Please describe your proposed solution

<u>Implementation of previous research:</u>

**This is the implementation of research conducted by Txpipe – working closely with Input Output – and as part of a previously funded proposal). The output of this proposal is a fully functioning MVP use-case of an Oracle network built on IOG's partnerchain infrastructure.

<u>Feasibility and Research preliminary work</u>

<https://projectcatalyst.io/funds/11/cardano-use-cases-concept/charli3-cardano-integrated-side-chain-oracle-built-on-substrate>

<https://milestones.projectcatalyst.io/projects/1100091/milestones>

The output of the feasibility report (in-progress) as of May 14th 2024 is that a MVP is possible, although it may not address ALL of the challenges we hope to solve using the IOG's partnerchain infrastructure. The feasibility and implementation report may be available in time for voting, but at the very least we will provide updates in the comments as to the progress and findings from that research.

SOLUTION:

A fully functioning Oracle Network built on the IOG partnerchain infrastructure. In other words, a private Oracle network off Cardano that retains the security guarantees of Cardano while avoiding issues with the following:

1. Network congestion (goal: increased reliability)
2. Transaction costs for both consumers and node operators (goal: lower costs)
3. Economic and Scaling issues for node networks (goal: scale/increase number of node operators supporting a single data feed)
4. Block timing restrictions (goal: improve finality to e.g. less than a second)
5. Interoperability with other chains (goal: increase data pathways between other chains e.g. evm)
6. Restrictions on transaction sizes and other details (goal: customize a network to meet the needs of an oracle solution specifically)
7. Onboarding real world businesses to Cardano (goal: remove barriers by customizing network integrations for real world businesses)
8. And more may be addressed as research concludes

It is important to note that the output by Txpipe for the research report may not successfully address all of these challenges, but we are confident that a MVP is feasible that addresses some of them. At the very least, a functioning solution is possible we already know as of May 14th 2024 – but it is dependent on the timeline of IOG's progress.

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

The most obvious impact is to showcase the functionality IOG's new partnerchain infrastructure with a functioning and powerful use-case: an oracle network.

More focused on the impact of an oracle network built in this way, we can look at the goals from the previous question and discuss some of the positive impacts:

1. Network congestion (goal: increased reliability)
2. IMPACT: Improve the quality of the current Charli3 network so that it can retain high performance levels during volatile bull market activity and high Cardano usage
3. Transaction costs for both consumers and node operators (goal: lower costs)
4. IMPACT: Make it more affordable for consumers of data on Cardano (e.g. Dapps, DeFi protocols, and etc. while also lowering the costs for node operators to participate in networks by lowering transaction costs
5. Economic and Scaling issues for node networks (goal: scale/increase number of node operators supporting a single data feed)
6. IMPACT: Increased decentralization of a key infrastructure layer solution improving the quality of data integrations of Cardano Dapps that use the output of this proposal.
7. IMPACT: Enable more community involvement to overcome a facade of "opening up" node network participation while only large stakeholders actually obtain NFTs/licenses or insiders take note licenses. This impact leads Charli3 away from the path Chainlink took of having blue chip companies running nodes and prioritizes a way to allow any person to run a node in the network… a key part of the web3 ethos shared by many on Cardano.
8. Block timing restrictions (goal: improve finality to e.g. less than a second)
9. IMPACT: Particularly useful for DeFi protocols that require "fresh" data… 20 second delays can mean the difference of a liquidation or not when it comes to the bull market. This is a critical data infrastructure layer problem that will surface in severe ways as the market volatility increases. Our research is striving for sub second finality although may not achieve it.
10. Interoperability with other chains (goal: increase data pathways between other chains e.g. evm)
11. IMPACT: Enable solutions to interact with Cardano from other chains; there are other oracles out there that do this for EVM chains, but we believe a solution built on the robust and secure Cardano infrastructure has many advantages. This project will enable better cross-communication between chains, especially UTXO chains.
12. Restrictions on transaction sizes and other details (goal: customize a network to meet the needs of an oracle solution specifically)
13. IMPACT: As an oracle solution provider since Oct 2022 on Cardano, we understand that certain restrictions and limitations exist being built natively on Cardano. By building on a partnerchain infrastructure that retains the security guarantees of Cardano but allows Charli3 and Txpipe to optimize the chain infrastructure to run an oracle solution we can achieve a more accurate, reliable, robust, and optimal solution. This means a better way for Cardano solutions to consume data to build better dapps to enable users to do more things.
14. Onboarding real world businesses to Cardano (goal: remove barriers by customizing network integrations for real world businesses)
15. IMPACT: Following the thought of point 6, by customizing for an oracle solution we can also optimize for unique use-cases to integrate real world use-cases such as is required for our Proof of Reserve solution for Mehen (we are connected to tradfi banks). There are many real world businesses that have approached Charli3 over the years to find a way to use Cardano but we were behold to the limitations of Cardano. A partnerchain solution allows sufficient customization to help these businesses now integrate.

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?

Charli3 was founded in 2021. The C3 network is the first decentralized oracle solution built natively on Cardano with our mainnet feed launching in October 2022. Our solution is also the first Cardano solution to pass a level 2 audit by CertiK. Our main ADA/USD feed has been active for approximately 600 days with 100% uptime with zero incidents. Overall, we offer multiple feeds to the community with a combined uptime of 99.99%. Our team has strong ties with multiple labs, including but not limited to: Anastasia Labs, Mlabs, Metalamp, Plank, Txpipe and more. We have delivered successful on multiple Catalyst projects already including the most recent portal.charli3.io launch.

Txpipe.io is currently contracted by Charli3 and working with our team and IO to assess the full feasibility of this implementation, to research and design an oracle solution, and output a report that includes an implementation plan. Some of the key team members at Txpipe were instrumental to the creation of our original infrastructure (although not employed by Txpipe at that time). Txpipe is a well known and reputable lab and if we decide to continue using them for the implementation of this project (as we intend) there is little doubt we have the best team in Cardano working on this project. We will assign our most senior members of the Charli3 team to work directly with Txpipe in the implementation. That said, we may choose to use only in-house team members or another lab, Txpipe is currently contracted by us but not "officially" a parter in this proposal nor is IO.

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

Milestone 1: A: Milestone outputs

Core implementation team selected

Implementation plan from previous funded proposal refined by team

B: Acceptance criteria

Implementation team defined and start of work

Roadmap set with Epics defined

C: Evidence of milestone completion

PDF submission or medium article showing the following:

1. Team: will we continue using Txpipe and some of the charli3 team members? yes no whom?
2. Roadmap and description of Epics, user stories may be included, but at the very minimum the major epics, as well as any project risks/delays (if any)

Milestone 2: A: Milestone outputs

A POC on the partnerchain that does not output to Cardano

B: Acceptance criteria

A proof of concept of an oracle network functioning on the partnerchain that does not have output to Cardano is available for observation and review

C: Evidence of milestone completion

Provide a demo video of functioning code on a local machine or if possible a live display/demo for catalyst review.

Milestone 3: A: Milestone outputs

A POC on the partnerchain that does output to Cardano

B: Acceptance criteria

A proof of concept of an oracle network functioning on the partnerchain that does have output to Cardano is available for observation and review

C: Evidence of milestone completion

Provide a demo video of functioning code on a local machine or if possible a live display/demo for catalyst review.

Milestone 4: A: Milestone outputs

A MVP on the partnerchain that does output to pre-production Cardano that addresses some or all of the challenges faced by Cardano native oracle networks

B: Acceptance criteria

A MVP of an oracle network functioning on the partnerchain that does have output to pre-production Cardano is available for observation and review and includes a summary of all the features/enhancements since the last milestone including blockers

C: Evidence of milestone completion

Provide a demo video of functioning code on a local machine or if possible a live display on Cardano with a functioning use-case.

Milestone 5: A: Milestone outputs

A fully functioning MVP is deployed and outputs are made on mainnet Cardano showcasing a functioning use-case.

B: Acceptance criteria

The MVP is functioning as expected and outputs on Cardano showcasing its features is exemplified by a working use-case for review.

C: Evidence of milestone completion

Demo video or live demonstration of the private network working along with the output to Cardano in a functioning use-case.

Final Milestone: A: Milestone outputs

Close out the project

B: Acceptance criteria

Close out video is completed

Close out report is completed

C: Evidence of milestone completion

A video is submitted to catalyst and accepted for final completion

A report is submitted to catalyst and accepted for final completion

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

Assuming we proceed with the same team from our previous research proposal that is designing and creating the implementation plan for this project… this a summary of the team:

Project lead: Txpipe founder (https://www.linkedin.com/in/santiagocarmuega/)

Business Leads: Damon Zwarich and Robert Hever (Charli3 Founders)

Development team: Txpipe team members as assigned by Santiago, Charli3 senior team members led by Deep Bhatt (https://www.linkedin.com/in/bhatt-deep-bdat/)

Technical Advisor George Flevorsky former Mlabs team member (https://www.linkedin.com/in/george-flerovsky-01943836/)

Metalamp Team support as needed; members who worked on Iagon, Meld, and other projects (https://metalamp.io/)

Please provide a cost breakdown of the proposed work and resources

TxPipe has set an initial estimation of $250,000. This is based on the person hours required to deliver a project of this scope. It is difficult to provide a precise estimate at this time, but at USD$100 hourly, this is 2,500 hours across 6 months. This equates to 3 full time architects and/or developers working full-time for 6 months straight. This of course is just an illustration of how far the funds will go and not representative of the actual team who will work on it (the previous question of the team roles is a better idea).

This initial MVP category only allows 300,000 ADA.

1. There may be lack of funding to meet the estimate by Txpipe alone. Charli3 will use their own funds to bring additional team members to the project.
2. We are confident 300k is enough funds to output a MVP and complete the project with the caveat that if the market (ADA drops) the quality of the final MVP may not be as good as if we had additional funding.
3. Quality of MVP scales with funding/ADA value; with more challenges addressed and a more sophisticated use-case/demo/example as output
4. Charli3 will do everything in our power to stretch the funding as far as it can go and leverage the experienced team at TxPipe to their fullest.
5. IO may support the project through co-development, although that is not guaranteed or promised; this however could potentially lower the costs for delivery to ensure a premium MVP is available at the end of the project.

This project is potentially dependent on IOG's Partner Chain infrastructure as well as the research and architecture from TxPipe to implement our oracle needs into a side chain.

The feasibility of the implementation and the implementation plan are outputs of the previously funded proposal (contracted to Txpipe): <https://projectcatalyst.io/funds/11/cardano-use-cases-concept/charli3-cardano-integrated-side-chain-oracle-built-on-substrate>.

The Txpipe team has progressed rapidly in their research and we are confident an implementation is possible already, hence the proposal to move forward. As of May 14th 2024, we have not entered in the milestones. These will quickly be submitted before the vote begins for this round.

Our estimate for implementation is 6 months, but the biggest risk is the functionality that the Input Output team promises will be available may be delayed. We would then pause the project until unblocked by IO. The impact would be a longer timeline than expected. There is faith IO will deliver everything we need for a MVP.

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

IO is investing resources into developing a partnerchain infrastructure. For 300k the community can help a premier Cardano solution to collaborate with Txpipe a premier Cardano lab to bring a practical fully functioning use case leveraging the innovative infrastructure that IO is building.

The value:

• Proof of concept that the partnerchain infrastructure by IO works with a real use-case
• Practical solution that will lead to a better decentralized oracle solution that provides an essential service for Cardano Dapps
• Enables scaling by enabling larger oracle node networks, creating a more decentralized data infrastructure layert
• Enables customization easing the onboarding of real world solutions to Cardano and showcases to the world the functionality of Cardano
• Lowers costs for data consumers
• Lowers costs for node operators, so more community members can participate
• Increases interoperability between other chains especially UTXO chains
• Faster transmission of data will improve DeFi and Lending protocols including some of the biggest Dapps on Cardano currently
• A network purpose built from the ground up can prioritise auditability leading to users being able to more easily track data movement through the network

All of the above will lead to increased adoption of Cardano, more protocols potentially using an oracle solution leading to an improvement on their current data integration setup and improving the quality of their service to their users, more integration by real world businesses, more integration of other chains to Cardano.