Cardano’s philosophy is to be a public, permissionless, and inclusive blockchain, where every developer can build their proposals.
As the Cardano community continues to grow, the needs are expanding.
Why not allow institutional capital access? This does not mean that Cardano decentralization will be neglected, as the structure of the network will not change.
Banks, asset managers, fund managers, and insurance companies could allocate some of the trillions of dollars in assets under their control into the Cardano ecosystem.
As the Cardano ecosystem matures, decentralized finance (DeFi) on Cardano will create new assets, synthetics, investment types, and new financial tools in which institutional funds could participate in these decentralized markets.
In the last two years, investment returns in DeFi have been much more interesting than in traditional finance. Additionally, transacting in a decentralized space can also remove much of the counterparty risk of centralized finance.
In order to access institutional capital, the Cardano ecosystem needs to not only know how to classify and meet the various requirements of institutional investors and their custodians, but also have tools and frameworks to meet their needs.
These needs go far beyond multi-signature wallets, which while necessary as an institutional workflow, also require documentation and KYC requirements, as well as complex risk, liquidity and capital deployment controls.
While this project focuses on custody banking from a DEX and Wallet point of view, Stake Pools are a critical part of the Cardano ecosystem. In planning this project, an additional challenge was identified in that custodians need to delegate ADAs and tokens under their control, but cannot risk doing so with unknown or anonymous pool operators due to oversight requirements related to who they do business with.
The Proposal: A Custodian Layer for Cardano
The goal is to integrate institutional funds into the Cardano community.
The team’s job, for this proposal, is to use community funds to provide information for the entire community, to be used by individual projects.
Institutional capital is often protected by layers of permissions and authority. Custody services are commonly used to safeguard managed assets.
This requires identifying legal requirements to meet institutional audit and compliance needs, across multiple categories of custodians and jurisdictions.
The team will coordinate a research group tasked with identifying how individual DApps and wallets can meet the needs of custodians, with as little customization as possible by creating a shared services layer, and a process that could serve as a whole. of tools for the community.
While the product will be primarily designed to help DEXes and wallets, the main goal will be to align different players, enable interoperability and composition between competitive players in the ecosystem, by offering shared frameworks and knowledge.
The proposal includes the design of the necessary information frameworks and processes, and permission structures for the community to build compatible tools and integrations that meet these requirements.
Therefore, the developers propose toinvestigate the KYC layer for Cardano wallets, especially light wallets, to establish the requirements for a custodian and permission layer.
- In 3 months: A project team will be formed that will allow the investigation to be completed on a broad enough scale and jurisdiction, with a framework to determine the information to be collected. The most appropriate traditional financial players, fund managers and custodians will be identified.
- In 6 months: The interviews of the project will be almost finished and the initial frameworks defined, in the process of iteration. We hope this will lead to specific recommendations for toolkits and APIs from the community.
- In 12 months– The project will conclude with the following with global research on the needs and workflows required for institutional investors and their custodians to participate in Cardano DeFi. These needs will be separated into solutions and recommendations for the community as a whole, as opposed to one-off projects.
The budget will be allocated to a core team of 6 researchers, spread around the world, who will work remotely for 7-10 months, together with the four main project leaders.
The team will be paid for their time, with most of the budget going to researchers and domain experts, who will be hired as consultants.
The team estimates that the requested funds will be sufficient to complete the research phase and the production of frameworks and recommendations.
The implementation of KPIs, zk tests, and composable objects like NFTs, will enable recommendations across the DeFi ecosystem, likely requiring additional funding for subsequent Catalyst Funds by projects that wish to implement our recommendations.
Funds requested: USD 95,000.
Mallabs Ltd. team is a group of Haskell native, quantitative financial researchers, developers with years of experience building advanced and scalable business systems at leading financial institutions.
Jarek Hirniak is the founder and lead developer of Maladex, with over 8 years of experience leading multiple development teams in traditional financial institutions such as UBS and Citadel Securities.
He has a Master’s in Computer Science from the University of Edinburgh (where Phil Wadler and Aggelos Kiayias research and teach) with a specialization in concurrent and distributed systems, functional programming, and formal methods. Head of Platforms in an international bank leading 3 teams, designing and building complex financial systems.
He is a seasoned Haskell developer, used Haskell multiple times in personal and commercial applications, active conference participants, and Haskell hackathons. I have completed the first cohort of the Plutus Pioneer program and got NFT to provide it.
Mike Rogero, the project lead, has 25 years of experience as a c-suite manager of technology development companies. He holds several professional certifications relevant to the project: he is a Certified Financial Analyst (CFA) Charterholder, Certified Fraud Examiner (CFE), Certified Anti-Money Laundering Specialist (CAMS). I have earned his MBA from INSEAD.
Benjamin Wang, has spent the last 15 years working in investments research, fine-tuning investment products based on derivatives with custom-made indices for banks, asset management companies, and family offices . He has worked with a number of asset owners (investors), asset holders (custodians), and trade implementers (brokers) to carry out due diligence and select brokers, custodian partners, and other service providers in order to win mandates from large pension funds . He holds an MBA from INSEAD.
Another member team, who prefers to preserve his identity, with 15 years of experience in fund management and investment strategy due diligence for Institutional investors and UHNWI. His tasks revolve around advising Institutional and Qualified Investors on trade strategies implementation and cross-border regulatory compliance. He is a silent partner at Noviganto & Associates GmbH, a German Think Tank specializing in Corporate Finance, Strategies, and Law. He has strong relationships with different Fund/Investment Managers, Financial Regulators, and other institutional experts, allowing us to create a tied feedback loop with clients, regulators, and the research team. If funded, the project team will further leverage the combined participant and partner networks to further fill out the execution and delivery team beyond the principals. We expect to create a project team within the INSEAD community which will enable the project to conduct interviews with custodians and fund managers in multiple countries leveraging that international network.
You can see the original proposal published on Ideascale.