---
tags: hackathons, tezos

title: Gitcoin Bounty proposals - DeFi & Cross-Chain Interoperability
---

## Bounty 1: Cross-chain loan mechanism
**10.000 USD worth of tez**

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
**10.000 USD**

### 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: Fractional NFT ownership
**7.500 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.

### 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

- 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/)", an approach for on-demand dilution through recurrent issuance
- "[Mortys](https://www.paradigm.xyz/2021/09/martingale-shares/)", Martingale shares for a fair randomized settlement process
- Another, simple approach is to allow a threshold of holders to vote for the NFT to be put to auction

## Bounty 4: 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 5: Timelocks in the Hangzhou update
5 days **5000 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)

## 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