Bounty proposals Gitcoin hackathon - DeFi & Cross-Chain Interoperability

--- tags: hackathons, tezos title: Bounty proposals Gitcoin hackathon - DeFi & Cross-Chain Interoperability --- -------- **Judging criteria** Potential impact: Envisioned impact of your project Novelty: Innovativeness of the project Technical: Does the code work? Is it secure? Design and UX: How is the look and feel and how intuitive is the design? **Track requirements:** Submissions must be open source (MIT license) Submission with a working prototype must be deployed live on the current testnet Submissions must list the addresses of their token contracts **Prize** Prize (1 team) $10,000 in tez (XTZ) at the time of payout **On bounty deliverables** We would like to provide guidelines on what we expect to see out of the hackathon. We are aware that the topics we're putting up for bounties are complex, and scope might have to be defined narrowly to allow delivery within the hackathon's timeframe. The concrete deliverables we expect out of a bounty application are: * Whitepaper describing the mechanism, with analysis from economic and game theoretical perspectives * The analysis doesn't have to be in-depth at this stage, but we want to see that thought was put into the idea * Decentralized Minimum Viable Product showcasing all key components of the mechanism * Prioritize backend completeness over frontend flashiness * Write clean code following best practices * Cleanly separate various components of your architecture * Document enough to allow reviewers to fully understand what you did * Writeup on what the product backlog for reaching what you'd consider 'completion' looks like Keep in mind that the purpose of your deliverables are to convince people *almost as smart as yourselves* that your idea is viable, and you are capable of delivering a reliable, working product. **Developer resources** For those who are completely new to Tezos development, the dev portal is a good place to start https://developers.tezos.com/ Tacode, a p2p learning platform for Tezos teaches you how to build a Dapp on Tezos while earning tez https://tacode.dev OpenTezos is an open-source wiki on all topics Tezos https://opentezos.com/ A guide how to mint NFTs on Tezos and how to build a simple NFT platform https://medium.com/ecad-labs-inc/how-to-mint-nfts-on-tezos-using-taquito-and-pinata-15a407078495 A react provider for Dapps to easily setup connection to Beacon/Taquito wallets https://github.com/tz-contrib/components-library/tree/develop/packages/react-wallet-provider Awesomelist for Tezos https://github.com/tz-contrib/awesome-tezos Tezos Stack Exchange is a useful resource to where you can see answers to technical questions regarding Tezos https://tezos.stackexchange.com/ If you do not find answers to your technical questions on the Tezos Stack Exchange, join the Tezos Developers telegram channel and ask away https://t.me/TezosDevelopers -------- ### Context Gitcoin will host a 3 week virtual hackathon focused on building new tools for decentralized finance and interoperability between protocol, the [DeFi & Chross-Chain Interoperability Hackathon](https://docs.google.com/presentation/d/1Eurl8P0LY8OlVRpZoeXX_ZNyFBRo7gK8-R7oaX9zqIU/edit?usp=sharing), **October 18 - November 8, 2021**. As part of the sponsorship agreement, we can take part in the hackathon with specific tez bounties for building upon the Tezos protocol. ## On bounty deliverables We would like to provide guidelines on what we expect to see out of the hackathon. We are aware that the topics we're putting up for bounties are complex, and scope might have to be defined narrowly to allow delivery within the hackathon's timeframe. The concrete deliverables we expect out of a bounty application are: * Whitepaper describing the mechanism, with analysis from economic and game theoretical perspectives * The analysis doesn't have to be in-depth at this stage, but we want to see that thought was put into the idea * Decentralized Minimum Viable Product showcasing all key components of the mechanism * Prioritize backend completeness over frontend flashiness * Write clean code following best practices * Cleanly separate various components of your architecture * Document enough to allow reviewers to fully understand what you did * Writeup on what the product backlog for reaching what you'd consider 'completion' looks like Keep in mind that the purpose of your deliverables are to convince people *almost as smart as yourselves* that your idea is viable, and you are capable of delivering a reliable, working product. ### On non-functional requirements * For Tezos smart contracts, use either * the Ligo language (ligolang.org), preferrably its CameLigo dialect, * or human-written Michelson (with ample comments) * For EVM smart contracts, use the latest stable version of the Solidity or Vyper languages * When possible, make use of the well-audited OpenZeppelin smart contract library * No reliance on centralized indexers (eg. TZKT, BCD, Etherscan, etc.) * Lightweight, user-deployable indexers may be used (eg. QuePasa) * The use of an indexer over on-chain complexity is highly preferred ## Bounty 1: Cross-chain loan mechanism **7.500 USD** We would like to see a cross-chain (Tezos <> EVM) mechanism for loans, with collateral on one chain, and the loan being extended on another, with automated, decentralized mechanism protecting both sides from abuse. ### Rationale Looking at the currenct crypto ecosystem, it is likely that users will increasingly own various holdings, both NFTs and fungible assets, across various blockchains. We would like to allow asset holders to temporarily pool or transfer value from one chain to another, by entering loan agreements with other users who have liquid assets on the target chain they might be willing to lend out for interest income. ### Requirements * Fully decentralized mechanism, without centralized bookkeeper or administrator * Enabling parties who do not know or trust each other to enter agreements easily * Built-in disincentive against using the mechanism for permanent value transfer between chains ## Bounty 2: Ethereum - Tezos NFT bridge **7.500 USD** ### Background In the previous Gitcoin hackathon, an [NFT bridge between Ethereum and Tezos](https://github.com/hashi-protocol/hashi-app) was selected as one of the winners. The three builders are still students with not that much time to take the project further, apart from the fact that the idea [needed some extra thoughts and guidance](https://docs.google.com/document/d/1RnkJi72pHjj5qHKyfFEUpqcwozQqtGkfkEwv7kEYXrY/edit?usp=sharing). We think however that the use case is relevant (the Dogami project already reached out to them, to see whether they could make use of it): ### Business case for a bridge Given the disparity of fees between Ethereum and Tezos, as well as the well-established green and decentralized image of Tezos through a working and well-tested liquid proof-of-stake mechanism (and the endless delays in Ethereum's planned move to proof-of-stake validation), we expect a token bridge to have a net beneficial effect on Tezos usage and relevance. From a user point of view, we see two ways in which a bridge can help Tezos adoption: - Allowing NFTs originally minted on Ethereum to be transacted on Tezos. We expect users will take advantage of this opportunity for lower fees while retaining full decentralization. - Providing a reassurance to artists and curators who consider minting NFTs on Tezos, that they will not be locked into the ecosystem, and thus will still be exposed to potential collectors and investors who operate solely on Ethereum. ### Bounty requirements We would like to see a decentralized bridge between Tezos and Ethereum (or other EVM chains) that allows users to lock up an NFT on one chain, and mint a stand-in for it on another. The owner of the stand-in token should be able to burn it in order to unlock the original NFT on its native chain into their custody. #### Functional requirements - Fully decentralized system, with no privileged access - Effective fraud resistance / prevention - eg. using a mechanism of proofs and challenges, with monetary penalties for fraudulent behavior, and rewards for reporting - Correct implementation of the FA2.0 (TZIP-12) non-fungible token standard, the TZIP-16 metadata standard, as well as the ERC-721 standard - Compatibility with wallets, decentralized marketplaces and indexers ## Bounty 3: NFT pawn shop **3000 USD** 5 days We would like to see a simple lending protocol that mimics the way pawn shops operate, using NFTs as collateral. The borrower locks an NFT (or a basket of NFTs) with a preset deadline, and the lender issues a currency loan with the NFT as collateral. On timely payback of the principal and interest, the locked NFTs are released back to the borrower - on failure to pay back on time, they are released to the lender. By the nature of this kind of transaction, the lender assumes downside price risk on the collateral, without benefiting from the upside. For this reason, it is to be expected that lenders will issue loans at a fraction of collateral value, and charge interest to offset the downside risk. ### Requirements - Pawn shop contract which allows users to lend crypto to others for set terms, using NFTs as collateral - the collateralized NFTs are placed in locker contracts, - if the loan with interest is not paid back on time, the NFTs are released to the lender, - on a timely payback, the NFTs are released back to the borrower - Should allow parties to enter into contracts through an open marketplace, without former knowledge of each other ## Bounty 4: Fractional NFT ownership **5000 USD** 5+ days We would like to explore the possibilities of fractionalizing NFTs in a manner that protects from the usual pitfalls of naive implementations, ensuring that the original NFT can be reconstituted, while retaining fairness for all owners of NFT fractions. This is a call for open experimentation with solutions, thus we will list the required features, and a few potential approaches as guidelines. This paper from Paradigm presents RICKS, an interesting approach https://www.paradigm.xyz/2021/10/ricks/ Another, simple, approach is to allow a threshold of holders to vote for the NFT to be put to auction. Yet another option is to put a Harbinger tax (insert link) on each share where those who place a high price end up paying those who place a low price. ### Requirements - The protocol should be resistant to token loss or minority obstruction. - Even if a majority stake in the NFT is burned or lost, there should be a way for the remaining active stakeholders to (over time) regain majority and reconstitute the NFT. - If a minority stakeholder is unreasonably blocking a majority decision to reconstitute, fair methods for buyout should be available. - Any such measure should be resistant to manipulation by potential buyers attempting to trigger a fire sale ### Avenues meriting exploration The following might be parts of a solution, but likely not the entirety of one. - Issuance on a bonding curve - New stakes are issued incrementally on a bonding curve, diluting existing stakes - On a market with buy pressure, stakers need to keep actively buying to preserve their stake - Food for thought - Income may be distributed among existing holders, to offset the dilution of their stake - How token buyback on the curve could be implemented along this mechanism - How do different curve shapes affect the economics of the system - Harberger tax - Holders of stakes in the NFT always have an open sell order at a self-assessed price - Each stakeholder pays a tax (lazily netted) to other holders based on this sell price - Setting a low sell price could potentially earn an income, but risks being bought out - RICKS (https://www.paradigm.xyz/2021/10/ricks/) - Mortys (https://www.paradigm.xyz/2021/09/martingale-shares/) ## Bounty 5: NFT floor price perps 5+ **5000 USD** A floor price perpetual future is a synthetic asset tracking the price of the cheapest NFT of a collection, which users can mint by locking up low-value NFTs. (https://www.paradigm.xyz/2021/08/floor-perps/) We'd like to see an implementation of floor price perps on Tezos, based on TZIP-12 (FA2) non-fungible assets. Here's an article describing one way to implement such a primitive https://www.paradigm.xyz/2021/08/floor-perps/ But feel free to explore other routes. ### Requirements - The solution should be decentralized, without privileged access or a privileged market making system - In the MVP, NFT collections may be defined by parent contract - Mechanisms for more fine-grained collection definitions should be explored in theory ## Bounty 6: Timelocks in the Hangzhou update 5 days **3000 USD** The currently pending Hangzhou protocol update of Tezos contains a proposal for a timelock encryption mechanism in Michelson -- https://tezos.gitlab.io/alpha/timelock.html We're looking for nails to use this hammer on. This bounty is issued for innovative solutions making use of this feature in a meaningful way. ### Requirements - The solution should deliver real business value - It should make use of the 'open chest' timelock mechanism as an essential component of its implementation - Use of the timelock mechanism should be integral to its viability, or at least... - its use should present a clear business benefit over relying on other potential avenues (such as hash commitments) # additional - oracle price medianizer - **is this a separate thing, or meant as part of the previous topics?** -