Please describe your proposed solution

Proposed Solution

Problem Perception:

The current problem is that Cardano’s native tokens are limited to the Cardano blockchain, restricting their liquidity and utility. This creates a siloed ecosystem where assets cannot be effectively utilized in broader financial systems, reducing their market reach and integration with other decentralized finance (DeFi) platforms, particularly Bitcoin's ecosystem, which has high liquidity and established financial tools.

Approach:

The solution is to create a secure and robust cross-chain bridge that connects Cardano to Bitcoin. The approach involves leveraging cryptographic mechanisms such as atomic swaps, multi-signature schemes, and smart contracts to facilitate the wrapping and unwrapping of Cardano native tokens into Bitcoin-compatible assets (e.g., wrapped ADA, or other native tokens). This bridge would enable seamless transfers, increasing interoperability between the two networks and allowing Cardano assets to be utilized in Bitcoin’s trading, lending, and DeFi platforms.

Project Engagement:

This project will engage the following key stakeholders:

1. Cardano Users and Developers: Providing new opportunities for liquidity, DeFi applications, and token use cases.
2. Bitcoin Community: Enabling integration of wrapped Cardano assets, expanding trading pairs, and increasing liquidity on Bitcoin’s DeFi platforms.
3. DeFi Protocols and Marketplaces: Allowing Cardano assets to be used as collateral or in other financial applications, expanding the market reach of both ecosystems.

Impact Demonstration:

Impact will be measured through the following metrics:

1. Transaction Volume: Track the volume of Cardano tokens bridged to Bitcoin and used in trading pairs.
2. Liquidity Growth: Monitor the liquidity pool sizes for wrapped Cardano assets on Bitcoin-based platforms.
3. User Adoption: Measure the number of users and wallets interacting with the bridg
4. Cross-Chain Integrations: Number of DeFi platforms and protocols integrating wrapped Cardano assets on Bitcoin.

By addressing the liquidity gap and expanding the utility of Cardano tokens, the bridge will drive increased adoption and utility for both ecosystems.

Please define the positive impact your project will have on the wider Cardano community

Positive Impact on the Cardano Community

1. Enhanced Liquidity: The bridge will enable Cardano native tokens to flow into Bitcoin’s high-liquidity ecosystem, giving users access to deeper trading pools and more capital.
2. Expanded Use Cases: By making Cardano tokens accessible on Bitcoin-based DeFi platforms, it unlocks new opportunities for trading, lending, and staking, broadening the utility of Cardano’s assets.
3. Increased Adoption: Bridging Cardano with Bitcoin attracts more users and investors, increasing visibility and driving the adoption of Cardano’s native tokens beyond its ecosystem.
4. Cross-Chain Collaboration: Facilitating cross-chain activity encourages partnerships between Cardano and Bitcoin developers, fostering a collaborative environment that strengthens both communities.
5. Strengthened Ecosystem Value: With more use cases, liquidity, and integrations, the value of Cardano’s ecosystem grows, making it a more attractive platform for developers and investors.

The project ultimately contributes to Cardano's interoperability with increased functionality, liquidity, and global adoption.

What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

We are very confident in our ability to deliver this open source protocol and have displayed our ability to deliver a secure v1 and v2 protocols where the smart contracts are open-sourced and have never experienced a security exploit.

To see an example of our product, kindly head over to https://app.anetabtc.io/ and try it out!

Furthermore, our wrapping protocol currently has the largest amount of bridged Bitcoin in the Cardano ecosystem (data available at https://defillama.com/protocol/anetabtc).

We have also completed all milestones of Fund12 thus far.

What are the key milestones you need to achieve in order to complete your project successfully?

Milestone 1: Initial Setup and Logic Separation

Duration: 4 weeks

• Investigate Rune Libraries (2 weeks)
• Research and analyze existing Rune libraries to understand their capabilities and integration potential.
• Separate out cBTC logic from shared logic in the existing project (2 weeks)
• Refactor the existing codebase to decouple cBTC-specific components from shared logic, laying the groundwork for Rune integration.

Milestone 2: Testnet Environment and Core Functionality

Duration: 4 weeks

• Implement Rune Enabled Testnet Environment (1 week)
• Set up a testnet environment with Rune functionality for testing and development.
• Implement Guardian Indexing (Runes) (1 week)
• Develop and deploy an indexing solution for Guardians to track Rune assets.
• Implement Rune Etching (1 week)
• Enable Rune etching functionality for asset creation and management.
• Implement Rune Transactions (1 week)
• Develop support for executing Rune-based transactions on the testnet.

Milestone 3: Bridge Coordination and Testing Framework

Duration: 4 weeks

• Implement CNT Bridge Coordinator (2 weeks)
• Design and implement a bridge coordinator to handle cross-chain transactions between Cardano and Rune-enabled systems.
• Implement Testing Stubs (1 week)
• Create testing stubs to simulate different bridge scenarios and validate the core functionalities.
• Expand Guardshift Scripts (1 week)
• Update Guardshift scripts to handle new scenarios introduced by Rune transactions and bridge operations.

Milestone 4: Frontend Integration and Final Testing

Duration: 2 weeks

• Implement New Functionality on the Frontend (2 weeks)
• Integrate new Rune-based features into the frontend, enabling user interaction and visualization of Rune operations.

Final Milestone: Final Report Video

Duration: 1 week

• Final wrap up video explaining the milestones and completed project.

Who is in the project team and what are their roles?

Aneta Labs, a collective of skilled developers and DeFi enthusiasts across continents like Asia, Europe, and the Americas, is spearheading the creation of the anetaBTC protocol.

Our commitment to this protocol is highlighted through the initial release of our V1 protocol, freely available for all and fortified with a strong security record.

Presently, it stands as the leading Bitcoin wrapping protocol in the Cardano ecosystem with 15x more BTC than the next Bitcoin wrapping protocol (as of the time of this writing).

Please provide a cost breakdown of the proposed work and resources

Our allocated budget for development involves a specialized team dedicated to perfecting the protocol.

This includes 2 skilled engineers:

• 1 x Senior Blockchain engineer for 6 months at $7,000 per month (97,500 ADA)
• 1 x Frontend engineer for 6 months at $7,000 per month (97,500 ADA)

Total Development Budget: 195,000 ADA ($70,000)

Our total allocated budget stands at 195,000 ADA or ~$70,000 in USD.

No dependencies

How does the cost of the project represent value for money for the Cardano ecosystem?

Value for Money

The cost of developing the Cardano-to-Bitcoin bridge offers a valuable investment for the Cardano ecosystem because:

1. Expanding Use Cases: By opening access to Bitcoin’s DeFi ecosystem, the bridge enables new use cases for Cardano tokens, making them more useful and providing additional value for users without the need for costly new projects.
2. Building a Foundation for Growth: This project creates essential infrastructure that can support future integrations and innovations, allowing other developers to build on top of it and generate even more value.
3. Cost-Efficient Approach: The project focuses on creating a minimal, secure bridge with clear utility, ensuring funds are used efficiently and avoiding unnecessary complexity.
4. Broader Ecosystem Benefits: The bridge helps the Cardano community reach a wider audience, potentially attracting new users and developers, which could lead to long-term growth and increased adoption.

We believe that by focusing on practical impact and careful resource allocation, the project can contribute to the overall health and expansion of the Cardano ecosystem in a meaningful and sustainable way.