Multi-hop swaps for more liquidity

[IMPACT] Please describe your proposed solution.

MuesliSwap has open-sourced its smart contracts to build liquidity pools on Cardano. We want to implement multi-hop routing on our open-source pool contracts to provide a general guideline to the Cardano DEX community and provide more efficient use of liquidity. Multi-hop routing does not only allow for swaps between tokens that do not directly share liquidity but it can also help to generate swaps that use different pools to reach lower price impacts. This means our implementation can help to more efficiently use liquidity available in Cardano DEXs. As part of our solution, we are planning to release a report with our proposed solution, develop Plutus smart contracts and perform an internal security audit on our implementation. 

[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 features that are already standard in other blockchain ecosystems. Multi-hop trading is a prominent example of how a better trading experience can be reached and how the provided DeFi liquidity can be used more efficiently. We are planning to open-source our implementation to provide a general guideline for other Cardano DApps and include the implementation in MuesliSwap. This will make Cardano trading a better experience for all users and more people can profit from arbitrage trading between pools. 

[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. It may be that the current development environment does not allow for a technical solution. However, due to our intimate knowledge of the On- and Off-chain ecosystem of Cardano, we are close to a prototype to this idea. We are therefore convinced that there will not be a technical hurdle to the realization of the project.

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

[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 the project 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: (1-2 months)

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

Internal Security Audit: (2 weeks)

We are planning to make the internal security audit public. The audit will be performed with some of the standard Cardano tools to perform smart contract correctness. Moreover, the internal audit team will include developers that are not part of the initial contract development. The audit will not conclude the development of the protocol. Via Open-Sourcing we enable the whole community to access the code. If the code is to be used by us, we will organize an external audit on our own and we expect other users of the results to do the same.

[FEASIBILITY] Please provide a detailed budget breakdown.

Total: 29,400 USD

As the requested amount will not be sufficient to cover the full costs of research, development and audit the MuesliSwap team is planning on covering the remaining costs to create the open-source smart contracts. 

Technical Report 6 hours - 400 USD

Development: 300 hours - 24,000 USD

Internal Security Audit 70 hours - 5,000 USD 

Technical Report 

Creating a technical report outlining the implementation details and importance of multi-hop routing - 6 hours 

Development

On-Chain Code 300 hours

• Architecture and Model Design 50 hours
• eUTXO model and diagramming modeling, analysis 50 hours
• Development of smart contract components (Plutus, Haskell) 110 hours 
• Development of a testing framework for on-chain code and writing of tests 35 hour
• Review smart contract (code and security review) 25 hours 
• Security Analysis 25 hours
• Documentation of on-chain code 5 hours

Internal Security Audit 70 hours -

• Reviewing created code (developer 1) - 15 hours
• Reviewing created code (developer 2) - 15 hours
• Use Cardano tools to perform automated testing (including coding) 30 hours 
• Write audit report - 10 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.

[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?

[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 multi-hop routing in the Cardano eUTXO model, along with its 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. 

[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 making sure that Cardano is on point with account-based blockchain. The approach will also be implemented in the MuesliSwap DAPP. This means that the project will already have the guarantee to be included in one of Cardano's biggest DeFi protocols. 

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

We are not planning to return for further funding in a later round for that specific project. Any additional costs of development are planned to be covered by the MuesliSwap team.