Modular DeFi Trading Engine: Arbitrage Prototype

[Proposal setup] Proposal title

Please provide your proposal title

Modular DeFi Trading Engine: Arbitrage Prototype

[Proposal Summary] Budget Information

Enter the amount of funding you are requesting in ADA

170000

[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 DEX liquidity is fragmented, causing price gaps and inefficient trades. There is no open, community-run automated trading system to monitor markets and execute opportunities across DEXs.

[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

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.

Main parts of the engine will be pen on Github

[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).

Our project introduces a modular, open-source automated trading engine for Cardano. While private or single-purpose bots exist, there is no public framework that monitors multiple DEXs, identifies opportunities, and executes trades in a transparent and extensible way.

By building a reusable engine starting with arbitrage developers and community members gain a foundation for creating future trading strategies without needing to reinvent core infrastructure.

The innovation is not just the arbitrage strategy, but the open, modular framework that anyone can build on.

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

The MVP will demonstrate a working arbitrage prototype running on Cardano. It will show live price monitoring across supported DEXs, detection of simple arbitrage opportunities, and safe construction swap transactions.

Users will be able to access it through:

• an open-source GitHub repository,
• a command-line tool for running the engine,
• documentation explaining setup and configuration.

This MVP focuses on proving the core engine works end-to-end on testnet, without aiming for full production automation.

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

Success will be measured by delivering a functional, open-source prototype that the community can run on testnet. Key indicators include:

• the engine successfully identifying arbitrage opportunities between DEXs
• the ability to build and submit valid testnet transactions,
• community testers installing and using the tool

clear documentation enabling others to explore or extend the framework.

These measures demonstrate the feasibility of the approach and lay the foundation for future strategy modules and mainnet deployment.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Our solution is a modular, open-source trading engine that can monitor multiple Cardano DEXs, identify pricing differences, and construct safe transactions for users to execute. The first strategy supported is simple arbitrage, but the framework is designed so additional strategies can be added in the future.

By providing shared infrastructure market watching, routing logic, and transaction building we make it easier for users and developers to benefit from liquidity opportunities across the ecosystem without relying on private or closed tools.

[Your Project and Solution] Impact

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

This project improves liquidity efficiency across Cardano’s DeFi ecosystem by helping align prices between DEXs and enabling users to act on opportunities that currently require custom tools or private bots.

Because the engine is open-source, it becomes a resource that developers, traders, and builders can extend or learn from. This encourages more experimentation, creates shared infrastructure for future strategy development, and contributes to more consistent activity on the network.

[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 has already delivered several working Cardano tools, including a DEX aggregator, a lending and borrowing aggregator, automated mining bots, and custom indexers as well as telegram tracking bots. These demonstrate our ability to build reliable on-chain software and automation.

Examples of previous work:

https://fetch.hosky.io/

https://yield.ada.markets/

https://github.com/ADA-Markets/midnight_fetcher_bot_public

Feasibility will be validated by releasing the engine as open-source code, showing it operating against live mainnet DEXs, and ensuring users can run it with clear documentation. Our experience with transaction-building, indexing, and automation on Cardano gives us confidence in delivering the prototype reliably.

[Milestones] Project Milestones

Milestone Title

Framework Design & Technical Specification

Milestone Outputs

• A complete high-level architecture for the modular trading engine, including the market watcher, strategy module, and transaction builder.
• A technical outline describing how components interact and how data flows through the system.
• A list of initial DEXs to be supported and the requirements for integrating them.
• A planning document describing the development approach for later milestones.

Acceptance Criteria

• A public technical specification is completed and provides enough detail for implementation to begin immediately.
• The document clearly describes component responsibilities, system interactions, and expected behaviours.
• Reviewers and community members can understand the planned structure without additional explanation.
• The specification is uploaded to the project’s GitHub repository.

Evidence of Completion

• A design document published in the GitHub repository summarizing the full architecture.
• Supporting notes or diagrams showing the main system modules and their intended functions.
• A README or link in the repo indicating where the specification can be found and confirming milestone completion.
• Public visibility of the commit history showing the work delivered.

Delivery Month

1

Cost

30000

Progress

20 %

Milestone Title

Core Engine, Market Watcher & Basic Strategy

Milestone Outputs

• A working internal version of the market watcher capable of reading price and liquidity information from selected Cardano DEXs.
• A basic arbitrage strategy module that identifies simple price differences according to configurable thresholds.
• A transaction builder that can prepare example swap transactions for review and testing.
• Internal documentation describing how to run the components and how they function together.

Acceptance Criteria

• The core engine runs reliably in a local development environment and retrieves real-time DEX data through the market watcher.
• The strategy module can detect basic arbitrage conditions and pass them to the transaction builder.
• The transaction builder can construct valid transaction structures without submitting them.
• The team can demonstrate the engine running end-to-end through logs, screenshots, or a short recorded demo.

Evidence of Completion

• A recorded demonstration (such as a short screen capture video) showing the engine retrieving DEX prices, identifying potential arbitrage, and generating transaction structures.
• Internal documentation summarizing how the demonstration was run and what components are functioning.
• A milestone report outlining completed work and confirming that the engine is operational in a private development environment.
• No code publication is required at this stage; the public release occurs only in the final milestone.

Delivery Month

3

Cost

85000

Progress

60 %

Milestone Title

Mainnet Prototype Release & Community Testing

Milestone Outputs

• A functional arbitrage prototype operating on Cardano mainnet with configurable settings for assets and thresholds.
• A usable CLI tool allowing users to run the engine, view detected opportunities, and review proposed transactions.
• Documentation and usage instructions updated to guide community testers.
• Integration of key feedback from early users before producing the final tagged release.

Acceptance Criteria

• The prototype is available as an open-source release and can be run on mainnet by users with clear instructions.
• The engine reliably detects price differences between supported DEXs and builds valid transaction structures.
• Community testers are able to install, configure, and run the tool without developer assistance.
• A final release candidate is prepared based on user feedback.

Evidence of Completion

• A tagged mainnet-ready release published on GitHub with source code, documentation, and instructions.
• A short demonstration video or example log output showing the prototype in operation on mainnet.
• A summary of community feedback and any improvements made as part of this milestone.
• Public commit history and release notes confirming work completion.

Delivery Month

6

Cost

55000

Progress

100 %

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

1. Engineering & Development — 120,000 ADA

• Core system development
• Market watcher and data processing
• Strategy module implementation
• Transaction builder logic
• Internal testing and refinement

1. Infrastructure & Testing — 20,000 ADA

• Node services and API access
• Development and testing environments
• Monitoring and logging tools for mainnet prototype
• Hosting for internal demos and reviewer verification

1. Documentation & User Guidance — 15,000 ADA

• User instructions and setup guides
• Technical notes for testers and contributors
• Updates and revisions during community testing
• Clear documentation for the final open-source release

1. Project Coordination & Reporting — 10,000 ADA

• Managing Catalyst milestone reporting
• Internal planning and organization
• Community testing management and support
• Final release preparation and communication

1. Contingency — 5,000 ADA

• Buffer for minor unforeseen technical or infrastructure needs
• Ensures continuity if additional resources or adjustments are required

[Final Pitch] Value for Money

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

Our project provides long-term value by creating open-source infrastructure that improves price efficiency and trade execution across the Cardano DeFi ecosystem. The trading engine serves as a reusable foundation for developers and community members, reducing the need for teams to build similar systems from scratch.

By supporting arbitrage first and enabling future strategies to be added, the project helps increase activity across DEXs, encourages experimentation, and contributes to a healthier, more efficient network. Because all work is released openly at the end of the project, the ecosystem benefits from both the prototype itself and the framework it provides for future development.

[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