Please describe your proposed solution

The purpose of a cryptocurrency wallet is to control access to the user's funds, ensuring that only the rightful owner can spend them. In Cardano, addresses that hold cryptocurrency come in two flavors: public key addresses and script addresses.

To own cryptocurrency at a particular public key address means to know the corresponding private key that unlocks it. Script addresses allow for much more nuance: the ability to spend funds located at such addresses may be tied to some complex logic. For example, a user may set a spending limit or may allow to use the funds only in certain kinds of transactions.

Cardano has a very diverse wallet ecosystem. However, currently, all wallets only work with public key addresses. While it is very difficult to add complex validation logic in the form of regular Plutus smart contracts, it is possible to do it with zero knowledge smart contracts as they allow verifying almost arbitrary complex logic for a constant price in terms of ExUnits and network fees.

In this submission, we propose to develop a universal smart contract wallet backend that is CIP-30 compatible but also has some extra features (not possible with regular wallets). This backend, in the form of a library, can be used by any Cardano wallet to augment themselves with features of a smart wallet.

As a part of this proposal, we want to deliver the following features:

• zkLogin: use Web2 credentials to authorize transactions;
• Multi-user transactions: reduce your transaction fees by combining your transaction with those of other users;
• Babel fees and sponsored transactions: pay fees using tokens other than ADA, or don’t pay fees at all in sponsored transactions!

We have discussed this proposal with several Cardano wallets and received

positive feedback.

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

Implementing our solutions will have a significant positive impact on the Cardano community by enhancing user engagement, increasing adoption rates, and building a stronger and more resilient network:

1. Simplifying the interface and integrating Web2 functionalities into Web3 will make Cardano accessible to a non-technical audience. Cardano wallets will expand the user base beyond the traditional crypto-savvy community to include casual users, thereby increasing the network’s market penetration and influence.
2. By making transactions cheaper or even free (sponsored by wallets or dapps), Cardano can retain users who might otherwise be frustrated by the complexity of typical Web3 interactions. Retaining users is crucial for the long-term success and viability of the ecosystem.
3. Enhanced transaction fees payment features will make Cardano more attractive to users, leading to increased trust and investment in the ecosystem.

Overall, these solutions aim to create a more accessible, secure, and user-friendly environment within the Cardano community. By addressing fundamental challenges related to user experience and security, Cardano can position itself as a leading platform in the Web3 space, capable of attracting and retaining a broad and diverse user base. This would enhance its community's growth and solidify its reputation as a robust and user-centric blockchain.

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?

ZKFold is the company that works on L1 and L2 scaling for Cardano using zero-knowledge proofs. It aims to release the first version of zkFold Symbolic (the zero-knowledge smart contract language) in Q3 2024. The zkFold team consists of expert Haskell, Rust, and ZKP developers. The founder of zkFold, Vladimir Sinyakov, previously completed a Project Catalyst Fund 6 grant leading the ENCOINS team. ENCOINS is a DApp on Cardano that has been recently launched on the mainnet. Also, zkFold is consistently delivering Fund 11 proposals' milestones.

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

Milestone 1: Produce Smart Contract Wallet documentation

Milestone 2: Build feature prototypes as separate smart contracts

Milestone 3: Build CIP-30 Smart Contract Wallet prototype

Milestone 4: Implement the zkLogin feature for some specific Web2 credentials

Milestone 5: Integrate features into the wallet smart contract

Final Milestone: Complete the backend server

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

The zkFold team consists of expert Haskell, Rust, and ZKP developers. ZKFold's team members participated in the development of several successful projects on different blockchains, including Cardano, Polkadot, and Near. The zkFold team won the EMURGO BUILD Hackathon on the zero-knowledge track and took 3rd place in the Battle of the Builders at the Cardano Summit 2023 in Dubai. Also, all of zkFold's Fund 11 proposals have been accepted by the community.

Vladimir Sinyakov

Founder and CTO,

<https://www.linkedin.com/in/vladimir-sinyakov/>

Founder and protocol architect of ENCOINS. Ph.D. in Computational Mathematics. Prior experience includes five years of postdoc in applied mathematics (Control Theory), publishing in top journals in the field. Previously completed a Project Catalyst Fund 6 grant leading the ENCOINS team. ENCOINS is a DApp on Cardano that has been recently launched on the mainnet.

Stanislav Marycev

Co-founder, Business Development.

<https://www.linkedin.com/in/stanislav-marycev/>

Bachelor degree in Business Management. Cardano Blockchain Certified Associate (CBCA). PMP and agile professional with 12+ years of experience in worldwide IT and blockchain projects. Stanislav has experience in leading multicultural international teams (30+ countries) and working closely with top level stakeholders in finance.

Ilya Eriklintsev

ZKP researcher,

<https://www.linkedin.com/in/ilya-eriklintsev-3a296852/>

Techlead at vSelf, an SSI solution on NEAR blockchain. More than six years of experience in the blockchain industry. Former researcher in Computational Fluid Dynamics.

Eitan Chatav

Developer

PhD in mathematics, expert in advanced mathematics and physics; probability and statistics, algebra, real and complex analysis. 5+ years of experience with blockchain, NFT, Haskell.

Vladimir Morozov

Developer

B.Sc. in Applied Mathematics and Computer Science, PhD in Computational Biology. 6+ years of experience with Haskell and Python.

Other zkFold’s developers will contribute to this proposal on request.

Please provide a cost breakdown of the proposed work and resources

Smart Contract Wallet documentation and Project Management: 92,000 ADA

1 technical writer @ $3,000 per month for 5 months = $15,000 (~32,000 ADA)

1 software developer @ $3,500 per month for 5 months = $17,500 (~37,500 ADA)

1 project manager @ $2,100 per month for 5 months = $10,500 (~22,500 ADA)

Build feature prototypes as separate smart contracts: 179,000 ADA

4 software developers @ $3,000 per month for 6 months = $72,000 (~153,000 ADA)

1 software developer @ $3,000 per month for 4 months = $12,000 (~26,000 ADA)

Build CIP-30 Smart Contract Wallet prototype: 77,000 ADA

2 software developers @ $3,000 per month for 6 months = $36,000 (~77,000 ADA)

Implement zkLogin feature for some specific Web2 credentials: 89,000 ADA

2 software developers @ $3,000 per month for 6 months = $36,000 (~76,000 ADA)

1 ZKP researcher @ $3,000 per month for 2 months = $6,000 (~13,000 ADA)

Integrate features into the wallet smart contract: 38,000 ADA

2 software developers @ $3,000 per month for 3 months = $18,000 (~38,000 ADA)

Complete the backend server: 25,000 ADA

2 software developers @ $3,000 per month for 2 months = $12,000 (~25,000 ADA)

Total: $235,000 = ~ 500,000 ADA

No dependencies.

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

The project requires a deep understanding of Cardano smart contracts and blockchain backend infrastructure, as well as expertise in zero-knowledge cryptographic protocols. As we pay competitive salaries to our developers and researchers, we've arrived at the budget breakdown above. Ultimately, the project's cost is comparable to other Cardano projects of similar scale.