Please describe your proposed solution.

<u>Problem</u>

Many things can be said about the issues we have encountered as a community when it comes to scaling and smart contracts. as an ecosy can be said about When it comes to the DeFi ecosystem, stablecoins play a foundational role in every level. and lacks the crucial component of a native stablecoin. This can be stifling growth and thus becoming a barrier of entry.

<u>Solution</u>

Fluent is an interoperable stablecoin and settlement system connecting digital assets to core banking. It acts as a two-layer product suite for financial institutions, consisting primarily of an interbank and cross-chain settlement system and public stablecoin. Our goal is to provide an efficient bridge between the enterprise and the public layers.

In order to mint and burn our flagship stablecoin USD+ we have Federation Member Bank uses the Fluent Network (F-Net), a vertically integrated private interbank settlement system. F-Net acts as the bridge between core banking and the USD+ smart contracts on the public blockchain. Fluent’s private and public layers connect legacy banking to digital finance — enabling new revenue streams and product offerings for traditional institutions.

• No single custodian
• Through the Federation Member banks brooking the main fiat entry and exit point of USD+
• Enabled by banks
• As a condition of entry into the Fluent Federation, Federation Member Banks must guarantee a 1:1 exchange with US Dollars and USD+
• Provably sufficient reserves
• Instead of mere attestation or a delayed third party audit, Fluent uses real-time on-chain analysis and audits to prove that each Federation Member Bank can meet their fiat obligations to USD+ holders.
• Seamless vertical integration into core banking systems through the Fluent Protocol, thus succesfully removing friction for both banks and their customers while also new revenue opportunitites and investment products for everyone.

<u>Market</u>

We will me providing a new way for financial institutions to monetize their current custody and generate new AUM. In addition to new AUM and revenue streams, Fluent provides expanded access to consumers, including populations that commonly lack banking services.

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

<u>Fund9</u>

Challenge –> dApps, Products, and Integrations

The utility of stablecoins is found in their ability to represent fiat value while also adding the speed and security of blockchain. As we move forward with the Cardano community, we need to aim for growth, even more so inclusion across the industries.

Djed is the only stablecoin project with relevance in Cardano. Although showing promise signs, its still quite in its infancy, only recently starting to roll out in the mainnet, and thus wouldn't be fair to make any judgements. That being said, Djed is an algorithmic stablecoin, and in light of recent events it, I find it had to see a scenario where users would come running.

Fluent will help drive adoption and traction across the Cardano ecosystem by bringing investors and institutions in both the traditional and digital asset financial landscape with an opportunity to service an untapped market by providing a trusted, low-risk entry to crypto markets.

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

Risk management has been a priority and a focus in every step of development in the project. This initiative has given us the ability to provide a low risk profile into an industry poised with volatility. Nonetheless, we have identified several risks, albeit extreme, but nonetheless important:

<u>Risk 1: Regulation & Compliance: "How are we ahead of regulation"</u>

Fluent utilizes banking institutions, regulated corridors, for all minting and burning of USD+. All reserves are held and maintained by a federation of member banks. To ensure that the Fluent Federation has a system that adapts to new legal rulings, membership is restricted to only financial institutions (and reserves) within banks that have legal approval to hold USD. Fluent’s Enterprise Layer is responsible for regulatory compliance within the network. In addition, Fluent is built on bank-led protocols featuring frictionless integration with the core banking systems to meet the required banking standards and regulatory compliance.

<u>Risk 2: Depegging of the USD+ Stablecoin & handling Collateral Risk</u>

Fluent and USD+ operate in close relationship with the existing financial system, focusing on frictionless integration with the systems that maintain custody of stablecoin reserves. The protocol includes smart contract interfaces and generalized engines that can execute policies that protect the peg and the integrity of the system.

Only Federation Members can mint and redeem tokens, effectively working as “gateways,” or public distribution points. Once USD+ is issued, USD+ tokens are treated as digital U.S. dollars that can be traded, transacted and transferred 24/7 without friction.

Fluent uses an F-score to help maintain the quality of reserves – with separation of short and long-term reserves, as stipulated by guidelines established by all Federation Members. Reports on reserve levels and portfolio composition are made available to the public in real time via oracles. Banks that maintain quality reserves and act within Federation guidelines will gain a high F-score over time, reducing their cash requirements.

<u>Risk 5: Bank Run</u>

Fluent’s F-Score acts as the first line of defense – providing real time data of behavior and overall health of the federation. In the case of a bad actor the F-score will fall that will trigger a set of risk mitigation actions.

• The primary risk measure is part of Fluent by design – it is the federated custody across many actors reducing the single point of risk or attack.
• Freezing on a bank’s node (ability to mint and burn USD+).
• The Federation will go through legal means to seize the accounts.
• The DAO Treasury can act as a market actor putting fiat up as collateral to restore the peg.
• sFLNT will be auctioned to restore the peg.

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

Milestone (ETA)

Stage 1 -> Structural Planning

Our team will begin to organize a strategic and most efficient approach for integration

• 1-2 Months

Stage 2 ->Cross Chain Integration

Begin Cross chain bridge and mint USD from Core banking to Cardano

• Alpha launch on Cardano
• 3-4 Months

Please provide a detailed budget breakdown.

Total funding: $250,000

The main destination for funds will be utilized for the development of different components within the solution our product offers.

Budget allocations are prioritizing funds for the software factory in the different work streams that cover the stages of product deliverables: Alpha, Beta and MVP.

Additional funds are also routed to the supporting areas that guarantee the execution of required controls: Compliance, Finance, Legal.

These areas will be auditable.

Our Chief Compliance Officer will produce reports on a monthly basis that include technical updates, use of grant funding to date, and share any unexpected deviations*.*We will also provide real time monitoring of our total USD+ minted on Cardano via oracles.

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

<u>Bradley Allgood | Co-Founder & CEO</u>

As the driving force behind Fluent, Bradley brings over a decade of experience in product development, technical architecture, venture capital, blockchain business development, and strategic acquisitions. Co-Founder of the largest network of Special Economic Zones and SEZ professionals, Bradley has developed numerous enterprise blockchain, digital identity, settlement security, and tokenization of property using NFTs/ fungible tokens.

<u>Oliver Gale | Co-Founder & Director</u>

Inventor of the CBDC and founder of the privacy-focused Panther Protocol. With over 20 years of experience in finance, Oliver also founded BaseTwo, a multi-strategy investment firm focused on digital assets, and the Authentic Revolution accelerator program. He has revolutionized the world of decentralized finance.

<u>Jaime Plata | Co-Founder & CTO </u>

Entrepreneur, published author, researcher and strategist responsible for designing complex systems for the National Bank of Canada, ATB Financial, PEMEX, PDVSA, Liberty Mutual, the Costa Rican Stock Exchange and Paypal. Winner of the Google Financial Services Reimagined Challenge, Jaime also serves as strategic advisor to the Eastern Caribbean Central Bank and is a Hedera MVP.

<u>Claudia Zambrano | Chief Financial Officer</u>

Former Head of Financial Digital Transformation for Latin America and CFO for the Andean Region at Citi, with more than 20 years of experience in accounting and management. Having led business transformations in several key markets globally, Claudia brings a unique perspective to her role, with proficiencies in banking, financial planning and analysis, operational risk management, as well as balance sheet reconciliation in complex banking vehicles and structures.

<u>Michael Thompson | Chief Information Officer</u>

Michael has a decade of experience as a full-stack developer and tech lead. He has previously worked for NASA’s Jet Propulsion Laboratory to design and develop data science visualization and technology for the world’s largest Special Economic Zone network and investment dashboard.

<u>Greg Guedel, Ph.D | Chief Legal Officer</u>

Greg has extensive experience in developing banking frameworks and policies for sovereign entities, and has served as legal counsel for both governments and major businesses. Greg received the first Ph.D. ever awarded in the 100+ year history of the University of Washington’s Jackson School of International Studies and is a former officer in the U.S. Army Corps of Engineers and Judge Advocate General’s Corps with the 2nd Armored Division, 4th Infantry Division, and 81st Infantry Brigade.

<u>Marie-Noel Nsana | Chief Compliance Officer</u>

Marie-Noel enjoys over 15 years of experience in the banking industry, specializing in BSA/AML compliance, financial crimes and technology. As the former Global AML Compliance Program Manager at Citi and Head of AML Compliance Governance at Industrial and Commercial Bank of China, Marie-Noel is a Certified Anti-Money Laundering Specialist (CAMS) and serves as an advisor to several fintech startups.

<u>Will Hester | Head of Corda Engineering </u>

Will served as a leading software engineer at R3, a premier provider of enterprise technology and one of the first companies to deliver a private, secure, and scalable DLT platform designed for regulated markets. Prior to his work at R3 where he reported directly to the company’s CTO, Will served as a software engineer for Alfa Financial Software, where he learned how to build enterprise software written in Java. He is self-taught in modern front-end languages, such as React, JavaScript, CSS, and HTML5. Will also holds a Master’s Degree in physics at King’s College London, where he graduated with First Class Honors.

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

Not really. I believe that once we imminently reach our natural next step which is the actual launch we will grow and will be able keep that momentum consistently.

I also would add that it doesn't go in line with inclusion or giving opportunity to the next generation.

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

Fluent primary metric of success is USD+ in circulation with our near team goal across the organization being 1 billion USD+ in circulation in the next 18 months.

What does success for this project look like?

Our final goal would be to create an ecosystem compatible with the Cardano infrastructure that uses all relevant capabilities in the end solution. The release of such a solution will create expansion for Cardano adoption in the market.

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

• N/A - this is an entirely new propossal.