Cardano <> Incognito Bridge

By bridging Cardano with Incognito chain we can add a working solution as a Layer 2 solution without a trusted custodian rather quickly.

The team implementing this has already built bridges for Ethereum, Bitcoin and Binance while Hermespool will support marketing.

Project name

Layer 2 privacy for Cardano and beyond through a decentralized approach to cryptocurrency custodianship.

Project goals (High level overview)

Establish a trustless bridge between Cardano and Incognito allowing ADA holders to swap their ADA for a private version called "pADA". These "pADA" can be traded anonymously & cross-chain with other assets on pDEX (e.g. Bitcoin, Ethereum, Monero, BinanceChain).

About Incognito

Incognito is a privacy project focused on delivering trustless privacy for any crypto asset, and any dApp. Our main areas of research are in scalability, interoperability, and of course, privacy.

Through Incognito, all crypto transactions are confidential and untraceable. Incognito uses several cryptographic primitives, such as linkable ring signature scheme, homomorphic commitment scheme, and zero-knowledge range proofs, to shield sending addresses, receiving addresses, and transacted amounts.

Portal is a universal bridge that connects Incognito's privacy layer to

Cardano, and to other blockchains like Bitcoin that lack a smart contract language. Ultimately, Portal is designed to connect blockchains to each other through a common need for privacy. It uses a system of over-collateralized bonds, similar to how the DAI stablecoin is created on MakerDAO. The first implementation is a programmed smart contract, which controls bonds and provides real-time processing, as opposed to the multi-day manual process adopted by centralized custodian companies.

Read an in depth view on how Portal works here:

https://we.incognito.org/t/the-portal/3800

https://we.incognito.org/t/trustless-custodians-a-decentralized-approach-to- cryptocurrency-custodianship/84

Current implementation with Ethereum only as an example and proof of the team's capabilities:

https://we.incognito.org/t/incognito-mode-for-ethereum/

As for what success looks like for our project, we are focused on enabling better privacy, for more people. We also hope that the Web3 community will find our decentralized approach to custodianship helpful, and expand upon it to build more fully-decentralized systems of custodians.

pDEX Facts & Figures

Trading volume, pairs and other relevant information about pDEX can be found here: https://incscan.io/pdex

Impact:

For crypto users today, having privacy is hard. They are required to either compromise privacy to stay in their favorite ecosystem, or leave their ecosystem entirely to have privacy. This divide benefits no one. We strongly believe that the ideal privacy solution is not another privacy coin. The ideal solution embraces diversity, supports individual choice – and above all, is easy and safe to use. We aim to make having privacy simpler, safer, and more inclusive – for anyone who owns crypto now or will in the future.

Why is this beneficial for the Cardano ecosystem and its users:

1. The possibility to cross-chain buy/sell and swap ADA privately and without a 3rd party custodian. This will facilitate onboarding more users into Cardano by letting them buy their coins privately.

1. Earn interested (in PRV) directly within the Incognito mobile app by providing liquidity to the ADA/PRV pair.

Development Roadmap:

Milestone 1 - Implement shield process

• Shielding via a bond contract that allows the user to turn ADA into privacy ADA (pADA). With the new bond contract, custodians have one more option for collateralization, i.e. ADA alongside PRV (Incognito's native token)

• Working module deployed on Incognito's devnet (or testnet) environment, so anyone can test the new functionality.

• Unit-test coverage to ensure functionality and robustness.

• Documentation describing how the module can be used and tested.

Milestone 2 - Implement auto-liquidation process

• Implement the auto-liquidation process to handle 2 cases: custodian misbehavior or drop in the value of bonded collateral.

• Deliver a working module deployed on Incognito's devnet (or testnet) environment.

• Unit-test coverage to ensure functionality and robustness.

• Documentation describing how the module can be used and tested.

Milestone 3 - Implement unshield process

• Implement unshield process to turn shielded pADA back into ADA.

• Deliver a working module deployed on Incognito's devnet (or testnet)

environment.

• Unit-test coverage to ensure functionality and robustness.

• Documentation describing how the module can be used and tested.

Milestone 4 - Test, fix bugs and document

• Implement unshield process to turn shielded pADA back into ADA.

• Deliver a working module deployed on Incognito's devnet (or testnet)

environment.

• Unit-test coverage to ensure functionality and robustness.

• Documentation describing how the module can be used and tested.

• Integration test for the 3 implemented modules to ensure the protocol works well.

• Complete documentation on our exposed APIs, how the protocol works as well as test-cases.

Future Plans:

Once this initiative is complete, we will continue to contribute to the Web3 ecosystem. Here is a list of potential next steps.

1. Maintain a privacy bridge for Cardano based on the implementation described above.

2. Research into enabling privacy for other native assets on the Cardano network.

3. Explore the possibility of integrating Cardano network into Incognito's Node Tree devices.

Read up on the upcoming NodeTree device: https://we.incognito.org/t/node- tree-multi-pnode-set/523/59

4. Research on using Cardano smart contracts as the basis for the bridge instead of "Incognito Bond Contract".

Grant expectation:

We are asking for $25k equivalent of $ADA to develop the Incognito/Cardano bridge based on the "Incognito Bond Contract" described above and provide liquidity for pDEX in the early stages of the bridge. We could possibly lower this amount and provide more liquidity by ourselves when in exchange we get marketing support and media coverage by the Cardano & IOHK team. Main goal is to get usage to the bridge and liquidity into the trading pairs to make sure they are actually usable on the pDEX.

Timeline:

Approx. 3 months development time including testing and documentation.

Thanks a lot for your attention,

Incognito Team & Hermes Stakepool