How can we encourage DeFi teams to build/deploy open finance solutions on Cardano in the next 6 months?
This is the total amount allocated to F7: Boosting Cardano's DeFi
The previous challenge(ScaleUP Cardano's DeFi Ecosystem) demonstrated success and allowed popular DeFi projects such as Liqwid Finance, Minswap and ErgoDEX to be funded by the treasury, without the participation of venture capitals and with fair launch models, allowing sustainable distribution of the supply among the community/userbase.
The fact that ERGODEX's proposal was the second best voted proposal in the Left-Over budget is an important indicator to demonstrate the competitiveness of the proposals presented in Fund5.
Currently, the vast majority of DeFi dapps and assets flows occur on the Ethereum blockchain, however due to congestion and increased transaction fees, the use of DeFi is increasingly elitized, leaving out the people who could most benefit from it, the unbanked.
Over the past year several DeFi projects have been moving to more scalable blockchains, such as Binance Smart Chain, Polkadot, Cosmos, Solana, among others. Second layer solutions are also being used as alternatives to Ethereum main chain, Polygon has been a great example.
In this migration and bridges creation scenario, some projects are turning to Cardano to create their DeFi projects.
Cardano is finally delivering smart contracts and that opens a door to a lot of innovation in DeFi. We can offer not only a scalable blockchain, but also a secure blockchain and aggregated governance layer in the near future. This set of characteristics place Cardano in a prominent place and with a good opportunity to gain market share and expand the user base.
With Catalyst, we have the opportunity to fund DeFi projects and allow them to have greater decentralization and resilience, which are essential aspects for DeFi projects. Many projects end up accepting the participation of Venture Capitals due to lack of financial resources. The participation of VCs in DeFi projects usually ends up causing a large part of the supply distribution to be alocated to VCs and this compromises the decentralization and consequently the security of these projects.
The DeFi ecosystem today is taken over by projects full of vulnerabilities, hacks are constant, economic models are copied from other projects, decentralization is no longer a priority and few projects are dedicated to create economic models/bonding curves/algorithms thinking about the users' needs.
It has become clear over the year that bugs, hacks and vulnerabilities are not unique to smart contracts on Ethereum. Dapps running on Binance Smart Chain and Cosmos suffered from vulnerabilities as well.
Cardano arrives to change this paradigm and bring security to users.
Privacy and resistance to censorship are also important but often overlooked in favor of subsidizing (yield farming). How to encourage DeFi projects to seek resilience, safety, research-based economic models and critical thinking?
RATIONAL FOR BUDGET DISTRIBUTION
To encourage greater diversity of funded teams and proposals each team can request up to 20% of the total $500,000 USD budget or $100,000 USD.
It is important to note that 20% is the maximum amount of aggregated budget that the same team can request in this challenge, but any amount below that can be requested. This means that the challenge will have space for at least 5 proposals from different teams, which guarantees greater chances for teams with less popularity and that may be overshadowed by more popular teams in the community.
Why is it important?
It's important because Defi dApps provide trustless on-demand access to financial services for global users
How does success look like?
A competitive environment for DeFi on Cardano with an emphasis on cross-collaboration & driving composability across protocols.
Key Metrics to measure
View all the ideas that were allocated funding in this challenge.