Sharing liquidity between DEXs

[GENERAL] Summarize your solution to the problem.

We want to develop an open order book that can be used by any DEX to fill orders. This meta-dex protocol allows users to place limit orders and use the liquidity of all participating DEXs. 

[GENERAL] Summarize your relevant experience.

We are OpenSwap Technologies - the team behind MuesliSwap, one of the biggest decentralized apps on Cardano. As developers of DeFi infrastructure, we have experience with all relevant aspects of Cardano (off-chain, on-chain code), haskell programming and smart contract audits.

[GENERAL] Requested funds in USD.

[IMPACT] Please describe your proposed solution.

Due to the unique Cardano EUTXO model it is possible for DEX protocols to share a common orderbook from which orders are fulfilled. This means that traders across all platforms are able to lock their trades in one specific order book from which all DEX protocols can fulfill orders. This approach yields the best possible price outcome for users and means liquidity is shared with all DEX protocols through a common orderbook. By incorporating such a model in Cardano we can achieve a truly decentralized exchange. 

We want to develop such an open-source orderbook approach and will reach out to our fellow DEXs and members of the Cardano DeFi Alliance to get more DEX protocols involved. . Solving this problem includes the development of Plutus smart contracts, audits and the outreach to other DEX protocols.

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

To improve the competitiveness of the Cardano dApp ecosystem, we need to build native dApps that take advantage of the Cardano eUTXO model. The EUTXO model allows for different and more scalable solutions. For instance, this order book approach is uniquely suited to the Cardano eUTXO model and offer some unique features like limit orders shared among different DEXs. With this project, we are aiming to develop open-source, high-quality code that can benefit the Cardano Dapp ecosystem. Building a protocol that enables routing of order will help to attract more DeFi users to Cardano and mitigate the risks for new users. 

Moreover, through open sourcing our code and audit process we will be able to share open-source best practices of Cardano DApp development.

While improving liquidity on all of Cardano this project serves another secondary use: New projects don’t need to build their own batching script anymore. They can all use the same protocol as a backbone, that is in turn more heavily audited and battle-tested. Exchange projects of all kinds can then focus on their unique approaches to providing liquidity to the overall protocol.

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

We will not encounter any budget problems as any extra costs will be covered by the MuesliSwap team. As we have a big development team we will also not encounter any risks like development staff leaving the team. One risk is that other DApp protocols will not be interested in using this approach. However, we at MuesliSwap are planning to use this approach. That means we will make it possible for smaller DEX protocols to fulfill orders that are placed through our smart contract. Moreover, we are planning to operate our own bots that will be able to fulfill the orders with liquidity from other DEXs meaning that we will be able to offer the shared limit order approach anyway. 

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

The detailed budget breakdown also presents the different aspects in which projects can be divided. Throughout the entire project we are planning to do Twitter spaces and tech updates informing the community of our development process. 

Timeline: 

Development: (2-3 months)

The development process will be documented through open-source repositories and community updates. 

Protocol corporations: (in parallel to development)

We are planning to reach out to other DEX protocols to suggest the idea of a common orderbook and will try to emphasize how important sharing liquidity is.  

Audit: (1 month)

The time process for the audit is hard to plan as we don’t know the availability of the audit companies and how many revisions we will encounter during the audit phase. We are planning on making the audit process/results available to the community. 

[FEASIBILITY] Please provide a detailed budget breakdown.

Total: 52,000 USD

As the requested amount will not be sufficient to cover the full costs of research, development and audit the MuesliSwap team is planning to cover the remaining costs.

Development: 390 hours - 35,000 USD

Community Outreach 24 hours - 2,000 USD 

Estimated Audit costs (not sufficient to cover entire audit): 15,000 USD

Community Outreach 

Consultation with other protocols and making partnership for shared order book - 24 hours 

Development

Technical Proposal 20 hours

• Creating a technical proposal that will outline the approach in detail 20 hours

On-Chain Code 390 hours

• Architecture and Model Design 50 hours
• eUTXO model and diagramming modeling, analysis 25 hours
• Development of smart contract components (Plutus, Haskell) 175 hours 
• Development of testing framework for on-chain code and writing of tests 35 hours
• Peer-Reviewing smart contract (code and security review) 25 hours 
• Security Analysis 75 hours
• Documentation of on-chain code 5 hours

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

The MuesliSwap development team together with external help will work on this project. The MuesliSwap development team currently consists of 9 developers with experience in different fields from which most are long-standing Cardano community members. With Muesliswap being the first major DAapp launching in November 2021 the team has gained a lot of experience in developing Plutus smart contracts and the corresponding off-chain code. As part of the Dapp development process, the MuesliSwap Team gained significant experience in developing decentralized finance infrastructure and Plutus smart contracts. Currently, we are operating multiple different smart contracts on Cardano mainnet (liquidity pools, order book DEX, staking contracts etc.). Moreover, already having multiple audits performed we have gained experience in the auditing process and the coordination of these audits. We are planning to apply this knowledge and our development power to our Fund9 proposal. 

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

We are not planning to return for further funding in a later round for that specific project. The remaining costs of development are planned to be covered by the MuesliSwap team. For example the additional costs required to cover the development, extra audit costs etc.. 

[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?

We are trying to be very transparent throughout the entire development process. 

Technical Proposal

Once the technical proposal has been finished, we will publish our findings as a report, detailing the proposed order book model that can be used in the Cardano eUTXO model, along with advantages and disadvantages. We are planning to update the Cardano community on the development process as part of our weekly twitter spaces.

Open Source Development

Once the development phase starts, we will be able to open source the repositories on GitHub so that the progress can be publicly tracked by the community. 

Audit

We are consulting multiple reputable audit companies to check availability and quotes. The audit details as well as the report will be made public.

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

We hope that the developed approaches will be implemented by dApps on Cardano, enriching the entire DeFi ecosystem and giving Cardano another competitive advantage over account-based blockchains. We at MuesliSwap are already planning on implementing this approach. This means that the project will already have the guarantee to be included into one of Cardano's biggest DeFi protocols which will make smaller applications incorporate it as well. 

[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 a new proposal from the MuesliSwap team.