Detailed Plan
This proposal aims to address interoperability with other blockchains. It would open up flows of tokens between Cardano and other blockchains, thus making Cardano more attractive for DeFi projects both inside and outside Cardano. A rough estimate of opportunity cost of not having such interoperability can be the ~$700 million TVL of Wormhole bridge [1] for Solana (which is comparable to Cardano in market cap).
Cosmos is a particularly interesting target ecosystem, as it is designed as an interoperability hub for blockchains. In addition to being a blockchain itself, Cosmos also provides an SDK for quick development of blockchains, which was used to develop many successful projects: Binance Smart Chain, Terra, THORChain, Crypto.com — to name a few. Cosmos enables an ecosystem worth ~$170 billion [4].
A bridge between Cardano and Cosmos can become a powerful addition to both Cardano and Cosmos ecosystems, locking value on both "sides" of the bridge.
Product
The Cardano-Cosmos IBC Bridge will be a piece of blockchain infrastructure that enables cross-chain DeFi applications. The on-chain part of the IBC protocol will be implemented as Plutus smart-contracts. The off-chain part will be a network of relayer nodes that will securely relay transactions between Cardano and Cosmos SDK-based blockchains.
The primary users of the Cardano-Cosmos IBC bridge will be dApps on Cardano and Cosmos. For example, a DEX on Cardano will be able to swap assets from both Cardano (like ADA or MELD) and chains in the Cosmos ecosystem (like UST and LUNA, an algorithmic stablecoin and its backing coin, on Terra blockchain). It will make possible to list Cardano native tokens on exchanges in Cosmos (like Osmosis) and vice versa.
To encourage participation, we will issue the utility token for the relayer network securing the bridge. The token will be used to pay the "bridge toll" for relaying IBC traffic and will be distributed as rewards to node operators and delegators.
Components
Cardano-Cosmos IBC bridge will consist of two major parts:
- On-chain: Plutus implementation of IBC core specs [5],
- Off-chain: network of nodes running IBC relayer software [6] capable of talking to both Cardano and Cosmos Hub (and other Cosmos SDK based blockchains).
As the primary users of our product are going to be dApps, we will also need a developer and operator portal for API documentation, integration guides, access to testnet, operating manuals, etc.
All of the above will be developed as open source software.
Project Roadmap
3 months
Key results:
- Initial implementation of Plutus smart-contracts for IBC core specs.
- Initial implementation of the relayer node has started.
- Funding secured for the next milestone.
Skills required:
- Smart-contract development: Haskell, Plutus.
- Off-chain backend development: Rust, Go, Haskell.
- Business development.
6 months
Key results:
- Both on-chain and off-chain components are deployable and have been rolled out at least once.
- The bridge is functional on the Cardano testnet.
- API docs and testnet dApp integration guide are available on the developer portal.
- Funding secured for the next milestone.
- Token ISPO started.
Skills required:
- Smart-contract development: Haskell, Plutus.
- Off-chain backend development: Rust, Go, Haskell.
- Product management: DeFi products.
- Community management, social media.
- Technical writing.
- Business development.
12 months
Key results:
- All software components are regularly deployed by automated release process.
- Project website contains the necessary steps to get started for dApp developers, relayer node operators, end users.
- Token ISPO has finished.
- The Cardano-Cosmos IBC bridge is fully operational and relays traffic between Cardano and Cosmos-SDK blockchains.
Skills required:
- Smart-contract development: Haskell, Plutus.
- Off-chain backend development: Rust, Go, Haskell.
- Product management: DeFi products.
- Community management, social media.
- Technical writing.
- Business development.
Budget
The funding requested will help fund the project development towards the first (3 months) milestone.
Contributions to the success of the challenge
If this proposal gets funded, it will help start at least 1 of the target 4 new teams deploying DeFi dApps on Cardano in 2022: the project team itself is such a new team. Plus, as a cross-chain DeFi infrastructure provider, we will attract DeFi developers from the Cosmos ecosystem.
This project will also (directly or indirectly) contribute to the following of the challenge metrics:
- How many DeFi dapps were launched on Cardano mainnet within 3, 6 and 12 months after funding.
- How much Total Value Locked (TVL) are the funded DeFi dapps able to capture 3, 6 and 12 months after launch.
- Number of users participating in testnets.
- Number of token holders/unique wallet(when dapp has a token).
- Distribution of supply between the team and the community.
- Numbers of listed pairs (in case of DEXs).
- Number of listed assets (cases of loan+lending dapps, derivatives and synthetic assets).
Links:
- Wormhole Network Stats. https://wormholebridge.com/#/stats
- Inter-Blockchain Communication Protocol. https://ibcprotocol.org
- Cosmos: The Internet of Blockchains. https://cosmos.network
- Cosmos Market Capitalization. <https://cosmos.network/ecosystem/tokens>
- IBC on GitHub. https://github.com/cosmos/ibc/tree/master/spec/core
- IBC relayers. https://ibcprotocol.org/relayers/