:

• Fix all detected bugs.
• Refactor source code to reduce gas fees for L1 Batcher transactions.
• Fine-tune server configuration to reduce Latency for operator.

3.Production mainnet deployment: Setup operational server infrastructure (Production Environment) connected directly to Cardano Mainnet network. Deploy entire L1 Contracts and Backend/Frontend Services to this environment.

4.Educational materials & close-out report and video:

• User Guide documentation and tutorial video.
• Closeout report and closeout video.

Acceptance Criteria

1.Quality verification: Testing report must confirm system has passed 100% of critical paths test cases. No errors causing fund loss or system hang remain.

2.Optimization efficiency: Compare before and after optimization, average gas fee for a settlement transaction must decrease or reach theoretical optimum; operator response time must be stable.

3.Mainnet verification:

• Real users can Mint/Redeem successfully with real assets (Real ADA).
• System operates stably continuously for first 7 days of launch without serious incidents (Downtime).

4.Documentation verification: Full instruction documentation for all 3 roles (Investor, Manager, Admin).

Evidence of Completion

1.Evidence for testing & bug fixes: Full test report: Link to download detailed testing report PDF (listing found bugs and "Fixed" status).

2.System optimization & bug fixes: Release notes: Release note document, listing optimized items

3.Evidence for mainnet deployment:

• Live Mainnet URL: Official dApp access link.
• On-chain verification: List of actual Transaction hashes (TxID) on Cardano mainnet proving full product lifecycle:
• Tx Manager creates new basket.
• Tx Investor Mints basket tokens.
• Tx Operator executes Settlement successfully.

4.Evidence for documentation & close-out:

• Documentation link: Link to page containing user guides.
• Final proposal: Link closeout report and video sent to Catalyst community.

Delivery Month

12

Cost

25000

Progress

100 %

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

MILESTONE 1: Hybrid architecture design & L1 core contracts

Milestone total: 29,000 ADA (18.12%)

1.1 Technical documentation: Write spec, data flow, architecture design - 3,500 ADA

1.2 ARO contract: Aiken code, admin logic, on-chain verify - 9,600 ADA

1.3 Factory contract: fund creation logic, whitelist check - 12,800 ADA

1.4 Testing (basic): Unit test, run testnet transactions - 3,100 ADA

MILESTONE 2: Dynamic NAV validator & intent collection

Milestone total: 27,000 ADA (16.88%)

2.1 Smart vault contract: Intent datum logic, state machine - 11,200 ADA

2.2 Settlement logic: Batch settlement logic (1-to-many) - 9,600 ADA

2.3 Testing script: Write integration CLI tool - 5,200 ADA

2.4 Management & reporting: Report consolidation, video demo, task mgmt - 1,000 ADA

MILESTONE 3: Internal netting engine & hydra Batcher

Milestone total: 42,000 ADA (26.25%)

3.1 Netting engine: Code matching algorithm - 14,300 ADA

3.2 Batcher module: Tx CBOR creation module, DEX SDK interaction - 11,700 ADA

3.3 Simulation environment: Setup stress-test, performance optimization - 7,800 ADA

3.4 Dev infrastructure (Cloud): Rent High-CPU VPS (2 months) - 3,000 ADA

3.5 Reporting & Demo: Performance report, video log - 5,200 ADA

MILESTONE 4: System integration & public testnet

Milestone total: 37,000 ADA (23.12%)

4.1 Operator service: Event listener backend - 7,800 ADA

4.2 Frontend (full app): Investor/Manager/Admin UI, Wallet connect - 16,200 ADA

4.3 Public deployment: DevOps, deploy vercel/AWS, Setup Node - 5,200 ADA

4.4 UI/UX testing: User flow test, UI fixes - 4,500 ADA

4.5 Testnet infrastructure: API (Blockfrost pro), hosting services - 3,300 ADA

MILESTONE 5: Mainnet launch & comprehensive testing

Milestone total: 25,000 ADA (15.63%)

5.1 Comprehensive QA: Internal security testing, pentest, fix bugs - 7,800 ADA

5.2 Optimization (fixes): Code refactor, gas reduction, speed optimization - 5,200 ADA

5.3 Mainnet setup: Mainnet server config, firewall, hydra - 3,250 ADA

5.4 Mainnet infrastructure: Server + API (Pre-paid 6 months) - 5,550 ADA

5.5 Close-out & user guide: User guide, close-out video, close-out report - 3,200 ADA

PROJECT TOTAL: 160,000 ADA (ADA/USD ~ 0.41)

Details at: https://docs.google.com/spreadsheets/d/1zAo2P2a3GYRjPYFMl20OkTFfVdOuJBiG0zafGC81lDI/edit?usp=sharing

We confirm that the requested budget of 160,000 ADA is exclusively for future development activities as detailed in the 5 milestones.

• This fund does not cover any retroactive funding for completed work.
• The fund will not be used to purchase digital assets, provide liquidity, local treasury, speculation, branded merchandise, re-granting, or incentives/giveaways.
• The entire budget is allocated for technical personnel costs, project management, security audits, and necessary documentation to deliver the prototype according to the proposed scope.

[Final Pitch] Value for Money

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

1.Infrastructure value & ROI: This 160k ₳ investment builds not just 1 dApp, but a core infrastructure layer (Asset management layer) that the entire ecosystem lacks. We provide a secure, audited "blueprint", allowing anyone (from DAOs to individuals) to innovate financial strategies.

2.Ecosystem efficiency & security: Instead of 100 different projects building 100 ETF logics themselves (costing 100 times the cost, 100 times the security risk), the community only needs to fund once for an open, audited platform. This is an investment in capital efficiency and shared security for all of Cardano deFi.

3.Investment in core engineering and High-Speed infrastructure (Hydra): The 160k ₳ budget reflects serious investment not only in L1 core engineering, but also in pioneering Hydra integration for a complex DeFi use case.

By funding this Hydra-accelerated "ETF Factory", Catalyst is investing in a true "accelerator", enabling the creation of hundreds of on-chain financial products capable of operating with off-chain performance, solving one of DeFi's biggest barriers (speed and cost).

[Self-Assessment] Self-Assessment Checklist

I confirm that evidence of prior research, whitepaper, design, or proof-of-concept is provided.

Yes

I confirm that the proposal includes ecosystem research and uses the findings to either (a) justify its uniqueness over existing solutions or (b) demonstrate the value of its novel approach.

Yes

I confirm that the proposal demonstrates technical capability via verifiable in-house talent or a confirmed development partner (GitHub, LinkedIn, portfolio, etc.)

Yes

I confirm that the proposer and all team members are in good standing with prior Catalyst projects.

Yes

I confirm that the proposal clearly defines the problem and the value of the on-chain utility.

Yes

I confirm that the primary goal of the proposal is a working prototype deployed on at least a Cardano testnet.

Yes

I confirm that the proposal outlines a credible and clear technical plan and architecture.

Yes

I confirm that the budget and timeline (≤ 12 months) are realistic for the proposed work.

Yes

I confirm that the proposal includes a community engagement and feedback plan to amplify prototype adoption with the Cardano ecosystem.

Yes

I confirm that the budget is for future development only; excludes retroactive funding, incentives, giveaways, re-granting, or sub-treasuries.

Yes

[Required Acknowledgements] Consent & Confirmation

I Agree

Yes