anetaBTC, decentralized wrapped BTC

[GENERAL] Summarize your solution to the problem.

anetaBTC is a decentralized, fully on-chain, wrapped BTC product that allows users to seamlessly unlock their BTC value on Cardano and Ergo.

[GENERAL] Summarize your relevant experience.

anetaBTC is composed of a team of PhD researchers and developers from MIT and University of Finland. The team is also advised Kyber Network, the inventors and lead developers of Wrapped BTC on Ethereum, the #1 wrapped Bitcoin product in the world.

[GENERAL] Requested funds in USD.

[IMPACT] Please describe your proposed solution.

anetaBTC is a decentralized, fully on-chain, wrapped BTC product that allows users to seamlessly unlock their BTC value on Cardano and Ergo.

AnetaBTC enables Bitcoin holders to unlock the value of their assets in a secure and efficient environment to provide yield, without selling any Bitcoin and without any third-party custodian involvement, as in the case of wBTC which is on the Ethereum blockchain and is the largest wrapped Bitcoin protocol today with over $5 billion of locked Bitcoin value.

Wrapped Bitcoin has the potential to provide Cardano essential liquidity required for most all DeFi applications by transferring the full value of Bitcoin on a 1:1 basis — Bitcoin is by far the highest valued cryptocurrency, opening up the potential to bring massive value to the Cardano ecosystem.

AnetaBTC is crucial infrastructure to progress blockchain technology and decentralization — true decentralization, without any third-party intermediaries. AnetaBTC will be entirely on-chain using smart contracts and fully compatible with cross-chain decentralized exchanges on Cardano.

AnetaBTC is taking an Interlay-style approach with our wrapped BTC integration, and begins with mimicking the traditional BTC-relay in design.

This method leverages 1FA authentication, where the authentication comes from a decentralized group of relayers submitting events that occur on the Bitcoin blockchain, to the BTC-relay that exists on Cardano. Anyone can elect to be a relayer.

Anyone can choose to become a vault, as long as they provide enough collateral to cover the value of the assets in their vault, and thus ensure that they are a good actor in the ecosystem. If a vault acts maliciously (think stealing the Bitcoin that is sent to it), then its collateral is slashed, and the end-user gets reimbursed in multi-asset collateral at a beneficial rate.

Instead of relying on trusted members to ensure reliable cross-chain information, anetaBTC relies on decentralized vault operators who must contribute collateral to become a vault.

There are three different endpoint smart contracts that allow anetaBTC to function:

1. Issue smart contract → allows the creation of Bitcoin-backed tokens, deemed as anetaBTC on the BTC-relay.
2. Transfer smart contract → allows the transfer of anetaBTC to others within the Cardano ecosystem.
3. Redeem smart contract → allows the burning of Bitcoin-backed tokens on the BTC-relay and the reception of 1:1 of the amount of Bitcoin in return.

We have been researching and developing since our inception in November 2021, and are planning to release our testnet in Q3. When live, users will be able to wrap their BTC onto the Cardano network and then use anetaBTC for take out loans on lending protocols, and trade on decentralized exchanges such as our partners' platforms, Minswap and ErgoDEX.

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

This solution will enable Bitcoin holders to unlock the value of their assets in a secure and efficient environment to provide yield and use other financial applications on Cardano, without selling any Bitcoin and without any third-party custodian involvement, as in the case of wBTC which is on the Ethereum blockchain and is the largest wrapped Bitcoin protocol today with over $5 billion of locked Bitcoin value.

In short, this will allow holders of Bitcoin to use anetaBTC on Cardano in a completely decentralized manner.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

The main risks are currently a lack of funding and potential security exploits. To this day, anetaBTC has not accepted any money from VCs or private investors, and has been entirely community driven. We would like anetaBTC to keep this dynamic and continue to prioritize our the best interest of our community. It is crucial, however, that we are able to ensure long-term development and continue developing over the next 6 months.

Additionally, wrapped protocols and bridges, especially on Ethereum, have a history of poor security, leading to hacks and exploits. To mitigate this risk, we are led by researchers and security engineers from the most prestigious universities and institutions around the world. Additionally, we are working closely with Kyber Network, the inventors and developers of wBTC and KyberSwap. WrappedBTC and KyberSwap, are widely considered the more innovate platforms on Ethereum. To this day, neither of these platforms has experienced a hack or exploit.

Furthermore, another plan to mitigate the risks of losing community members' Bitcoin, the NETA Community Fund's Bitcoin reserves will be minted and redeemed as anetaBTC, thus displaying the security of the protocol and instilling trust in the protocol. The NETA Community Fund currently holders 2.003 BTC, and we plan to continue acquiring more.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

Stage 1 → Q4 2021 (Completed)

• Release Litepaper
• Launch Community Airdrop Fund
• Research wrapping protocols (wBTC, REN, tBTC, sBTC, interBTC)
• Research decentralized asset-backed stablecoin
• Research Dynamic Market Maker
• Research most secure ADA, BTC, and ERG wallets
• ErgoScript testing

Stage 2 → Q1 2022 (Completed)

• Release Tokenomics
• Announce Aneta Foundation and allocation to Ergo Development DAO led by Ergo Foundation
• Complete NETA Airdrops (successfully airdrop 5,000 outputs in one transaction)
• Establish and announce Strategic Partnerships (ErgoDEX, Minswap, KyberSwap)
• Develop and deploy Analytics Dashboard
• Participate in ErgoHack III
• NETA/cNETA listed on ErgoDEX, Muesliswap, and SundaeSwap
• cNETA listed on CoinMarketCap and CoinGecko
• Launch Community Team Fund
• Research and develop Ergo and Cardano voting/governance mechanism
• Develop Aneta Improvement Proposals and Aneta Governance Proposals (AIPs/AGPs)

Stage 3 → Q1/Q2 2022 (90% Completed)

• Launch Liquidity ISO (LISO)
• cNETA Listed on Minswap
• Acquired 1st assets of LISO (ADA, BTC, ERG, MIN, KNC, NETA/cNETA)
• Release Tokenomics Part II
• Develop Aneta Wallet V1
• Begin community testing of Aneta Wallet V1
• Design anetaBTC UI
• Develop anetaBTC UI
• Develop NETA/cNETA staking
• Integrate Yoroi and Nautilus Wallet integration on anetaBTC (Ergo Network)
• Develop TosiDrop, a platform for claiming cNETA rewards from LISO (Cardano Network)
• Develop TosiDrop, any project can airdrop their tokens to their community (Ergo Network)
• Begin claiming of cNETA tokens via TosiDrop
• Launch TosiDrop (Cardano and Ergo)
• Launch Aneta Wallet V1
• Release Aneta Wallet iOS (Launching Soon)
• Launch NETA/cNETA staking (Launching Soon)

Stage 4 → Q3 2022

• anetaBTC contracts (Ergo Network)
• Start BTC/ERG and BTC transaction fee oracle
• anetaBTC contracts public audit (Ergo Network)
• anetaBTC Testnet (Ergo Network)
• anetaBTC wrapping dashboard
• Onboard first community-run vaults (Ergo-BTC bridge)
• Launch anetaBTC voting/governance mechanism
• Implement new collateral assets
• BTC compatibility with Aneta Wallet for mobile (Android and iOS)
• ADA compatibility with Aneta Wallet for mobile (Android and iOS)
• anetaBTC Mainnet (Ergo Network)
• anetaBTC protocol improvements (Ergo Network)
• Develop Aneta Wallet for desktop (ADA, BTC, ERG)

Stage 5 → Q4 2022

• Develop anetaBTC front end with CIP-30 wallet integration
• anetaBTC contracts (Cardano Network)
• Start BTC/ADA transaction fee oracle
• anetaBTC contracts public audit (Cardano Network)
• anetaBTC Testnet (Cardano Network)
• Onboard first community-run vaults (Cardano-BTC bridge)
• NETA/cNETA listing on Tier 1 exchange
• anetaBTC Mainnet (Cardano Network)
• anetaBTC protocol improvements (Cardano Network)
• Publish anetaBTC research and release Whitepaper
• Launch Aneta Wallet for desktop (ADA, BTC, ERG)

Stage 6 → 2023

• Stable anetaBTC release
• Develop and launch other wrapping protocols such as anetaKNC → this will allow for interoperability with Kyber-compatible chains, such as Ethereum, Binance Smart Chain, Polygon, Avalanche, Fantom, and Cronos.
• Implement interoperability with other chains such as Polkadot and Algorand

[FEASIBILITY] Please provide a detailed budget breakdown.

Development cost is currently running at about $15,000 per month. We currently earn 10% of LISO rewards for R&D, but it is not guaranteed that these will be enough funds to sustain development for the long-term.

We believe the top priority for the success of our protocol is ensuring long-term sustainability. Current cost includes daily expenses for core team members ($5k/month) along with paying the researchers and developers a livable salary ($5k/month). This also includes the cost of hiring smart contract developers and developing our cross-chain address association mechanism (at least $5k/month).

Our proposed budget will allow us to continue development for at least 9 more months, which we believe is ample time to have the protocol running smoothy on both Cardano and Ergo.

[FEASIBILITY] Please provide details of the people who will work on the project.

Our team can be found here: https://team.anetabtc.io/

We also have many community members who contribute to the project, who can be found on our Github, Telegram, and Discord.

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

Depending on audit costs and market conditions, we may seek additional funds to ensure security of our platform and long-term development. We told our community that we would only seek catalyst funds if it was necessary to ensure the long term development and sustainability of our project.

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

Progress will be tracked by the completion of our roadmap, which was laid out in March 2022. Up to this point, the roadmap has been fulfilled and we plan to continue using this roadmap as our path to success. The full roadmap can be seen here: https://medium.com/@anetaBTC/roadmap-2-0-b2fe0c47eec6

[AUDITABILITY] What does success for this project look like?

Success for the project looks like successfully releasing a stable, secure, and efficient Bitcoin wrapping protocol on Cardano and Ergo by 2023. Success includes anetaBTC being widely accepted as the #1 Bitcoin wrapping protocol in the Cardano and Ergo ecosystem and having the largest amount of Bitcoin locked in the protocol. Success additionally looks like being regarded as one of the most community focused protocols, where our foundations of decentralization and inclusivity drive the growth of our protocol for years to come.

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

This is not a previously funded catalyst proposal.