Detailed Plan

Dropnir: Pool-Powered CNFT Markets

Detailed Plan for Catalyst F7

Problems with Growth for SPOs

• There are not enough levers available to stake pool operators to differentiate themselves between other pools. Other than social media activity there is little room to provide a Unique Service Proposition and grow organically beyond a certain scale.
• Cardano NFT artists suffer from a loyalty problem; would-be NFT artists see a market saturated with flipping and are turned off by the lack of serious consideration and holding of digital art.
• Both SPOs and NFT projects meet a technology barrier when it comes to gamifying engagement with utility such as follow-up drops and dynamic website content for token holders.

Identified Community Needs

• SPOs should be able to sell assets that enrich their pool while providing unique ways to engage with their audience.
• NFT artists should be paid royalties in perpetuity without worrying about a specific token metadata format or marketplace adoption of a specific CIP.
• All artists, CNFT and otherwise, deserve a chance to build a lucrative future for themselves on Cardano with a marketplace platform framed to incentivize long-term name loyalty.

What We Are Building

Dropnir is a constellation of Cardano smart contract instances that marry CNFT commerce with stake pools as "Art Pools''. These smart contracts leverage ADA stake pool nodes to provide conditional rewards to the wallets of token holders. These rewards can be "programmatic", meaning that rewards can be sequentially ordered to make a CNFT project "evolve" in your wallet.

Reward streams to sold NFTs also partially benefit the artist, as "perpetual royalties" that do not need a particular meta schema or marketplace adoption in order to work. Collecting multiple pieces from the same artist carries a bonus effect in reward stream payout logic, incentivizing loyalty to a specific artist and encouraging more serious consideration in support of artists.

To make holding more valuable the longer you appreciate the art, Dropnir uses a portion of its reward stream to mint fungible tokens at a forced, static cost before sending them along to wallets of drip token holders. Like drip NFTs, the value of these FTs is a factor in the size of the epoch reward for that wallet, thereby creating a multiplicative bonus factor to holding long-term.

What Can You Do With Dropnir?

• Perpetually reward pool stakers with art
• Design a reward sequence that makes a CNFT "evolve"
• Use tokens as proof of stake, enabling website interactivity exclusive to pool customers
• As an SPO, sell tokens that represent pool stake, but with liquidity
• Incentivize loyalty to a particular artist

Market Adoption

The Dropnir system works with any stake pool without requiring significant changes to its configuration. Dropnir works with any CNFT regardless of metadata schema, mapping policy IDs and token asset IDs to rewards logic.

Product Impacts

• A support system between a stake pool and one or more artists grows both audiences faster
• Pool customers have new reasons to reinvest and remain in a pool
• Pool assets are made liquid with dNFTs; the token holder is not the pool customer, the token itself is the pool customer and rewards follow the token across wallets and marketplaces.

Unique Strengths

• HiveMQ state machine side chain can hold a vast amount of information and rewards logic as an enterprise data flow management system.
• No other known project provides the same level of potential incentivization opportunities for SPOs

User Acquisition

• SPOs as business users of Dropnir pay for subscription access to Dropnir's UI.
• Art buyers experience no barrier to entry or use.

Additional Plans

In a second phase of Dropnir, the Echelons concept comes into play. These NFT reward streams become configurable by the holder to "subscribe" to an artist. Partial ADA is held back until the asking price is met for an existing or future item. In other words, the automatic buying of art and automatic, name-your-price selling for artists. Existing SPOs can use their own pools when onboarding, and a "pool kickstarter" mode will allow artists to sell enough art to fund their own pool instance.

Terminology

Art Pool: Any existing stake pool mapped to a set of sellable CNFTs. Sales empower the pool which in turn perpetually rewards token holders.

dNFT: Drip NFT. Any CNFT, existing or unminted, that is associated with an art pool by way of the Dropnir side-chain (HiveMQ). Drip NFTs are indirect benefactors of a stake pool, providing periodic rewards to their host wallets in the form of ADA, "passthrough art", and fungible tokens that act as force multipliers.

Primary Components

Cardano Node Server

• A participating stake pool installs Dropnir node scripts that help keep track of programmatic rewards logic for CNFT holders.

• SPOs configure a slush fund for rewards streams through a web interface that authenticates with their node to edit campaigns.

Initial Stake Pool

• Odin Pool is needed as an initial first art pool, open to self-onboarding by CNFT artists

• Each artist determines the price and initial "strength" of the drip their art has, by choosing a percentage of sales to divert to the pool for this purpose. It can be from 0% - 100% minus fees.

HiveMQ Cluster

• The Dropnir state machine cluster, a "map of meaning" between NFT activity tied to stake pools, as well as customized rewards logic for perpetually powering each drip NFT post-sale.

Pool Smart Contract (Slushie)

• A "manager" smart contract instance whose address is beneficiary to a stake pool.

• Using a technique described by Lars Brunes to use a smart contract that requires as input another smart contract, one that developers expect to be able to update in a similar way to how system versioning is handled with traditional software today.

• The state machine updates Slushie contracts with new rewards logic to current token holders, and rewards are triggered by stake pool epoch

Minting Service Node

• An API-only minting service that is not limited to Dropnir's need to dynamically generate and mint native tokens.

Dropnir is configured purposefully as a series of connected microservices rather than a single system. The advantage is in flexibility in features, ability to scale, and forming functional relationships with other web3 businesses. For more on how it works, please see the attachment Overview Of Features PDF.

Revenue Models

The core of Dropnir as a service is its side-chain, a state machine cluster running on HiveMQ that maps meaning between tokens and pools, generating the smart contract instances that feed NFT reward streams from pool rewards. Costs from hosting the Dropnir user interface, HiveMQ state machine cluster, team salaries and all other operating costs are covered from business user and sale fees on a calculated cost-based model.

Upon the original sale of a drip NFT from an art pool, a portion of the sale is deposited on behalf of a smart contract address instance nicknamed Slushie, which uses the stake reward deposit as a trigger to dispense rewards to wallets of current holders.

SPOs must hold business login tokens to use the service. While the tokens never move, their utility can expire within Dropnir's service database and would need to be renewed with ADA. A small percentage of the funds sent to the SPO's Slushie contract instance can be appropriated for profit to ensure those contracts and associated microservices continue to execute.

We do not take sales fees for Odin Gallery, the initial CNFT marketplace for drip tokens. The drip reward system does not rely on any particular metadata configuration and therefore is backwards compatible with any native token, and any stake pool. Our fees will be reverse-calculated based on operating costs to stay as low as possible, and stake pool operators are in charge of reward logic and financial configurations for their own art pools.

Perpetual Royalties

dNFTs (drip NFTs) are any native token in Dropnir's system sold through Dropnir in an art pool, configured to receive a share of rewards from pool funds sent to a smart contract beneficiary (Slushie). Artists are paid a portion of each existing reward stream pertaining to a CNFT they sold. Not only is there no CIP metadata format requirement, drip NFTs do not require a subsequent sale to trigger a royalty; these royalties have no reliance on secondary market activity.

Cost Need Breakdown

Thanks to voter feedback, I've modified the requested amount. I plan to produce a smaller first deliverable in a shorter period and therefore I'll require less initial funding. I am moving to Wyoming as well; there is no need for the project to suffer the high living costs of one particular area. The below figures are for a six-month timeline for first functional deliverable.

Plutus Developer (myself)

I will personally deliver the tasks requiring Cardano node scripting as well as Plutus / Haskell.

• Rent - $3,600

• Groceries - $2,800

• Energy drink addiction: $720 (2 @ $3, x 30 x 6)

• Misc. utilities: $1,080

• – Subtotal: $8,200

Architecture Costs

• Smart Contract SPO Bank $5,000

• Server Architecture Budget $4,680*

• – GCP Cost Estimate: https://cloud.google.com/products/calculator/#id=04c3f7de-630d-41cc-be7d-9649fa4f829f

• Cloud Architect Contractor: $11,000 **

Soft Costs

• Budget for 3rd Party Licenses: $1,500

• Budget for Launch Advertising: $5,000

Total requested: $34,680 USD for the first deliverable product within six months of funding.

* GCP Account: I plan to use free levels of service for the first two months, equating to $1,170 per month times four.

** GCP Contractor: For assistance with non-Cardano related cloud architecture work. This budget allots for a GCP Architect contractor with 4-6 years experience to work for 20 full days at $550 per day. The contractor will not be needed for the full duration of development.

3rd Party Licenses: SAAS vendors for business such as website plugins, Asana Pro, Pipedrive CRM and backup services.

Any and all funds that may remain after executing on expenses listed above will go into the Google Cloud Platform budget.

Milestone Deliverables

First Month

Naptcha v0: the side-chain hive mind reacting to payto addresses

• Recursive royalties campaigns, CLI interface

• CNFT-to-Pool onboarding UI begins

• Live Prototype: Tokenized website access

Q1

• Live Prototype: Token drips (snapshotting, reward stream)

• Art pool smart contract beta (Slushie BasicBiscuit)

• SPO partner established as the second Art Pool

• Self onboarding for artists

• Migrate from Node.JS to HiveMQ

• 1,000 active merchant users

• 3,000 unique active consumers

Q2

• Programmatic reward streams (Slushie v1)

• CNFT marketplace; shop for art <u>and</u> utility

• Self onboarding for SPOs

• 5,000 active merchant users

• 100 active SPO users

• 10,000 unique active consumers

For more information on deliverable timelines, see this gantt timeline chart, a live link to our management system for this project: https://app.instagantt.com/shared/s/1201403572123121/latest

Risk Factors

Several challenges face our team in this project, namely that there is only one person on the team! While I have been working for and brainstorming with many developers and subject-matter experts in Cardano, there are a few positions I will need to contract and consult with once funded. See the Dropnir jobs page, <https://dropnir.io/opportunities/> where I list all needs for all open projects.

A technical risk to this project is that several aspects of it, while vetted by professionals, have never been tried before. It may be argued that aspects of Dropnir make it a security; while we don't believe so, we are prepared to consult with professionals in that space to earn cooperation with the SEC if needed. The tokens themselves are the pool customers, and since the exact value and combination of goods per epoch can never be calculated in advance, it should not be defined as a security.

Proposal Team

Abe Ellis Hazbun: Plutus student, project manager, and e-commerce analytics professional.

Abe creates operational business strategies from competitive and internal analyses of e-commerce brands. As a Plutus Pioneer student he devotes his time to learning smart contracts for use in B2B services to grow utility and tooling on Cardano.

Relevant Experience: In over 14 years of experience in competitive consumer industries, Abe was often at the forefront of business analysis, strategy development and execution, managing large-scale technical projects with teams of up to thirty-five people. Abe is bringing a mix of Cardano blockchain experience and digital marketing background to the project.

Abe is in the Plutus Pioneer Program to lead Haskell development for Cardano projects, while managing execution for a small team of developers to deliver milestones on time with Asana. He is self taught in Python, Haskell and Javascript.

General: Honorably discharged from US Army active duty as a communications specialist (25U) within the top tenth percentile in learning aptitude (ASVAB) scores. Google Analytics certified, Google Adwords certified.