Please describe your proposed solution
What is MAYZ?
We are a development team from Latam, building on Cardano for the last three years. We run [MAYZ] Stake Pool. MAYZ Protocol is a decentralized protocol that allows the creation and management of decentralized and trustless investment funds. Index Funds smart contract has been open sourced, and TxPipe reviewed the code. The protocol is live on Testnet and we expect to be audited and go to Mainnet this year.
Indexes on Cardano explained by Charles Hoskinson
https://www.youtube.com/watch?v=Iu3eiX7lJyA&t=814sAs part of the development team, we want to research of this new functionality in Cardano that will be Open Source. A trustless Over-the-Counter (OTC) smart contract designed to incentivize medium and large transactions on Cardano.
Problem
Although Cardano's deterministic nature allows users to set slippage tolerance levels, the lack of liquidity for high-volume trades can still pose challenges and discourage users from transacting in large volumes.
The absence of sufficient liquidity for large transactions on Cardano's DEXs can result in higher slippage tolerance requirements, discouraging users from executing sizeable trades. Our solution aims to address this issue by creating a new avenue for executing large transactions without directly relying on DEX liquidity but on an Smart Contract that acts as an OTC market.
Ethereum and Solana Hybrid DeFi experiments
Both in Solana and Ethereum there are Hyrid DeFi experiment. ERC-404 Token Standard “is an experimental, mixed ERC-20 / ERC-721 implementation with native liquidity and fractionalization. While these two standards are not designed to be mixed, this implementation strives to do so in as robust a manner as possible while minimizing tradeoffs.” According to Pandora Labs <https://github.com/Pandora-Labs-Org/erc404>
This idea was created in Solana with BozoHybrid experiment
https://youtu.be/kInBgqe0iEs?si=_-2C46FjFXBpAuhY&t=247Here you can find how it works
<https://medium.com/bozohybrid-official/hybrid-defi-how-solana-can-flip-ethereum-b28f017a2dd1>
In the case of Ethereum the ERC404 faced the limitations of high transaction fees that obtuse the flexibility in NFT to Fungible Token transactions and the other way around, product of high costs.
In the case of Solana, the constant network outages put a limit to the explosion of memecoins and the volume of transactions that occurred last February.
We believe that in Cardano there is an ecosystem in which hybrid DeFi can really grow, and at the same time providing solutions to the lack of liquidity.
Approach for Cardano
By locking fungible assets into NFTs, we create a unique, tradable representation of the original asset that can be listed on secondary marketplaces. This alternative approach to trading large volumes bypasses the need for deep liquidity on DEXs and offers users a more accessible way to transact without facing significant slippage. Our solution benefits Cardano users seeking to execute large transactions without directly relying on DEX liquidity. It also fosters engagement among NFT enthusiasts and encourages participation in the broader Cardano ecosystem.
OTC on Cardano - how would it work
A haskell smart contract on the Cardano blockchain that will allow for a certain amount of fungible tokens to be locked in the smart contract, the smart contract will release an NFT corresponding to the tokens locked.
The smart contract will securely store the tokens and maintain a datum that records the details of the minted NFT and its associated tokens. This setup enables not only the issuance of an NFT in exchange for tokens but also permits the reverse transaction, allowing users to trade back the NFT to retrieve the locked tokens.
This NFT can be sold on marketplaces such as jpg.store where the seller can set a price in ADA.
It benefits the seller, because it can sell at a set market price without decreasing the price in ADA with the transaction.
It benefits the buyer, because it can buy large amounts of ADA from a token without increasing the price, therefore without overpaying.
It benefits the project and those who keep holding the token, because the price does not drop dramatically on Dex pool. And it reduces the need to provide large incentives to liquidity providers (which in the long run will generate more token issuance and selling pressure).
More about the problem we want to solve
In these screenshots we show what happens from the point of view of a buyer and a seller when wanting to buy or sell the equivalent of 100,000 USD one of the most liquid projects in Cardano as SNEK and another consolidated project such as NMKR but with a not so high liquidity.
For projects that are just starting out it is practically impossible to get liquidity, and it is generally achieved at the cost of paying a lot of interest to liquidity providers, generating long-term problems for the price of the token.
This does not look good for whales or large investors from other ecosystems who want to come and invest in Cardano.
If someone would buy 100,000 usd of SNEK it will have a 3.53% of price impact.
If someone would like to buy 100,000 usd of NKMR it would have a 22.64% of price impact
If some one sells 100,000 usd of NMKR price will dump 22.65%
If you sell 100,000 of SNEK price will dump 3.94%
Demonstrating Impact: We will measure our solution's impact by tracking the number of tokenized assets, the volume of trades executed through our smart contract, and user feedback on the ease and accessibility of executing large transactions using our OTC approach.
This innovative approach to addressing the liquidity problem for high-volume trades on Cardano is essential for enhancing the trading experience, promoting user confidence, and driving adoption of the Cardano blockchain platform.