Please describe your proposed solution.
In this proposal, we'll co-develop metadata standards with community consent, with CIP documents and community workshops, for a set of on-chain open accounting standards.
We'll work on open-source reference smart contracts with Javascript API's, that applications can use to directly insert accounting details from their dApps into their accounting system using those open standards.
What are on-chain accounting fundamentals?
Qipu were some of the world's first physical devices for accounting. The abacus was great for realtime computations, but qipu were viable prototypes of immutable semantics for interpersonal finance records, easily a thousand years before the first blockchain.
The fundamentals of on-chain accounting include categories and details for all kinds of assets, money received or paid, for money that is owed (receivables) or owing (payables), and for income and expenses.
Those fundamentals should include the standards-conformant structures of on-chain activity for setup (i.e. category-creation / chart-of-accounts maintenance), and the essential records of accounting transactions.
With solid baseline data on the state of finance in an organization, many kinds of reports can provide insight and knowledge about that organization and its operations.
Accounting Fundamentals for Cardano
Immutable record-keeping systems like Cardano are a great fit for accounting. The native UTxO model is also a close fit for the way information systems (like paper books, for example) grow and evolve.
We're making smart contracts for on-chain accounting records. We expect these will be operational on side-chains in future cases, but for today, we'll be focused on serving our open community's organizations with open accounting records.
Backstory
In 2022, the Treasury Guild conducted a collaborative collection of metadata schema to use for contribution-record-keeping. They've been applying that standard mechanism to their payout process, showing consistent contributor records, including task-level tags indicating different types of contributions.
Those on-chain records can now be queried and aggregated for a great reporting view - a staple of information-age accounting.
We're extending contribution-accounting to cover a more complete set of financial transactions to serve all kinds of organizations with great record-keeping.
We're working with organizations and individuals in the Cardano community with both knowledge and needs around accounting. We're developing data schemas for all kinds of transactions beyond contributor expenses.
Building Out with the Community
Open standards make a bunch of things easier. Let's do it together.
Some of our member organizations will also be developing various UI's interfacing into some of these same accounting contracts, each serving particular segments in ways unique for their applications.
Our engineering approach for accounting on Cardano is centered on the use of tokens and contract Datum (not transaction metadata, because on-chain contracts can't access transactions metadata).
At the application level, we will plan to leverage the patterns and infrastructure of Stellar Contracts, in which the low-level mechanisms of transaction-building are reframed as APIs that application developers and end-users would recognize as being closely related to the application domain. Within each of those meaningful APIs would be found some of the low-level transaction-building details.
How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?
These accounting-related standards are not yet well-developed (hence, not a fit for other challenge categories) but can be valuable building blocks for future application software.
By developing these standards, we can open next-adjacent-possibilities to create accounting records automatically during various transactions done by customers, prospects, contributors, vendors, etc.
The work products we create, ranging from standards (CIP) to whitepaper to transaction-building dAPI's, will be open-sourced and available for the community's further development.
We will seek to work together with Treasury Guild and other accounting-focused community members & orgs, distributing rewards for meaningful participation and contribution to the project's purpose.
How do you intend to measure the success of your project?
Participation in open community sessions (number of contributors)
Number of distinct elements identified having a meaningful on-chain accounting representation
Progressive creation and delivery of a lightpaper or CIP-in-progress draft
Submit CIP for review and adoption
Created smart contract dAPI's for building transactions having accounting metadata
Identified any areas of needs unmet by our in-budget design efforts
Please describe your plans to share the outputs and results of your project?
We will host open community sessions to do most of the work in this proposal in public.
We will post news and notes of community sessions on our website.
As we develop a CIP or light-paper, we will post updates to our website.
Developed smart-contract dAPIs will be posted on Github.