DEX using Protocol Owned Liquidity!

[IMPACT] Please describe your proposed solution.

What is the problem??

There are 2 main problems that we will try to solve with our project.

Problem #1

Over the past 2 years we have witnessed many different DEFI projects launch. While many people have benefited from these projects there have been instances of projects failing due to actions from the same people who benefitted from the project's token. A strategy of "Mercenary liquidity" has developed within the DEFI space. With this strategy entities or individuals provide liquidity to a project, mine the tokens, dump the tokens and finally pull the liquidity from the protocol. This behavior has damaging effects to long term token holders and to the project itself. This behavior crashes the price of a project's token for token holders and it also removes liquidity, which is required for a healthy DEFI Dapp to function.

Problem #2

The second problem is the blatant token creation/printing among the cryptocurrency industry. Most projects that create tokens use pure speculation to determine the value of a token. It has allowed the crypto industry to create projects that essentially just print fake money and value.

Solutions

Our main proposition comes from trying to make a self sufficient decentralized business. We intend to make the DEX/DAO self-sufficient through a mechanism called protocol owned liquidity and by backing the project's token called "SWEET" with digital assets such as ADA, LP tokens and stable coins in the DAO's treasury. To accomplish this we will be implementing 2 strategies. The first strategy is called PROPORTIONAL FEE SHARING and the second strategy is called BONDING.

PROPORTIONAL FEE SHARING

Token holders will be able to collect a portion of all collected service fees paid by traders. The portion of service fees that can be collected by individuals is dependant and proportional to how many of the project's "SWEET" token a holder owns and has staked, we call this system "Proportional Fee Sharing". To receive "SWEET" tokens users can provide liquidity to the Dex and participate in "liquidity mining program".

By implementing our "Proportional Fee Sharing" system it helps to ensure that this project can become a self-sufficient decentralized business. We do this by allowing the protocol/DAO to own and mine its own tokens. The DAO will start off by owning 25% off all SWEET tokens. As mentioned earlier users can collect service fees based on how many "SWEET "tokens they own, by allowing the DAO to own its own tokens it will be able to collect a significant portion of the service fees collected. These fees collected will be funneled to liquidity pools and used as protocol owned liquidity, which allows the DAO to mine more of its own token, due to the "liquidity mining program". By implementing these systems it creates a positive flywheel that will eventually allow the SweetDAO to be a self-sufficient decentralized business and not depend on outside liquidity to function, unlike most other decentralized exchanges currently do.

BONDING

Bonding is one of SweetDAO's revenue sources and one of the accumulation strategies that will be implemented for the protocols "Sweet treasury". It will help SweetDAO to acquire its own liquidity such as ADA, LP tokens and stable coins in the DAO's treasury and ultimately back each "Sweet" token. To accomplish this the protocol will periodically sell a limited amount of SWEET tokens at a market discount in exchange for these assets.

By implementing these 2 strategies it will allow our project to remove the long term dependance on outside liquidity and also help to back each "SWEET" token that is in circulation. We want to be an example that a Cardano projects don't need to print or create tokens as a business model. That we can avoid pump and dump behaviors associated with crypto and ultimately that we can create real decentralized self sufficient businesses. We wont be starting the liquidity mining program until there is ADA to back the tokens that will be available for circulation.

Our project will target the general Cardano community. We want to help build the cardano ecosystem with new innovative models that haven't been done before. Our stake holders are the people that want to be part of the SweetDAO community as well as the larger Cardano community. We believe that the general cardano community wants projects and their token's to have real intrinsic value which is why we want to back each "SWEET" token with ADA and other assets.

Our project will be implemented by creating a decentralized exchange that uses the Automated Market Maker model. We will first start off by creating a DAO and then start the development of the DEX.

Once development is done by the end we should have a Cardano Decentralized App that implements the following:

-Decentralized Autonomous Organization

-Automated Market Maker Decentralized exchange

-A "Proportional Fee Sharing" staking mechanism.

-Automated Bonding mechanism through a smart contract, that is triggered based on the ratio of circulating "Sweet" tokens to how many new tokens can still be mined, while still being "backed" by the DAO's treasury digital assets and protocol owned liquidity.

We believe that this project will benefit our projects community and the Cardano community want to help increase the number of decentralized apps that are available on Cardano, which will help to increase the adoption of the Cardano Network. We also think that this will also benefit the general crypto currency industry. We want to be an example that a DEFI project can have a real decentralized business model, have a token that is backed by "real" digital assets such ADA and stable coins.

The function and the value of the project's token will also be very different than what all the other DEXs on Cardano are trying to achieve. Unlike other tokens which are used mainly for speculation, we hope the value of the project's “SWEET” token comes from the utility and economic value collected by the protocol and its community of users.

The value of the token will come from 3 different token characteristics.

1) Token backed by assets 2) Service fee collection 3) Governance token

Token holders will be able to collect a portion of all collected service fees paid by traders. The amount that can be collected by SWEET token holders is proportional to the number of SWEET tokens they possess and have staked.

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

We believe that this project will benefit the Cardano community by inncreasing the number of DAOs and decentralized apps that are available on Cardano. Our proposed solution will address this challenge by helping to build the Cardano ecosystem with new innovative DEFI models and DAOs that haven't been done before. We think this will help to increase the adoption of the Cardano Network and bring more users and ADA holders to the ecosystem. Furthermore, our unique DEFI app will help to increase the total value locked in terms of ADA and also stable coins that we use in the Cardano Network.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

All projects face some risks when they are trying to execute on a plan. There are a few risks that decrease the chance that we can deliver on our vision.

Risk #1

We run out of money. Currently 2 team members have quit their full time jobs to pursue this idea full time. Due to life responsibilities and circumstances other team members are required to still have their full time jobs. This leaves 2 developer teams members to make sure we can deliver on time.

However the 2 team members have quit their jobs right before the current crypto market down turn and NFT market collapse. If we can't find funding, we will be forced to go back to finding full time jobs, which drastically delays our ability to deliver on this project.

Potential Solution

Our initial plan had depended on our ability to sell an NFT collection to raise funds to use for marketing and expenses for the team. With the new crypto downturn we might not be able to sell enough of our NFTs to pay for everything including living expenses for certain team members that are working on this project full time. We hope that we are able to raise money from project catalyst as well as the NFT sales but funding is not guaranteed.

RISK #2

-Unsuccessful ISPO we won't be able to have the required ADA to back "SWEET" tokens and kickstart the protocol owned liquidity.

A large portion of the funding for this project is going to be dedicated towards marketing an "Initial Stake Pool Offering" or ISPO for short. The funds raised during the ISPO are supposed to be used to kickstart the backing of the "SWEET" tokens and the "protocol owned liquidity".

Solution

To try and mitigate these risks we are actively looking for ways to fund the project and team. As mentioned before we have created an NFT collection that might help increase our projects funding so we can successfully market the project's IPSO and pay for living expenses for full time team members.

If we can't sell enough NFTs or successfully receive project catalyst funding. Our last resort is to try and have an Initial Dex Offering on one of the multiple launchpads that are available on Cardano. But doing so will ruin the project's token economics of backing circulating "SWEET" tokens with ADA. People that participate usually expect a low price per token, which would cause there to be more "SWEET" tokens in circulation than ADA to back them. Also since the team needs the ADA for expenses it ruins the backing even more.

It would be much easier to just print tokens and sell tokens but that's what we are trying to avoid, it goes against our project's philosophy.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

NFT LAUNCH

Estimated Timeline: 1 Month

August-September

Core Tasks:

Launch and market a 2D NFT Collection.
Create and Airdrop a free 3D version of the NFT collection to holders.
Create an interactive eye catching landing page with all the information about the NFT collection, its functionality and relevant information that community buyers should now know about.
Create a Trailer to market NFT and SweetDAO project
Create Partnerships with other projects

Team Members: Martin Valencia, Seva, Alex Sporno, Timothy Vang

DAO DEVELOPMENT

Estimated Timeline: 1 Month

September-October

Core Tasks:

Create a Decentralized Autonomous Organization. Design and create a user friendly portal that will allow community members to create proposals and be able to vote on those suggested proposals.
Research potential jurisdictions where we can register SweetDAO.
Consult lawyers

Team Members: Martin Valencia, Seva Rybakov, Sebastianne Mekes

DEX DEVELOPMENT AND IPSO Launch

Estimated Timeline: 6 Months

October-March

Core Tasks:

Design mobile first user-friendly decentralized exchange interface. Ensure that the app works well on mobile phones.
Launch and Market and ISPO to grow a treasury that will back “SWEET” tokens with ADA and stable coins.
Create a decentralized exchange platform. Implement an automated market maker smart contract.
Development of the "Proportional Fee Sharing" staking mechanism
Development of an automated bonding mechanism.
Audit smart contracts
Implement audit feedback.
ReAudit Smart contracts
Deploy Smart contracts to test net
Fix any bugs found during test net testing
Deploy to the main net
Create decentralized exchange tutorials and documentation in different languages for users

Team Members: Martin Valencia, Seva Rybakov, Sebastianne Mekes, Micheal Santo Domingo.

PROJECT MARKETING

Estimated Timeline: Continuous Execution

Core Tasks:

Create marketing material
Community outreach, interviews, podcasts, twitter spaces.
Community development and growth.

Team Members: Martin Valencia, Alex Sporno, Timothy Vang

[FEASIBILITY] Please provide a detailed budget breakdown.

Detailed Budget Breakdown

NFT LAUNCH

Core Tasks:

Create NFT 2D Collection.
Hire Artist $5000.00
Create and Airdrop a free 3D version of the NFT collection to holders.
Hire 3D artist $6000.00
Create an interactive eye catching landing page with all the information about the NFT collection, its functionality and relevant information that community buyers should now know about.
Create a trailer to market NFT and SweetDAO project
Hire 3D rigger and animator - $5000.00
Create Partnerships with other projects

Total:$16,000.00

DAO DEVELOPMENT

Core Tasks:

Create a Decentralized Autonomous Organization. Design and create a user friendly portal that will allow community members to create proposals and be able to vote on those suggested proposals.
Developer and designer salary - $20,000.00
Research potential jurisdictions where we can register SweetDAO.
Consult lawyers and register DAO
Consult with lawyers in crypto friendly jurisdictions - $10,000.00

Total: $30,000.00

DEX DEVELOPMENT AND IPSO Launch

Core Tasks:

Design mobile first user-friendly decentralized exchange interface. Ensure that the app works well on mobile phones.
- Designer and developer salary $10,000.00
Launch and Market and ISPO to grow a treasury that will back “SWEET” tokens with ADA and stable coins.
Create Marketing Material, promotional spending, take part in crypto and Cardano conferences- $30,000.00
Create a decentralized exchange platform. Implement an automated market maker smart contract.
Developer Salary - $20,000.00
Development of the "Proportional Fee Sharing" staking mechanism
Developer Salary - $20,000
Development of an automated bonding mechanism.
Developer Salary - $20,000
Audit smart contracts
3rd party smart contract audit $30,000.00
Implement audit feedback.
Re-audit Smart contracts
3rd party reaudit after fixes $10,000.00
Deploy Smart contracts to test net
Fix any bugs found during test net testing
Deploy to the main net
Create decentralized exchange tutorials and documentation in different languages for users
Hire translators for documentation and user interface translations - $3,000.00

Total: $143,000.00

PROJECT MARKETING

Estimated Timeline: Continuous Execution

Core Tasks:

Create marketing material
Hire in house graphic designer for content marketing - $10,000.00
Community outreach, interviews, podcasts, twitter spaces.
Community development and growth.
Ad spend - $10,000.00

Total: $20,000.00

Developer Salaries are based on a greatly reduced Software developer salary for 4 individuals residing in Australia and the Netherlands.

Designer salary is based on a freelance estimate for a well designed user interface for the DAO and for the decentralized exchange.

Project’s Grand Total: $209,000.00

[FEASIBILITY] Please provide details of the people who will work on the project.

Team Feasibility

Name: Martin Valencia

Linkedin: <https://www.linkedin.com/in/martin-valencia-9b084b20b>

Twitter: https://twitter.com/ronaldmvalencia

Experience: Martin Valencia has worked for various startups as a full stack software developer.

Project contribution: Martin will lead and manage the development of the SweetDAO project. Will help to execute on the vision by contributing to the development of the various smart contracts required for the DAO and decentralized exchange to function.

Name: Sebastiaan Mekes

Linkedin: <https://www.linkedin.com/in/sebastiaan-m>

Experience: Sebastiaan Mekes is a software developer with several years of experience. He has worked for various startups over the course of his career and currently works

Project contribution: Sebastiaan will help to design and code a mobile first, front end user experience.

Name: Seva Rybakov

Linkedin: https://www.linkedin.com/in/seva-rybakov-200410111

Experience: Seva Rybakov has a passion for startups and has several years of experience as a full stack software developer.

Project contribution: Seva will help to develop the platform. Will assist in creating the code for the smart contract functionality of the DAO and decentralized exchange platform.

Name: Micheal Santo Domingo

Linkedin: https://www.linkedin.com/in/michael-sd

Experience: Micheal has several years of experience as a full stack software developer.

Project contribution: Micheal will help to develop the platform. Will assist in creating the code for the smart contract functionality of the DAO and decentralized exchange platform.

Name: Alex Sporno

twitter: https://twitter.com/SpornoYT

Experience: Has a Bachelor of business technology management. Alex successfully launched and grew a gaming youtube channel and community to over 15,000 subscribers.

Project contribution: Alex will help to develop, promote and grow the SweetDAO community Alex is an integral team member that will help to execute marketing campaigns on twitter and other relevant social media channels.

Name: Timothy Vang

twitter: <https://twitter.com/ThHddnOrdr>

Experience: Tim has successfully launched and grown an NFT community around the HiddenOrder brand. Tim is an active Cardano community member who has organized multiple live Cardano events to help grow the Cardano community. Most recently he held community event for Cardano Japan

Project contribution: Tim will help to develop, promote and grow the SweetDAO community. Tim will help to execute marketing campaigns on twitter and other relevant social media channels. He will help to promote the SweetDAO project in future Cardano events that he will be organizing.

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

We hope we don't need to return for further funding. Our hope is that with the funding provided by Project catalyst that we are able to create and effectively market the project and a very successful ISPO. Once the tokens are backed we believe we can have a long term viable business that doesn't require any further outside funding.

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

To measure our progress of the SweetDAO project we will be using the number of git commits over time as a measure of the progress towards building up the project’s code base.

The project’s success will also be determined by how many people are staking during our initial stake pool offering. The more people that stake during our ISPO the greater chance for the success of the project since the ADA raised will go towards backing the projects “SWEET” token. So we will also be sharing the stats on how well the initial stake pool offering is going over time.

[AUDITABILITY] What does success for this project look like?

We have big expectations for this project. There are multiple things that need to happen for us to consider this project a success. The easiest thing for us to deliver is a working decentralized exchange, the true test for this project is to successfully create a self-sufficient DEFI business, that owns its own liquidity and backs each of the project’s tokens as a result. For this project to be considered a success, each “SWEET” token in circulation is required to be backed using ADA, a stable coin such as USDC or Liquidity Pool tokens that pair with genuine assets such as ADA/USDC liquidity pool tokens. To ensure we can accomplish this we hope we are able to have a very successful initial stake pool offering. A successful ISPO will allow us to kickstart the protocol owned liquidity and backing of the first tokens for the Cardano community. In the long term we hope that there is enough trading activity on the DEX to allow the DAO to collect revenue that will be used to increase protocol owned liquidity and also back each token.

We want to be an example for other cryptocurrency projects out there that there is no need to print tokens out of thin air and that they can rely on real revenue streams to back tokens.

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

This is an entirely new proposal and new type of decentralised business model we are proposing.

bookmarked!