Hydrastake - Liquid Staking Protocol on Midnight

[Proposal setup] Proposal title

Please provide your proposal title

Hydrastake - Liquid Staking Protocol on Midnight

[Proposal Summary] Time

Please specify how many months you expect your project to last

3

[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?

We want to solve the problem of capital lock-up and inefficiency in DeFi that hinders users from maximizing asset's utility within the ecosystem.

[Proposal Summary] Supporting Documentation

Supporting links

• https://github.com/TechMartins72/hydra-stake-protocol

[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 here more information on the open source status of your project outputs

All project outputs will be fully open-sourced under the MIT license. The codebase, documentation, and test suites will be publicly accessible in our GitHub repository, allowing free use, modification, and contribution by the Midnight community.

[Theme Selection] Theme

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

Staking

[Campaign Category] Category Questions

What is useful about your DApp within one of the specified industry or enterprise verticals?

Hydrastake is offering a compliant liquid staking platform on Midnight. Our infrastructure provides the foundation for availing staking-as-a-service on Midnight. Furthermore, our product is architected to provide a robust interoperability between dapps on Midnight, as well as other platforms outside the Midnight blockchain.

What exactly will you build? List the Compact contract(s) and key functions/proofs, the demo UI flow, Lace (Midnight) wallet integration, and your basic test plan.

We are building a industry-grade staking solution that is as private as an off-chain agreement, but as secure, liquid and Interoperable as a public blockchain. This proposal builds the core foundational structure/MVP of hydrastake for minimal testing.

Compact Contracts involved in Hydrastake

1. stake(): Accepts and verifies compliance_token, tokens_to_stake into the Hydrastake pool(s), and shields the depositor's address. This returns a minted LST tokens to the depositors wallet. The system keeps a mapping of staked assets and minted LST tokens to the depositors shielded address for redemption purposes
2. Redeem(): Accepts LST tokens deposit, shields the depositor's address, verifies in the depositors mapping, burns LST tokens and return the underlying assets+rewards to the user.
3. delegate(): Callable by the protocol Admin/Facilitator, this circuit delegates the deposited assets from Hydrastakes' pools into the intended third party staking platform.
4. addNewAdmin(): Callable by the protocol admin to add a new admin to the list of admins/facilitators in the protocol.
5. remove admin(): Callable by the protocol admin to remove an existing admin from the list of admins in the protocol.
6. Third party():
7. receiveDelegateRrward(): Callable by the protocol admin to claim rewards from the third party staking platform.

Demo UI Flow

1. Connect wallet
2. View protocol dashboard (TVL, available stakepools)
3. Deposit button
4. Redeem button

Basic Test Plan

Our plan for testing will follow after we have a deployed testnet version hosted on cloud (AWS). A select community of testers within the midnight ecosystem will be incentivized to test the system following a structured and documented test plan ensuring that all security checks in the smart contracts are tested and observed, and all business logics are validated. We'll also gradually and methodically test our backend servers for scalability by gradually increasing the test audience.

How will other developers learn from and reuse your repo? Describe repo structure, README contents, docs/tutorials, test instructions, and extension points. Which developer personas benefit, and how will you gauge impact (forks, stars, issues, remixes)?

The repository is a monorepo that teaches developers how to build complex DeFi applications with reusable components while fostering compliance and protecting users' privacy. It also showcases how to manage assets within smart contracts on the Midnight's UTXO-Account balance model design. Our code is properly documented in-line to improve readability on the go.

The README file contains information and guide on how to install compactc compiler, Lace wallet setup, test token aquisation, and all pre-requisites to setup the Midnight developer environment and instructions to run our dapp locally.

Our repository benefit heavy DeFi DApp developers and integrators. We also strive to attract new users through our readme file by providing all the prerequisites to setup the developer environment.

[Your Project and Solution] Solution

Please describe your proposed solution and how it addresses the problem

Hydrastake addresses the core problem of capital lock-up in DeFi by allowing users to stake their assets for network or protocol security while still retaining a liquid, transferable representation of those staked assets. Instead of choosing between earning staking rewards or using their tokens in other economic activities, users can do both simultaneously. By issuing a derivative token that mirrors the value of the staked asset, liquid staking frees users from the rigid lock-up periods that traditionally limit liquidity, enabling them to trade, lend, borrow, provide liquidity, or participate in yield strategies without sacrificing staking yields. This significantly improves capital efficiency because the same underlying asset now supports multiple layers of utility across the ecosystem. As a result, users can optimize returns, protocols can access deeper liquidity, and the overall ecosystem becomes more dynamic, with assets continuously circulating instead of sitting idle in staking contracts.

[Your Project and Solution] Impact

Please define the positive impact your project will have on Midnight ecosystem

Hydrastake will deliver significant technical, economic, and ecosystem-wide benefits. By combining capital efficiency with Midnight’s confidential smart contract framework, the protocol enhances network security, broadens DeFi utility, and accelerates developer and institutional adoption without compromising user privacy.

[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 brings together fullstack developers, smart contract engineers, dApp architects, and seasoned project managers (evident in the team details section below). Hydrastake is currently deployed on testnet (link: http://hydra-stake.s3-website.eu-north-1.amazonaws.com/ Github: https://github.com/TechMartins72/hydra-stake-protocol)) with some basic functionalities like deposit, withdrawal, and other admin functionalities. Hydrastake was also selected as the first place winner in the finance vertical of the just concluded Midnight summit in London - A decision strictly based on the technical competence we've demonstrated in the code and overall understanding of development on Midnight network. Furthermore, we have participated and won multiple Midnight's technical hackathons. Alongside the above, we are actively building with multiple teams and projects on both Cardano and Midnight. Notably, we are currently working with Fluidtokens as the core compact developers for their P2P lending dApp on Midnight, showing not just technical expertise but also consistent delivery. This track record highlights our ability to execute complex ideas and proves the proposed project is both realistic and achievable.

[Final Pitch] Budget & Costs

Please provide a cost breakdown of the proposed work and resources

1. Milestone 1: Smart contract (circuits) development and testing all functionalities on CLI. This milestone will utilize the services of 2 smart contract developers and the dApp architect for end to end product architecture design and core business logic development for 1 month = 2,000 USDM.
2. Milestone 2: Further smart contract work, UI integration and wallet connect for seamless testing. This will utilize the services of 2 fullstack developers and the product manager for 1 Month = 3,000 USDM
3. Milestone 3: Finalized product documentation, close-out report, finalized UI, Testnet deployment and Alpha testnet release for select community of testers pre-audit, creation of a feedback collection plan. This will require the whole team to test the product end-to-end before inviting external testers for 1 month = 5,000 USDM

[Final Pitch] Value for Money

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

An investment in developing a liquid staking protocol represents strong value for money because it delivers a foundational reference DApp and financial primitive that can unlock significant economic activity across the Midnight ecosystem with a relatively small budget. The MVP establishes the core staking, tokenization, and redemption mechanics needed for liquid staking, enabling users to earn staking rewards while still utilizing a liquid representation of their assets across other applications. This single capability increases capital efficiency, deepens liquidity, and expands use cases for both users and developers. By providing reusable infrastructure, the protocol lowers the barrier for new DeFi projects to integrate staking-backed assets, accelerating ecosystem growth without each team needing to build similar functionality from scratch. The MVP also offers empirical validation of how liquid staking interacts with Midnight’s privacy-preserving smart contract model, informing future optimizations while attracting developers, users, and partners who benefit from improved liquidity and yield opportunities. With a modest funding requirement and high potential to catalyze ongoing DeFi innovation, the project delivers strong, scalable value to the Midnight ecosystem at an efficient cost.

[Self-Assessment] Self-Assessment Checklist

I confirm that the proposal clearly provides a basic prototype reference application for one of the areas of interest.

Yes

I confirm that the proposal clearly defines which part of the developer journey it improves and how it makes building on Midnight easier and more productive.

Yes

I confirm that the proposal explicitly states the chosen permissive open-source license (e.g., MIT, Apache 2.0) and commits to a public code repository.

Yes

I confirm that the team provides evidence of their technical ability and experience in creating developer tools or high-quality technical content (e.g., GitHub, portfolio).

Yes

I confirm that a plan for creating and maintaining clear, comprehensive documentation is a core part of the proposal's scope.

Yes

I confirm that the budget and timeline (3 months) are realistic for delivering the proposed tool or resource.

Yes

[Required Acknowledgements] Consent & Confirmation

I Agree

Yes