Synthetic Asset Marketplace

[GENERAL] Summarize your solution to the problem.

Kerb Finance will build a synthetic asset marketplace for the Cardano ecosystem. Kerb Finance will allow users on Cardano to directly invest into real world assets using stable coins. 

[GENERAL] Summarize your relevant experience.

The team is diverse, consisting of personnel from different nations. It includes specialities ranging from:

• Stocks & Fund management
• High Frequency Trading
• DeFi product architecting and management (Speciality ETH chain)
• Computer Science PHD
• Marketing and BD
• UI UX Designer

[IMPACT] Please describe your proposed solution.

Problems

Kerb Finance addresses 2 problem statements

Currently,

• Crypto retail investors do not have real world investment opportunities and,
• Fiat retail investors can not freely trade into real world assets around the world. 

Problem statement 1

Crypto investors can not invest into real world assets because either they do not want to convert their crypto into fiat, or the regulations are such that it doesn’t allow them to convert crypto into fiat.

Problem statement 2

Currently the DeFi space is powered by staking and distributing rewards, this is not a stable system since it leads to a death spiral and doesn’t account for the consequences when everyone stakes.

This has brought a lot of capital into DeFi but such a system is not sustainable, (as proven by the unfortunate crash of Luna and various other DeFi protocols based on this staking reward mechanism) as this continues, users in DeFi will want a more

-      reasonable and

-      stable investment opportunity. 

Thus, Kerb Finance is positioning itself to enable real world asset investment directly using crypto.

Kerb Finance is creating an exchange where users can freely and permissionlessly trade real world assets (stocks/metals/bonds) directly using cryptocurrencies.

Solution

Kerb Finance is an orderbook DEX for real world asset trading.

It is a peer-to-peer, permissionless spot trading platform for synthetic real-world assets with zero over-collateralization. Kerb Finance will award the asset holders dividends with $KERB token, which has not been applied in existing DeFi protocols such as Mirror and Synthetix. Kerb Finance adopts oracles to peg the stock price instead of over-collateralization, which significantly improves the treasury fund utilization rate. Kerb Finance is a community-governed DEX for the mirror image spot trading of stocks, metals and bonds. On Kerb Finance, with one single wallet traders will be able to trade popular stocks, metals and bonds across the world freely and permissionlessly.

Some features of Kerb Finance

●    Permissionless In traditional centralized markets, users are required to finish know-your-customer(KYC), various other regulatory forms and procedures which is good for regulation to supervise the traders’ identities. But, this disregards the web3 spirit which is about pure decentralization and enabling a free market; allowing anyone to participate. Defi traders will be able to trade real-world assets, permissionlessly through Kerb Finance.

●    One Stop Solution Currently different stocks are available on different exchanges. Kerb Finance will be a one stop exchange by providing one platform to trade any stock/metal/bond available in the world using crypto.

●    DAO Kerb Finance is a community-governed DEX for spot trading of real world assets. Community being the powerhouse of the management in the form of the Kerb DAO.

●    24/7 Contemporary stock exchanges work for fixed hours, e.g., NASDAQ 9:30 a.m. to 4 p.m. Kerb Finance will be open 24/7, consistently.

●    Yield Bearing Kerb Finance has been designed to reward stockholders with the $KERB token. Many companies do not provide dividends to their stockholders e.g.4 companies from the FAANG i.e.Facebook, Amazon, Netflix, Google. $KERB rewards will be provided on all assets, even for stocks that do not yield dividends in the real world.

●    Dynamic Kerb Finance’s support for launching stocks will be limitless even if the stock isn’t available in real stock exchanges, potentially this means Kerb Finance can be a platform allowing for IPO purpose usage for small companies.

Additional Features of Kerb Finance

High and Sustainable yield on assets

Below mentioned is the dividend yield comparison between real world stocks and Kerb Finance stocks

For a detailed calculation of how the APRs are estimated users can refer to the whitepaper 6. Appendix via https://linktr.ee/kerbfinance.

Note: Kerb Finance divided rewards are based on our Trade to Burn mechanism which ensures high and sustainable USDC backed APRs.

In short 30% of all transaction fee (USDC) will be allocated to buying back $KERB from the market out of which 80% will be redistributed to asset holders in the form of dividends.

Thus Kerb finance dividend rewards are:

-      USDC backed

-      Based on a stable economic model

-      High yield bearing

An important point to note is that no synthetic asset solution has successfully implemented a solution to provide dividend rewards backed by a stable coin. This point alone will not only incentivize deFi traders but also fiat retail investors to trade on Kerb Finance.

DAO governed

Kerb DAO will be the regulatory body to manage Kerb Finance. The Kerb DAO is powered by the $KERB token. Some possibilities of the DAO :

●    Asset Control: Launch new stocks/metals and bonds. Increase/Decrease capacity of assets according to user demand.

●    Buybacks The DAO can decide to allocate funds from the treasury to buyback stocks from Kerb Finance orderbook thus conducting market making activities to create an additional layer of demand for stocks.

●    Inverse Assets Introducing new concepts such as the creation of inverse assets can easily be done by the governance mechanism of Kerb DAO.

●    IPOs In the future Kerb DAO can vote to list DeFi protocols and conduct the first round of crypto IPOs, an untried concept, until now. Yet something which the creators of Kerb Finance are looking forward to, in turn pivoting to a real, permission-less, global stock exchange through crypto protocols.

To incentivize and foster a resourceful community for Kerb DAO. The $KERB token which is the voting unit of the DAO is built to have the following features:

-      Decentralized No pre-mine, No ICO, No IDO. Directly distributed to Kerb Finance asset holders.

-      Re-distributary $KERB is bought back using the collected transaction fee (USDC) and is redistributed to Kerb Finance participants, this brings an anti-centralization and re-distributary factor into the token.

-      Deflationary 20% of all bought backed $KERB is burnt, this ensures that a deflationary token is being distributed as the voting power of the Kerb DAO.

Who is Kerb Finance’s competitor in the blockchain space?

Synthetix and Mirror protocol can be considered competitors, but since Mirror protocol (once at over 2 B+ TVL) has crashed and Synthetix is not offering real world assets there is a huge volume in market for a working synthetic asset marketplace solution.

Note: Neither Synthetix nor Mirror are based out of Cardano blockchain. Thus there is no synthetic asset protocol based on the cardano blockchain.

How Kerb Finance stands out among competitors/ implements technology that doesn’t exist in the ecosystem yet? (Main advantages)

Current implementations of trying to bring real world assets on the blockchain are all based on over-collateralization. Kerb Finance is different in this sense, it is based on an orderbook mechanism and thus provides 100% fund exposure on assets.

“Kerb finance is not an alternative to current synthetic asset solutions, Kerb finance is an alternative to real world stock exchanges.”

Kerb Finance solutions are pretty straightforward and simple to implement. It is an orderbook

Trading application that is backed by initial capital received by launching synthetic stocks, dividend rewards and an increasing treasury proportional to the transaction fee collected.

Additional points how Kerb FInance is better than its competitors:

1. Provides High USDC backed Dividend rewards on synthetic assets
2. 100% Decentralized token for the Kerb DAO
3. Provides 100% fund exposure (as it does not have overcollateralization)
4. Similar to real world exchanges, this makes it easier for traditional fiat traders to come onboard, start trading and implementing compatible strategies in Kerb Finance. 

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

Synthetic asset solution is one of the first listed types of proposal under the Campaign Brief of F9: Dapps, Products & Integrations.

Kerb Finance is a synthetic asset marketplace.

Thus there is a direct synergy between what Kerb Finance offers and the type of proposals Catalyst Fund 9 requires under the Dapps, Products & Integrations section.

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

Risk: We feel that synthetic assets are not liked by traditional organizations, this is reasonable because synthetic assets mimic securities but are not the real thing thus synthetic assets are bound to be targeted.

Solution:

-      Compliance: Kerb Finance’s first and foremost priority is to follow the law, we are clear on the fact that following the law is not an option but our duty. Thus Kerb Finance will draft in detail T&C elaborating the difference between synthetic assets and real assets available in real world exchanges and make it mandatory for users to read before trading into assets in Kerb Finance.

-      Completely on-chain: To have no conflict with traditional organizations, Kerb Finance trading protocol will be entirely on-chain and based on USDC having zero fiat involvement.

-      DAO Governed: Many forms of dangers come along building a huge protocol like Kerb Finance (Risks of hacks, losing of private keys, risk of attacks by malicious parties, etc). Thus as soon as the protocol is live with all derivative functionalities the Kerb DAO will be established to maintain, manage and guide the future of Kerb Finance. 

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

Q0 is what the team has already achieved/is in progress of:

●    Technical Team formation: Kerb Finance has formed a team with different expertise, from different nations to come together to build a self-sufficient team. The talent expertise includes:

○    Stocks & Fund management expertise

○    High Frequency DeFi Trading expertise

○    DeFi product architecting and management expertise

○    Computer Science expertise

○    Marketing and BD expertise

○    UI UX Designing expertise

●    Note: Kerb Finance does not need to hire any personnel to lead any core operation of the team. Building the team has been perhaps the most hardest part in the entire roadmap.

●    Whitepaper: Users can read on features of Kerb Finance, DAO, Tokenmoics, Dividen rewards distribution mechanism and statistics. Kerb Finance’s entire ideation, architecture and economic model has been laid down in a detailed whitepaper and launched publicly. Whitepaper can be accessed via https://linktr.ee/kerbfinance

●    Building community: Monthly calendar plan of propagating information, interaction and creation of a community overtime has been laid down and has started to be executed.

●    MVP Development (ongoing): Development is ongoing in 3 phases, currently product design is in process lined up with dApp front end/back end development and smart contract development.

○    Product design

○    Dapp frontend and Backend

○    Smart contract coding

Q1 is referred to the 1st quarter after receiving the Fund 9 grant :

●    Legalities: First and foremost thing Kerb Finance will do is to secure our synthetic assets solution in terms of legalities. This will help the team and cardano ecosystem to avoid having conflicts with real world organizations.

●    Development: Coding will be picked up from Q0 to develop the Kerb Finance order book trading platform (constituting buying, selling and staking functionalities). Beta version with the mentioned functionalities will be launched in this quarter.

●    Audit: With the development of beta version Kerb Finance will go through intensive audits with multiple auditors to ensure the security and minimize vulnerabilities of the smart contracts.

●    Outreach program: To incentivize real world adoption Kerb Finance has geared 3 outreach programs, these outreach programs will be implemented from Q1 :

○    Broker Outreach program

○    Affiliate program

○    Leverage Free trading program

This will help us ensure that we are able to build a trading community ready to start trading assets on Kerb Finance as soon as it goes live.

Note: The outreach programs are detailed in section 3.2 of the whitepaper. The whitepaper can be accessed via https://linktr.ee/kerbfinance.

●    Marketing and BD: The team has already started to build social media presence from Q0 with the target to make an organic community of users who are geared towards trading real world assets on the blockchain. Marketing and BD involves building a presence and ensuring strategic partnership in:

○    Insurance - However good coders Kerb Finance has in their team, there is always a possibility of human error. Thus to provide insurance and protect users against an unfortunate circumstance Kerb Finance will be establishing a strategic partnership with an insurance provider.

○     DEX - A strategic partnership will be aligned with a DEX to offer synthetic assets to various categories of users in the defi space.

○    Oracles - Synthetic assets require price updates on the blockchain in regular intervals, having a secure oracle is of top most priority to the protocol. Kerb Finance will either partner with an oracle provider to procure services or receive guidance while building our own oracle.

○    Lending and borrowing - Leverage trading functionality will be enabled on Kerb Finance through a lending and borrowing platform.

○    DAO - Kerb Finance has laid down a strategic partnership with Konma DAO. We will use their advice while setting up the Kerb DAO

○    Stable coin DEX - Kerb Finance supports USDC, but it will integrate itself with a stable coin DEX - To enable users to use different kinds of stable coins for purchasing assets on Kerb Finance without leaving the platform.

Q2 is referred to the 2nd quarter after receiving the Fund 9 grant :

●    Audit and Bug Bounty: This quarter will involve finishing the initial audit process, airing the beta version for public use and reporting bugs (in front end and smart contracts) and finalizing the audits with public bug bounty feedback.

●    Protocol LIVE: After the audit and bug bounty is complete, the protocol will be deployed on mainnet with users being able to:

○    Acquire real world synthetic assets.

○    Sell off real world synthetic assets.

○    Stake assets to acquire dividends.

●    Leverage trading functionality: The leverage trading functionality will be coded. This will also involve integration with a lending and borrowing platform to provide the capital for leverage trading.

●    Audit: Audit for leverage trading will be initiated

●    BD and Marketing: BD and Marketing will continue similar to Q1, extra attention would be given towards feedback and resolution (effects of having a live protocol).

●    Outreach program: Outreach program will be given special attention to after the protocol is live, it will be bootstrapped with capital to ensure that Kerb Finance onbaords not only defi investors but also fiat retail investors.

Q3:

●    Audit and Bug Bounty: This quarter will involve finishing the initial audit process for the leverage trading functionality, bug bounty program for leverage trading (only smart contract bugs) and finalizing the audits.

●    Leverage trading LIVE: After the audit and bug bounty is complete, the leverage trading functionality will be deployed on mainnet.

●    Options and Futures trading: Kerb Finance team was considering only developing the future trading functionality and not the options functionality since we were in talks with using Opium Finance’s open sourced options solution. But since we have considered shifting to Cardano we will be developing the smart contract for both the options and futures trading functionality from scratch.

●    DAO: Smart contract architecture and functionalities for the DAO will be finalized and development for the same will also begin this quarter.

●    Audit: Audit for options and futures trading will be initiated

●    BD and Marketing: BD and Marketing will continue similar to last quarter- with the strategies being subject to change according to the current market conditions..

●    Outreach program: Outreach program will continue similar to Q2 with a special emphasis on the leverage free trading outreach program.

Q4:

●    Audit and Bug Bounty: This quarter will involve finishing the initial audit process for the options and futures trading functionalities, bug bounty program for the same will be aired (only smart contract bugs) after which the audits will be finalized .

●    Futures and Options trading LIVE: After the audit and bug bounty is complete, the Futures and Option trading functionality will be deployed on mainnet.

●    DAO Beta: Smart contract will continue for the DAO and the beta version will be lived till the end of the quarter

●    Audit: Audit for DAO smart contract will be initiated

●    BD and Marketing: BD and Marketing will continue similar to last quarter- with the strategies being subject to change according to the current market conditions.

●    Outreach program: Outreach program will have a special emphasis on the Affiliate outreach program.

Q5:

●    Audit and Bug Bounty: This quarter will involve finishing the initial audit process for the options and futures trading functionalities, bug bounty program for the same will be aired (only smart contract bugs) after which the audits will be finalized .

●    $KERB Token Launch: $KERB will be directly distributed to users staking assets into the staking pools from the first month of this quarter.

●    Audit and Bug Bounty: Bug bounty process similar to previous bug bounties will be organized for the DAO smart contracts after which the audit will be finalized.

●    DAO Launch: The DAO will be launched by the end of this quarter on mainnet.

●    BD and Marketing: BD and Marketing will continue similar to last quarter- with the strategies being subject to change according to the current market conditions.

●    Outreach program: Outreach program will be generalized for coming 4 quarters to ensure steady inflow of new users

From this point the protocol will become decentralized with the DAO holding the power to change/add any functionality to the Kerb Finance protocol.

Short version of the development timeline:

[FEASIBILITY] Please provide a detailed budget breakdown.

Kerb Finance is proposing a grant of 179,000 USD for Q1, Q2 and 1st month from Quarter 3.

After this the protocol will go live and thus we expect to be able to bear the operational costs of further quarters independently.

Budget break down:

One time costs:

Legal services: 10,000 USD

Kerb Finance is a synthetic assets solution. This is why we have allocated a significant amount of capital on legal resources. This capital will be utilized for legal documentation and ensuring the legitimacy and legality of Kerb Finance, a synthetic asset marketplace.

Smart contract Audit: 15,000 USD

To ensure that smart contracts are deployed to the mainnet without any vulnerabilities, we have added this budget for the smart contract audit of Kerb Finance trading protocol which will go live at the end of Q2.

Monthly costs:

Core Team Salary (6 people): 18,000 USD

The core team is currently working part time in the Kerb Finance project. To be able to work fulltime the protocol has to ensure basic salaries for each full time working member.

The core team will be ensuring:

1. Smart contract development
2. Building buyback and marketing making algorithms
3. Designing the product according to contemporary exchange (stock/metal) expertise
4. UI/UX development
5. Managing marketing and BD
6. Conducting outreach programs

Accountant: 1000 USD

The team will have to hire this service

Misc: 3,000 USD

Miscellaneous is a very important category which will ensure smooth operations throughout the month. This could include but not limited to hiring unanticipated legal services, price shifts of ADA, extra audits, advisors, bug bounty programs, etc. 

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

As mentioned in the “summarize your relevant experience” section. The team is complete with each individual having a speciality from the list mentioned below:

●       Stocks & Fund management

●       High Frequency Trading

●       DeFi product architecting and management (speciality ETH chain)

●       Computer Science PHD

●       Marketing and BD

●       UI UX Designer

We know that providing personal information provides tangibility of the project to personal ids but the Kerb Finance team is anonymous.

We understand that having an anonymous team can be a bummer for the community, but we are operating anonymous because of the 2 reasons:

1. DAO - The creators of Kerb Finance want to develop Kerb Finance till a certain extent and then place it completely in the hands of the DAO. That is why if you look at the $KERB tokenomics that powers the DAO, PAs and VPAs can observe that $KERB token comes with no pre-mine (not even for the creators) and is directly distributed into the community.
2. Everyone in the team is dedicated towards the project but some of us are not comfortable to share our identities. Thus the entire team decided to be anonymous.

As one can see that the team is very well equipped with specialties of technical development, real world asset exchanges (stock exchanges, metal exchanges), defi, marketing and designing.

We do not need to hire resources to manage our core components, but yes services like legal services, audits, technical infrastructures and in some cases employees (advisors, jr. developers, unanticipated resources) working under the core team would be procured.

Also a point to note: Kerb Finance was initially planned for EVM compatible chains. We changed to Cardano after considering Konma’s recommendation. So we may launch Kerb using Milkomeda or procure Haskell development resources from Konma itself. Either way doesn’t pose a problem to Kerb Finance Team.

Konma Labz - Technical Support

Haskell Mentor - Santanu Chatterjee

https://www.linkedin.com/in/santanuchat

Plutus Mentor - Sebastian Pabón

https://www.linkedin.com/in/ing-sebastian-pabon/

Head of Tech, Konma - Sangeet Muralidhar

https://www.linkedin.com/in/sangeet-muralidhar/

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

We are gathering funds for 7 months to be able to launch our protocol by the 1st month of Q3 (Q3 refers to the 3rd after we receive the grant). After that every quarter Kerb has planned to launch

-      Leverage trading functionalities

-      Futures trading functionalities

-      Options trading functionalities

After which we plan to launch the $KERB token, establish the Kerb DAO and shift all the control towards the community.

We have planned to not come for another round of fundraising, but incase of an unforeseen circumstance which generates a load on our finances before the DAO is established or the protocol goes live, it is possible that we might come for another round.

[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?

Our project's milestones will be set according to the indetal timeline mentioned in the “Please provide a detailed plan, including timeline and key milestones for delivering your proposal.” under the [FEASIBILITY] section.

Furthermore, All of the developments from pertaining to:

●    Developments

●    Audits

●    Bug Bounties

●    Partnerships

●    Outreach programs

Will be announced publicly via our twitter.

For internal task and goal management we use Monday and Airtable management applications.

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

There is a huge user group that wants to invest into real world assets but can not due to:

-      Geographical limitations

-      National regulatory limitations

-      KYC limitations

The effects of successfully creating an exchange that offers investment into real world assets will mean that anyone who is being restricted will only have Kerb Finance as an option to trade their desired asset with

-      Permissionless trade

-      Higher dividends than users can earn compared to possessing the real assets

-      No overcollateralization, that means 100% fund exposure

Kerb Finance will open doors to retail investors and HNIs of every nationality a free investment opportunity.

$297.53 Billion USD was the trading volume of NASDAQ on 24 June 2022 alone. It is up to imagination how a successful implementation of an exchange which accumulates and provides 1 single permissionless market for different stocks from different exchanges will perform.

Success for our project will be to become an exchange enabling permissionless trade of real world assets having a daily transaction volume comparable to real world exchanges. Perhaps, when Kerb Finance reaches this stage, with the help of the DAO it should pivot towards becoming the first exchange to do a crypto IPO.

To summarise, success for the project would look like:

-      To be big enough to compare with real world exchange

-      To conduct a crypto IPO and establish a path towards becoming a real world exchange

[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.