[Active] AeonNet - Dynamic Derivative Swap Powered by Time Locked Synthetic Assets

Application Status

Status: Approved on the 26.05.2021
Last updated: 05.04.2021
Submited by Gokul, Alex, [email protected] on the 05.04.2021
Team: Gigamesh Garages
Approved Budget (in h): 750 hours
Used Budget (in h): 75 hours
Planned Delivery: JULY 2021

Specify the funding category

Open Source Development, Community Growth,

Application Title

Derivative Exchange and Derivative Swaps Powered by Secure Synthetic Assets on AE Protocol

Applicant

Gokul Alex
Co-Founder and CTO of Gigamesh Garages

Gigamesh Garage Ventures (GGV) is an Award Winning Aggregator and Accelerator of Distributed Ledger and Decentralised Finance Protocols and Platforms. GGV has pioneered a wide spectrum of protocols designed to digitise the autonomous interactions between humans, humans and machines and machine to machine touch points. GGV is creating Decentralised Data Stream management protocols and platforms powered by the principles of mathematical montages and mirages manifested by Cryptographic Constructions and Coherent Consensus Algorithms. Following are some of the achievements and accolades of GGV in its exciting journey.

GGV was won the prestigious Matic Network Build and Earn Grants for the EbbNet Multi Dimensional Money Stream Smart Contract platform powered by Verifiable Delay Functions. GGV has recently won two tracks in the Human DeFi Hackathon with the Time Value Tokenisation framework - AeonNet. GGV has created the first-ever confluence of CosmWasm Token Contracts and Polkadot Substrate based IBC Palette with portability to Polkadot Gossamer for the Cosmos India HackAtom GAIA Award-Winning MoorNet framework. GGV won the premier Hack the Horizon Hackathon by building the first-ever Zero Knowledge Proof based Provers and Verifiers between Harmony and Ethereum Protocols.

GGV has won the ETH Planet Hackathon as the most valuable project through VerityNet - a framework built with the first ever fairness-focused finance proofs on Ethereum decentralised apps such as AAVE, Compound, etc. using Quadratic Voting Verifiers built from Minimal Anti Collusion Framework. GGV has won the ETH India Dapp Jedi Hackathon for the confluence of data dynamic oracle based non fungible tokens and data exchange fungible tokens based token swap contracts governed by the VDF powered RANDAO.

Value Application

This application is a novel implementation of time locked, mixed oracle powered derivative contracts first ever implementation in the Aeternity Protocol. This application is designed to construct a hash time locked dynamic swap of derivatives.

This application will improve the management of synthetic assets in Aeternity Protocol. It will also help to add more liquidity into the Aeternity Protocol. It will also introduce a novel approach to securing synthetic assets through hash time locked smart contracts.

Why is your work beneficial for the aeternity ecosystem?

This will beneficial for the overall aeternity ecosystem to bring more traders and investors into the Aeternity Protocol and Ecosystem. This will give them an opportunity to increase the returns from their derivatives and synthetic assets. The dynamic derivative swap powered by On-chain Randomness and Time Locks will increase the security of time locks in Aeternity protocol. It will help aetentity ecosystem to become more aligned to the advanced financial primitives and decentralised finance.

Please describe the impact of your project.

This project is one of the first of its kind use of secure synthetic assets on Aeternity Protocol. This will also be a transformative product in terms how it improves the security of derivative swaps in decentralised finance.

How will your work impact the larger aeternity ecosystem?

AesynthNet is a breakthrough in creating a creative convergence of mixed market oracles and dynamic derivative contracts for streaming and securing synthetic assets within the Aeternity DeFi ecosystem.

On a larger and wider perspective, this would help to increase the capability and credential of aeternity ecosystem to develop and deploy advanced crypto-economic primitives and crypto-physical components. It can also incentivise the integration with liquidity from diverse set of existing decentralised finance protocols.

How does a successful contribution of your project look like?

Our project on its success will be able to create a new approach to storing liquidity on Aeternity Protocol in Synthetic Assets. It will also enable the investors and traders to swap the derivatives in a better verified and quantified portfolio or risks.

Definition of Terms

Synthetic Asset -

A ‘synthetic asset’ is a simulation of a real world asset. It is a synthetic representation of a real or collection of assets. It also represents/holds the same financial value of the asset(s) it represents. It can be a combination of derivatives like futures, options or swaps. The underlying asset of the derivatives could be a stock, bond, commodity, currency etc. Future and forward contracts are contracts that are used by businesses and investors to hedge against risks or speculate.

Swap

A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.

Time Locks

A Timelock is a type of smart contract primitive that restricts the spending of some bitcoins until a specified future time or block height.

Derivative

Derivatives derive their values based on the price, volatility, and riskiness of an underlying stock, bond, commodity, interest rate, or currency-exchange rate. Prices of derivatives fluctuate as the price of a reference security, commodity, bond, interest rate, or currency rises or falls in the market.

Futures

Futures and forwards are examples of derivative assets that derive their values from underlying assets. Both contracts rely on locking in a specific price for a certain asset.

Synthetic Positions

There are many different reasons behind the creation of synthetic positions. A synthetic position, for example, may be undertaken to create the same payoff as a financial instrument using other financial instruments. A trader may choose to create a synthetic short position using options as it is easier than borrowing stock and selling it short. This also applies to long positions, as traders can mimic a long position in a stock using options without having to lay out the capital to actually purchase the stock.

Status Quo

  • Improvements on Time Locks implemented in the Human DeFi Hackathon
  • Implementation of Verifiable Randomness in Sophia Smart Contract in progress
  • Extension of Hash Functions for Time Locks started
  • Research on Mixicles in progress
  • Research on Derivative Contracts in progress
  • Research on Derivative Swap in progress

Required Work

  • Extension of HTLC
  • Design of Dynamic Derivative Swaps
  • Design of Mixed Oracles
  • Design of Partial Orders
  • Design of Complete Orders
  • Design of Long Short Controller
  • Design of Order Manager
  • Creation of UI and UX
  • Integration of Smart Contracts and UI
  • Deployment of Smart Contracts to TestNet
  • Security Audit of Smart Contracts

Milestones

  • Design of Time Locks, Derivative Swaps, Derivative DEX.
  • Development of Time Locks, Derivative Swaps, Derivative DEX.
  • Deployment of Time Locks, Derivative Swaps, Derivative DEX.
  • Testing of Time Locks, Derivative Swaps, Derivative DEX.
  • Audit of Time Locks, Derivative Swaps, Derivative DEX.

Deliverables

  • Smart Contracts
  • WebApp UI
  • Wallet Integration to UI
  • Audit Reports

Estimate

Design - 200 hours
Development - 250 hours
Deployment - 150 hours
Testing - 100 hours
Audit - 50 hours

Known Limitations

  • Limitation that may arise due to a lack of synthetic asset oracles on Aeternity protocol.
  • Limitations faced due to a lack of synthetic smart contract features on Aeternity protocol.
  • Limitations that may arise in performing recursive smart contracts for derivative swap.

Outlook

  • Deployment of Synthetic Swap on Aeternity TestNet
  • Deployment of Synthetic Swap on Aeternity Mainnet
  • Integration with Aeternity Superhero Wallet
  • Launch of Synthetic Swap Website
  • Launching the Synthetic Swap Token
  • Airdrop for Synthetic Swap Token
  • Launching Bounty Program
  • Launching Referral Marketing
  • Launching Affiliate Marketing
  • Starting the Social Media Campaign

What happens after this project is completed?

Yes. We are planning to launch a website for user Onboarding, user education and user management. We will also create social media pages and profiles for marketing, campaign and education. We will also create educational blogs, videos and other user guides.

Publishment

We do hereby, confirm that the research and development generated will be published free of any proprietary license (open-source, open-access) under Apache 2.0 License. The GitHub repository link may be please found attached beneath:


Maintainance

We do hereby, confirm that our research and development code will be maintained with bug fixing and new updates free of charge for at least one year after publishing it.

5 Likes

Looking forward to see this come alive!! :clap::clap::fire:

2 Likes

Thanks Gokul! So happy to see the evolution of Aeonet since the #HumanDeFiHaeck, the proposal looks really promising!

4 Likes

@gokulalex Thank you very much for your application. ACF is still waiting for your email reply. Please send us the required information.

3 Likes

Hello Dr. Lydia, @Lydia,

Sorry for the delay in my reply. Please let me revert to the mail shortly. I have refined the concept a little bit in this time, with the refinement on the oracle oriented risk resistance framework for the Dynamic Derivatives and Synthetic Systems. It will help us to stabilise and streamline the asset architecture in totality.

2 Likes

Dear @gokulalex,
I am still waiting for your reply about your application.

1 Like

Dear Dr. @lydia sorry for the delayed response. I had shared all the details from my personal gmail address. It seems it is blocked by the network firewalls and content delivery networks. Please let me share the details directly here shortly!

1 Like

Hello Dr. Lydia,

Please find my cost estimation for the AeonNet product development, deployment activities towards the Aeternity Foundation Grant application. Over the last few weeks, I have upgraded my understanding on synthetic systems, financial flows and dynamic derivatives quite significantly. Please find the following proposal towards building the MVP on an effort estimate of 30 Euro Per hour.

2 Likes

@gokulalex Thank you for the reply. Your interesting application is approved by ACF Board. Please reply next time via email to my email for a documentation purpose.

4 Likes

Thank you so much Dr. @Lydia for the patience in my grant application process. Thank you so much @aelex and @erik.chain for all the persistent and passionate inspirations and guidances in this grant application process. Aeternity is one of the most aesthetically engineered ecosystems for cryptocurrencies, cryptoeconomics and cryptophysics. It is my delight and destiny to reach this coast !!

VirtualVoting

4 Likes

congratulations @gokulalex looking forward to see this in action!!

3 Likes

Hi Dr. @Lydia , @erik.chain , @ae-omar ,

Please let me share the update on the AeonNet release : Sorry for the delays in sharing the progress. I was held up in an array of domestic challenges due to the COVID -19 disease surveillance in India.

Documentation in Progress >>

Added System Context
https://www.notion.so/System-Context-a9ba663f3eea4467804b9d1847e2bb8b

Added Smart Contracts
https://www.notion.so/Smart-Contracts-83f755edd5de41c590c6a2edb098faed

Development in Progress >>

  • Adapted Security Module using ECDH by Milan Radkov
  • Adapted Exchange Module using WeiDex by Milan Radkov
  • Removed Redundant Contracts in the latest update

Next Steps >>

  • Refinement of DEX
  • Refinement of ECDH
  • Refinement of TimeLocks
  • Refinement of AssetList
  • Deployment to Integration Environment
  • Development of Web Application
2 Likes

Can you provide access to these resources? Seems like it’s not public right now.

Hi @marco.chain

Could you please share your email address. Is it okay to keep it differentially private until the completion of the design phase.

1 Like

will DM you, thanks!

Dear All,

I have updated the weekly status report directly on GitHub for better visibility. Request your views.

3 Likes