Please describe your proposed solution

Batchers play a crucial role in the Cardano ecosystem. By building off-chain transactions, they take on an important aspect in the architecture of many Cardano DApp protocols. In many cases, batchers can decide how to prioritize similar "batching transactions" (for example, in a DEX, whether to match older or newer offers when other factors are equal). Moreover, in the MuesliSwap DEX protocol, batchers (also known as matchmakers) can decide how to allocate the spread (the price difference between matched offers).

It is fair for batchers to be rewarded for their efforts in the form of a batcher fee. It is also desirable for the community to encourage competition among batchers so that innovation can lead to lower batcher fees and fast transaction processing for everyone. However, not all rules can be hardcoded into smart contracts (perhaps because the rules may be subject to change through governance, or because the performance metrics are qualitative).

Currently, batchers are almost exclusively proprietary, so the above benefits are not yet realized and often not sufficient decentralisation is provided. Our proposed solution addresses this issue through the creation of a comprehensive framework that allows a DAO to govern and issue batcher licenses. This project will improve decentralization, transparency, and greatly enhance user trust and influence in many Cardano DApps.

<u>Detailed Components of the Solution:</u>

Smart Contracts: Core to our solution, we will develop smart contracts that will handle the issuance and revocation of licenses for batchers based on the governance votes of DAO token holders. The rules and criteria for governance will be transparent and modifiable through community consensus, ensuring that the contracts evolve with the needs and values of the community.

Frontend Interface: A user-friendly frontend will serve as the visual interface for interacting with the batchers, viewing license statuses, and participating in governance. This will be crucial for engaging non-technical members of the community, ensuring they can easily vote and view the activities of batchers.

Backend: This layer will act as the intermediary between the frontend and the smart contracts, ensuring smooth data flow and enhanced security. The backend will manage API calls and data processing, which simplifies interactions for users and maintains a responsive and reliable user experience.

Monitoring Tool (Reference Implementation): To ensure compliance and performance, a reference implementation of a monitoring tool will be developed. This tool will continuously assess whether batchers adhere to the established rules and guidelines set by the DAO. It will provide analytics and reports, which can be reviewed by the community for further actions, such as revoking licenses if necessary.

<u>Engagement and Impact</u>:

Impact Measurement: Qualitatively, The effectiveness of our solution will be measured by the increase in transparency, community engagement, and decentralisation of batchers, as well as the adoption and active use of the governance system.

Unique Contribution to Cardano: Our solution will not only add a layer of democratic governance to the Cardano ecosystem but also establish a precedent for open-source, community-driven frameworks that enhance operational transparency and accountability. This aligns perfectly with Cardano’s vision of providing more equitable and accessible financial services.

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

Our project will significantly enhance transparency and community governance within the Cardano ecosystem by empowering DAOs with the ability to manage and oversee batcher operations directly. This democratic approach aligns with Cardano's vision of decentralised and transparent blockchain solutions.

Impact Measurement:

• Quantitative Metrics: We will measure success through the adoption rate of the framework among batchers, the number of active governance participants, and compliance rates with DAO-set rules.

Sharing Outputs:

• We will share our developments and updates through github, ensuring accessibility to all community members.
• Regular reports and analysis of governance outcomes and system performance will be published on community forums and social media (MuesliSwap X channel), fostering a continuous dialogue.

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?

The MuesliSwap Team is well-known in the community and credited with delivering high-tech solutions. We started the first DEX on Cardano, months before its competition launched and to date provides the only hybrid AMM-Orderbook DEX with integrated DEX Aggregator.

In particular, MuesliSwap Team members are known to be particularly strong in developing secure smart contract based dApps, pioneering the development of DeFi protocols since the early days of SCs on Cardano. The described SC-based batching mechanisms hence fall into our area of expertise.

The Team has also already completed multiple projects funded in Catalyst among which is an off-chain governance solution used by multiple Cardano projects. As a large team of dedicated techies, we have the competence, capacity, and motivation to also complete this additional part of governance infrastructure in time and with high quality.

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

Milestone 1: Milestone outputs:

• Architecture documentation: A detailed report that outlines the information flow and system requirements when:
• DAO members vote for batchers (issuing, revoking of licenses)
• Batchers fulfill orders (checking licenses)
• Licences are revoked/expire
• Licences are issued and distributed/claimed
• Smart contract infrastructure: Definition of the necessary smart contracts and their functionalities for assigning batcher rights to entities through issuance/revocation of licence tokens based on onchain governance.

Acceptance criteria:

• Documentation is easily understandable and concise. Further, it is feasible and consistent with requirements of both the Cardano blockchain and (possibly non-technical) end users.
• Smart contract design is robust, secure and capable of assigning batching licenses to entities based on governance.

Evidence of milestone completion:

• Architecture documentation is presented and indicates a clear and feasible path forward to the reviewer.
• Preliminary smart contract implementation presented for review

Milestone 2: Milestone outputs

• Preliminary front-end offering ability to vote on batchers
• Preliminary back-end that handles requests from front-end and interacts with smart contracts
• Fully developed smart contracts that handle governed batching rights via transactions initiated by the backend

Acceptance criteria

• An instance of the front end is hosted and publicly available. The user can vote on a batcher and see their vote stored on the blockchain.
• Backend is sufficiently developed to handle voting. Further, backend documentation will be continuously updated so all API request and response schemas are known to the public.
• Smart contract is deployed onchain and is integrated successfully with the backend.

Evidence of milestone completion

• A full system for handling voting and automatically assigning batching rights via smart contract is set up for one DAO.

Milestone 3: Milestone outputs

• Front-end: Monitoring of various important metrics related to batching rights, such as spread distribution, total profit, volume. Clear indication to the user that the batcher is/is not aligned with their responsibilities under DAO governance.
• Back-end: Automatic tracking of transactions handled by the batcher, including parsing of information used to calculate the above and monitor batcher performance.

Acceptance criteria

• Front-end is further built up to allow the user to easily monitor the activity of the batcher and assess their performance.
• Back-end is developed further to allow continual monitoring of the blockchain and provide endpoints to access the information related to batcher performance. Provided documentation should make this capability clear.

Evidence of milestone completion

• The proof of concept implementation is further expanded, allowing the user to track the batcher’s activity and performance related to the DAO that was voted on in Milestone 2.

Final Milestone: Milestone outputs

• A project close-out report outlining the technical developments that were achieved over the course of the project. Difficulties and remaining obstacles will also be documented so that other developers can easily understand where they can usefully contribute to the project in the future.

• A documentation that clearly demonstrates:

• To a DAO: How to set up a governed batcher license distribution system using our new tech stack.

• To a DAO member: How to vote for a batcher and monitor their performance to ensure that batching rights are held by those that provide the most benefit to the DAO.

In both cases, the documentation will highlight the benefits to be had by DAOs and users by adopting a decentralised approach to batching license distribution.

Acceptance criteria

• Project report and video are of good quality and are easily understandable.
• The report will be formally typeset, and the documentation will be produced with easy to follow instruction.

Evidence of milestone completion

• Report and video are complete and available for inspection.

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

Project Manager (Chris): Responsible for overseeing the project's overall progress, ensuring milestones are met, managing the budget, and coordinating between different team members.

UI and UX Designers (to be hired): Involved in the design phase to ensure that the user interface is user-friendly and accessible, particularly to non-technical users.

Smart Contract Developers (Phil + Niels): Focused on designing, developing, and testing the smart contracts necessary for the governance and licensing of batchers.

Frontend Developers (Matt + Pasi): Responsible for creating the user interface that will allow DAO members to interact easily with the batcher system, including voting and monitoring batcher performance.

Backend Engineers (to be hired): Develop the backend systems that will connect the frontend interface with the smart contracts on the blockchain, ensuring smooth and secure data flow and transaction processing.

Monitoring Tool Developer (Patrick): Develop tools to continuously monitor and report on the batchers' adherence to the rules set by the DAO, enhancing transparency and accountability. This also includes integration into the frontend.

Documentation and Community Management (Chris): Create comprehensive documentation and announcement to the community informing about the projects progress.

Please provide a cost breakdown of the proposed work and resources

1.Research and Design Phase:

• Personnel Costs (Designers, Project Manager, Smart Contract Developer): 25,000 ADA
• Technical Documentation: 5,000 ADA
• Subtotal for Research and Design: 30,000 ADA

2.Proof of Concept Development:

• Development Costs (Developers, Backend Engineers): 40,000 ADA
• Initial Smart Contract Prototyping and Deployment (including testing costs): 10,000 ADA
• Frontend and Backend Setup: 15,000 ADA
• Subtotal for Proof of Concept Development: 65,000 ADA

3.Development of Batcher Monitoring and Further Expansion:

• Additional Dev Costs (Further Backend and Frontend Development): 10,000 ADA
• Monitoring Tools Development: 20,000 ADA
• Subtotal for Monitoring Expansion: 30,000 ADA

4. Project Close-out and Reporting:

• Documentation and Reporting: 5,000 ADA
• Production of Educational Video and Final Presentation: 10,000 ADA
• Subtotal for Project Close-Out: 15,000 ADA

Project management and marketing throughout the project: 5,000 ADA

Total Requested Funds: 145,000 ADA

If we run over budget on this project we will pay the remaining difference from personal project funds.

No dependencies

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

The costs associated with our project reflect the necessary investment to deliver a high-quality, secure, and scalable decentralised governance framework for the Cardano ecosystem. Our budget allocations are based on industry standards.

Cost Justification:

1. Development Team Costs: The majority of our budget is allocated to the development team, which includes blockchain developers, front-end developers, and back-end developers.
2. Community and Outreach: This portion of the budget is focused on engaging with the Cardano community through educational materials and documentation.

Value for Money:

• Long-Term Benefits: By providing a robust governance framework, our project adds substantial long-term value to the Cardano ecosystem, promoting greater community involvement and enhancing the transparency and accountability of DApps.
• Scalability and Open Source: The framework is designed to be scalable and will be made available as open source, allowing further development and adaptation by the community, thus multiplying the value derived from the initial investment.

In summary, our budget reflects a prudent allocation of resources necessary to achieve a high-quality output that aligns with Cardano’s goals of decentralisation and community empowerment.