Please describe your proposed solution

While Cardano DeFi offers immense potential, the current DeFi ecosystem lacks full compatibility with advanced token types ("smart tokens") that enable new usecases such as stablecoins with similar functionality such as USDT/USDC. This unreadiness can hinder adoption of the Cardano blockchain on a mass scale.

CIP-113:

This challenge is addressed by CIP-113, a groundbreaking proposal introducing programmable token-like assets to Cardano. These tokens maintain true ownership while offering the same level of programmability as other ecosystems. This innovation addresses Cardano Problem Statement 3 (CPS-0003), enabling control over a token's life cycle beyond minting and burning. CIP-113 empowers developers with features like:

• Programmable token transfers: Define custom rules for token behavior.
• Lifecycle control: Manage a token's existence beyond the minting stage.
• Native smart asset integration: Seamlessly integrate assets like USDC and USDT.

This paves the way for a world of possibilities and exciting use cases, from enforcing NFT royalties to enabling native stablecoin integration (USDC/USDT) and advanced liquidity management features. CIP-113 also prioritizes wallet compatibility, co-existence with existing tokens, and computational efficiency.

<u>Our Solution:</u> A Collaborative DEX Built for CIP-113

Minswap Labs and Fluid Tokens together propose a collaborative solution: a DEX fully compatible with CIP-113 programmable tokens. This DEX will feature a custom-built AMM (Automated Market Maker) v2.1 contract, specifically designed to seamlessly integrate these smart assets within Cardano's DeFi landscape.

Our partnership with Fluid Tokens brings unparalleled expertise. Matteo Coppola, Fluid Token's lead developer, a certified Cloud Architect and also the author of this proposal, has been one of the three key contributors to CIP-113, guaranteeing a deep understanding of the technical requirements and the potential of this innovation.

By building this CIP-113 compatible DEX, we aim to:

• Unlock the potential of programmable tokens: Empower developers and usher in a new era of DeFi on Cardano.
• Enable seamless stablecoin integration: Facilitate the native integration of USDC, USDT, and other regulated stablecoins.
• Foster a thriving DeFi ecosystem: Provide the foundation for a robust and innovative DeFi landscape on Cardano.

This collaborative effort positions Cardano at the forefront of DeFi evolution. By embracing programmable tokens, we envision a future filled with innovative financial possibilities.

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

The impact of a smart-token DEX extends far beyond the confines of a single DEX or protocol; it's a cornerstone for a future-proof, true DeFi-ready, programmable token-compatible ecosystem. We envision a future where Cardano seamlessly integrates and supports programmable tokens (including stablecoins like USDC/USDT), fostering a world of possibilities for developers and users alike.

<u>A Gateway for USDC/USDT to Cardano:</u>

This project is driven by a core vision: to create a seamless gateway for established stablecoins like USDC and USDT to enter the Cardano ecosystem.

There's a clear demand for this integration. Circle, the parent company of USDC, has openly expressed interest in bringing their stablecoin to Cardano through discussions with Intersect, Cardano's governance body. However, current DeFi infrastructure lacks the necessary capabilities for full integration.

Our proposed CIP-113 compatible DEX directly addresses this critical gap. It provides the essential infrastructure for the seamless integration of both USDT and USDC.

Interestingly, a Working Group within Intersect, which includes Minswap Labs and Fluid Tokens as members, has already been formed, precisely with this purpose to onboard USDC/USDT on Cardano. A fully audited and deployable smart token DEX would be a valuable asset in these crucial negotiations with key players like Circle.

By building this DEX, we can confidently demonstrate the ease and efficiency of USDC integration within the Cardano DeFi landscape. This will pave the way for widespread adoption and utility of these stablecoins, fostering a bridge between traditional and decentralized finance.

<u>A Foundation for Innovation:</u>

We're building the groundwork, not just for USDC, but for any project leveraging programmable tokens. Our open-source AMM v2.1 contract will be a catalyst for innovation. Developers will be empowered to create:

• Novel DeFi Protocols: Imagine a world of innovative lending, borrowing, and derivative products built on programmable tokens.
• Tokenized Assets: Empower creators with NFTs that enforce royalties, or build tokenized securities for a more efficient future of Cardano.
• Next-gen dApps: Create entirely new use cases with dApps that leverage the power of programmable tokens.

Transparency and Community Growth:

By open-sourcing the AMM v2.1 contract, we foster collaboration and community-driven development. This fosters an environment where developers can contribute and ensure the project continues to evolve at the forefront of DeFi innovation.

The Next Step in Cardano DeFi:

This project acts as a step forward for Cardano DeFi. By embracing programmable tokens, we create an ecosystem that can compete with, and even surpass, established platforms. Increased adoption, enhanced liquidity, and overall growth will follow, benefiting the wider Cardano community.

This initiative is not just about technical advancements in Cardano; it's also a catalyst for a thriving DeFi future, fostering collaboration, innovation, and long-term growth.

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?

This project is a culmination of expertise and dedication, spearheaded by two established forces in Cardano DeFi: Minswap Labs and Fluid Tokens. Together, we bring a wealth of experience, expertise, and a proven track record of delivering innovative and secure solutions to the Cardano community.

Our Success Speaks for Itself:

1. Minswap Labs: The team behind Minswap DEX (<https://minswap.org/>), currently boasting the highest Total Value Locked (TVL) of over $68M (as of May, 2024) on Cardano. To add, Minswap Labs has consistently delivered on all of its approved proposals from past Catalyst Funds, reinforcing its commitment to accountability and project delivery. These achievements also demonstrate Minswap Labs’s capability to execute complex DeFi projects with the utmost security and transparency.
2. FluidTokens: A pioneer in the Cardano DeFi space, FluidTokens is renowned for its innovative protocols, such as pool lending, renting, and boosted staking. With a TVL of $3.43M on Cardano, they operate with transparency and community-driven ethos, fostering trust and accountability. To add, FluidTokens has delivered innovative DeFi protocols at an unconventional speed, without compromising safety or user experience, further demonstrating its capabilities and commitment to excellence.

<u>Validating Feasibility: We Don’t Trust, We Verify</u>

We don't just rely on past success; we meticulously validate our approach before development begins. Here's how:

1) CIP-113 Expertise: Matteo Coppola, FluidToken's lead developer and a certified Cloud Architect, co-authored CIP-113. As one of the three key contributors of CIP-113, Matteo brings a deep understanding of technical requirements and underlying principles. This ensures a smooth implementation of the AMM v2.1 contract.

2) Deep Cardano Exp: Our team combined comprises 15+ years of software development experience. Our Plutus engineers, with over two years of experience, possess a profound understanding of Cardano's architecture and security, having built some of the most important dApps in Cardano.

3) Rigorous Development Process: Multiple stages ensure a secure and scalable solution:

• Early community feedback
• Official audits
• Code optimization
• Public testnet
• Comprehensive documentation

4) Community Collaboration: Open communication with users, developers, and stakeholders is paramount. We actively solicit feedback to align our product with the community's needs, fostering widespread adoption and trust.

5) Transparency and Open Source: The open-sourced AMM v2.1 contract promotes transparency. Community scrutiny and contribution accelerate innovation and ensure long-term DeFi ecosystem success on Cardano.

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

Milestone 1: AMM v2.1 Contract Development (2 months)

• Milestone Output: A functional AMM v2.1 contract capable of supporting programmable token-like assets, adhering to the standards outlined in CIP113.
• Acceptance Criteria:
• The DEX can list and facilitate trading of programmable token-like assets.
• The AMM v2.1 contract correctly handles the lifecycle and interactions of these assets.
• The DEX integrates seamlessly with the existing Cardano infrastructure and wallets.
• Evidence:
• Comprehensive documentation, code repositories, and live demonstrations of the DEX functionality.

Milestone 2: Development of add. parts of the smart contract (1 Month)

• Milestone Output: Additional (part of) smart contracts required for the solution, such as token validators and auxiliary contracts.
• Acceptance Criteria:
• The smart contracts adhere to the CIP113 standard and best practices.
• The contracts are internally tested and audited for security and functionality.
• Integration with the DEX and other components is seamless.
• Evidence:
• Code repositories, reports, and integration test results..

Milestone 3: Auditing and Frontend Development (1 month)

• Milestone Output:
• Completed audits of the entire solution.
• A secure and user-friendly frontend interface for the DEX.
• Acceptance Criteria:
• Independent third-party audits identify and address any potential vulnerabilities.
• The solution meets the highest security and performance standards.
• The frontend provides an intuitive and accessible experience for users
• Evidence:
• Audit reports, frontend deployment.

Milestone 4: Public Testnet (1 month)

• Milestone Output: A public testnet deployment of the solution, allowing for community testing and feedback.
• Acceptance Criteria:
• The testnet is accessible to the public and showcases the full functionality of the solution.
• Comprehensive documentation and support resources are available.
• Community feedback is actively solicited and addressed.
• Evidence:
• Testnet deployment, community engagement logs, documentation.

Final Milestone: DEX goes LIVE!

• Milestone Output: The successful deployment of the DEX and smart contracts on the Cardano mainnet, enabling the seamless integration of programmable assets-like tokens.
• Acceptance Criteria:
• A full-fledged, bug-free LIVE AMM on Cardano mainnet capable of integrating USDC and other smart tokens.
• Evidence:
• Code repos and live DEX.

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

This project is spearheaded by a dream team collaboration between Minswap and Fluid Tokens, uniting some of Cardano's brightest minds.

<u>From Minswap Labs:</u>

• Long Nguyen (Co-founder): A visionary leader in the Cardano DeFi space, Long's expertise has been instrumental in shaping Minswap DEX into the leading decentralized application (dApp) within the Cardano ecosystem. His insights and experience, gleaned from interviews like the one at Cardano Summit 2023, will guide the overall vision and direction of the project.
• Technical Team: A team of highly skilled developers and project managers with deep knowledge of Cardano's architecture and security.Strategically located across US, Asia, and Europe, they'll focus on seamless integration, security, performance, and user experience.

<u>From FluidTokens:</u>

• Matteo Coppola: A certified Cloud Architect and senior Blockchain developer with expertise in both Ethereum and Cardano. A co-author of CIP-113, Matteo brings invaluable knowledge to the project.
• Raul Antonio Rosa Padilla: A skilled smart contract developer with a strong grasp of offchain integrations, ensuring smooth interaction between DEX and smart contracts.
• Ullas M.: Ullas is a seasoned frontend developer who will spearhead the creation of an intuitive and user-friendly interface for the DEX and token management platform.
• Alberto Rizzi: Alberto's expertise in backend development will be crucial in building the robust infrastructure required to support the DEX and smart contract functionalities.
• Anastasia Polozova: Working alongside Ullas, Anastasia will ensure a seamless and intuitive interface for interacting with the DEX and managing programmable token-like assets.
• Henry Peters: Henry's full-stack development skills will contribute to integrating and optimizing the project's various components.
• Lorenzo Martani: Lorenzo will play a vital role in promoting the project, engaging with the community, and ensuring widespread adoption and visibility within the Cardano ecosystem.

Please provide a cost breakdown of the proposed work and resources

This project adheres to a transparent cost breakdown, ensuring efficient use of resources and clear value for the Cardano community. Here's a detailed breakdown of the allocated budget:

<u>Building the Core Infrastructure:</u>

• Smart Contract Development ($53,000): Two engineers will dedicate three months to crafting the smart contract for managing programmable token-like assets. The cost incorporates iterations and adjustments based on auditor feedback, ensuring a high-quality solution.
• Off-chain Code Development ($19,000): One engineer will focus on developing the off-chain code and integrations for smooth interaction with the DEX and smart contracts.

<u>Ensuring Optimal Performance:</u>

• Debug and Testing Phase ($11,000): A dedicated engineer will rigorously debug and test the entire system, optimizing performance and functionality.

<u>Prioritizing User Experience:</u>

• Frontend Development ($37,000): A user-friendly and intuitive frontend is key for a positive user experience. This allocation covers the development of a polished and user-friendly interface.

<u>Robust Foundation &amp; Operational Efficiency:</u>

• Backend Development ($31,000): A robust backend infrastructure is crucial to support the DEX and smart contract functionalities. This cost encompasses the development of the necessary backend components.
• Infrastructure &amp; Cloud Services ($12,000): Deployment and maintenance of the necessary infrastructure, including cloud services and servers, for a seamless and reliable system operation.

<u>Security &amp; Reliability First:</u>

• Testing &amp; Quality Assurance ($16,000): Comprehensive testing and quality assurance measures will be conducted to identify and address any potential issues or vulnerabilities before the mainnet launch.
• Audit ($39,000): A meticulous security audit is paramount for both the DEX and smart contracts. This investment guarantees a robust and reliable solution.

Total Project Cost: <u>$218,000</u> = <u>495000 ADA</u> @ $0.44

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

This project delivers exceptional value for the Cardano ecosystem by addressing a crucial bottleneck hindering its potential as a full-fledged DeFi-ready ecosystem. Investing in this project is directly linked to investing in the future of Cardano. Here’s how:

Bridging the Gap to Mainstream Adoption:

• Seamless integration of established stablecoins like USDC and USDT acts as a gateway for traditional finance and new users to explore Cardano DeFi.
• User trust and familiarity with these stablecoins pave the way for wider adoption and growth.

Unleashing a Wave of Innovation:

• Programmable token-like assets open doors for exciting new DeFi use cases.
• Imagine tokenized real-world assets, programmable stablecoins, NFT royalties, and a plethora of innovative financial services flourishing on Cardano.

A Magnet for New Projects and Liquidity:

• By supporting programmable tokens, we create an attractive environment for new DeFi projects and liquidity providers.
• This influx fosters a vibrant and thriving DeFi landscape within Cardano, benefiting everyone.

Collaboration and Interoperability:

• Open-sourcing the project fosters collaboration and interoperability between Cardano protocols.
• Everyone benefits as new projects can leverage our infrastructure, accelerating the pace of innovation.

User Experience at the Forefront:

• We prioritize user experience with a user-friendly and intuitive DEX interface.
• This attracts new users, fosters long-term engagement, and simplifies interaction with DeFi on Cardano.

Future-Proofing Cardano's DeFi Landscape:

• Investing in programmable tokens today positions Cardano as a frontrunner in the ever-evolving DeFi landscape.
• As demand for innovative financial instruments continues to rise, Cardano will be ready to lead the charge.

This project acts as a step forward in the realization of the true potential of Cardano DeFi. It fosters innovation, attracts new users and liquidity, and positions Cardano for long-term success. The investment cost translates to a strategic advantage, making this project a compelling value proposition for the entire Cardano ecosystem.