Global Order Book connect Cardano DeFi to increase transaction

This proposal requests 3,333,000 ADA (3,300,000 ADA for delivery and 33,000 ADA for the 1% budget administration fee) for Dano Finance to accelerate the DeFi Kernel as an open standard for shared liquidity, on-chain financial intents, and global order-book coordination on Cardano.

Cardano DeFi is still fragmented. DEXs, lending protocols, options protocols, marketplaces, and future synthetic asset systems often operate as separate liquidity silos. The DeFi Kernel addresses this by defining a common standard where compatible smart contracts are permissionless, composable, and discoverable: users can write or fill orders without a privileged batcher, contracts publish clear datum/redeemer schemas, and orders can be found through on-chain mechanisms such as CIP-89 beacon tokens, deterministic addresses, or other tagging methods.

Dano Finance will support DeFi Kernel adoption by improving the public defikernel.org platform and registry so any Cardano builder can submit a compatible smart contract and make its information visible to the ecosystem. The platform will document script hashes, datum/redeemer schemas, integration steps, supported off-chain libraries, audit/security status, TVL references, and other metadata that wallets, bots, indexers, and protocols need to integrate reliably.

Alongside the DeFi Kernel registry work, Dano Finance will deliver two practical DeFi Kernel-compatible primitives, Spot Leverage Order Book and American Options Market-Making Pools, plus a Composable DeFi Transaction Builder SDK that helps wallets, bots, indexers, and other dApps discover, compose, and settle DeFi Kernel-compatible orders.

The value to Cardano is a more connected DeFi stack: a stronger DeFi Kernel platform, clearer smart contract metadata, easier integrations, deeper liquidity, better composability, new risk-management markets, and a foundation for future financial applications.

Minswap Labs will serve as the budget administrator for this proposal, providing an established Cardano ecosystem administrator to support fund administration, milestone review, and accountability.

Cardano already has capable DeFi protocols, but the ecosystem still lacks a shared coordination layer for financial intent, contract discovery, and composable execution. This creates practical friction for users, builders, wallets, bots, indexers, and liquidity providers.

Today, DeFi applications often differ in how they expose contract structure, datum formats, redeemer logic, discovery mechanisms, and integration paths. Some protocols publish detailed technical documentation, while others expose only partial information or rely on private frontends, custom indexers, or protocol-specific integration support. As a result, builders must spend significant time understanding each protocol separately before they can compose with it. Wallets, bots, and indexers often need custom logic for each integration, and liquidity providers and traders face markets where order flow, liquidity, and execution opportunities are not consistently discoverable across protocols.

This limits Cardano's DeFi growth. Fragmented liquidity reduces market depth. Fragmented metadata slows integrations. Fragmented execution paths make it harder to build advanced financial applications such as leveraged trading, options, synthetic assets, structured products, and cross-protocol strategies.

The DeFi Kernel is motivated by this gap. It defines a common pattern for permissionless, composable, and discoverable DeFi contracts. Through the public defikernel.org platform and registry, compatible contracts can publish the information that other ecosystem participants need: script hashes, datum/redeemer schemas, integration instructions, supported libraries, audit/security status, TVL or usage references, and discovery mechanisms such as CIP-89 beacon tokens, deterministic addresses, or other tagging methods.

Why are we the best suited?

Dano Finance and fallen-icarus are well suited to deliver this work because we are already building and operating Cardano DeFi infrastructure that follows the same principles the DeFi Kernel is designed to standardize: deterministic execution, composability, permissionless settlement, discoverability, and security-aware smart contract design.

Dano Finance currently has approximately USD 18M in TVL and more than 10,000 on-chain transactions, showing practical experience in the KPI categories this proposal is designed to improve: TVL, users, protocol activity, and liquidity growth.

The team has built across lending, concentrated liquidity, oracle aggregation, fixed and flexible borrowing, and composable transaction flows. This gives us direct experience with the technical and product challenges of building production DeFi on Cardano's eUTxO model, including liquidity bootstrapping, protocol safety, transaction composition, user onboarding, and reporting measurable ecosystem impact.

That experience is directly relevant to the requested work. Spot Leverage Order Book and American Options Market-Making Pools, plus a Composable DeFi Transaction Builder SDK, require secure smart contracts, pricing and risk design, transaction composition, indexing, wallet integration, oracle awareness, and liquidity integration. These are natural extensions of the infrastructure and product surface we already operate.

Dano Finance also has an existing alignment with the DeFi Kernel architecture. Dano's roadmap already includes more composable financial primitives such as synthetic assets, leverage, refinancing, and single-transaction execution. These products benefit from a shared order-book and financial-intent layer instead of isolated liquidity silos.

This proposal is a continuation of that practical execution path: use Dano Finance's operating experience to support the DeFi Kernel platform and deliver two concrete DeFi protocols that can expand Cardano's financial application layer. The request is intentionally smaller and more focused than a broad ecosystem DAO.

Alignment to Strategy Framework

Pillar 1 – Infrastructure & Research Excellence

The DeFi Kernel is infrastructure for Cardano's financial layer. It standardizes how smart contracts publish on-chain financial intents, expose composable data, and become discoverable by wallets, bots, indexers, and other protocols. The proposal supports research and infrastructure excellence by turning the DeFi Kernel from a design thesis into an operational standard, public registry, and integration path for production smart contracts.

Pillar 2 – Adoption & Utility

This proposal supports non-speculative DeFi adoption by delivering reusable financial primitives and tooling for Cardano. The DeFi Kernel improves discoverability and composability, while Spot Leverage Order Book, American Options Market-Making Pools, and the Composable DeFi Transaction Builder SDK enable leveraged trading, risk management, and easier integration for wallets, bots, indexers, and dApps.

Together, these workstreams support deeper liquidity, more advanced DeFi strategies, and stronger reasons for users and builders to choose Cardano.

Pillar 4 – Community & Ecosystem Growth

The DeFi Kernel registry, documentation, and integration work will make it easier for wallets, bots, and other Cardano applications to compose with each other. This creates shared platform tooling other builders can use.

Pillar 5 – Ecosystem Sustainability & Resilience

A more complete DeFi stack also makes Cardano more resilient by reducing dependence on isolated applications and fragmented liquidity. More useful L1 activity can also increase protocol fee revenue and strengthen the economic sustainability of the network.

This Treasury withdrawal is intended to fund work with ecosystem-wide value, not only a single application. The proposal combines four practical outputs: a public DeFi Kernel registry, a Spot Leverage Order Book, an American Options Market-Making protocol, and a Composable DeFi Transaction Builder SDK.

Together, these outputs address a clear gap in Cardano DeFi. The ecosystem needs better contract discoverability, clearer integration metadata, reusable transaction tooling, and more advanced financial primitives. The DeFi Kernel registry and submission process make it easier for builders to publish contract metadata and for integrators to discover compatible contracts. The SDK turns that registry information into practical developer tooling for wallets, bots, indexers, and dApps.

The two protocol work packages prove the standard through real DeFi use cases. The Spot Leverage Order Book introduces a high-utility trading primitive that combines order-book coordination, collateral, borrowing, position management, and settlement. The American Options Market-Making protocol introduces risk-management markets that can support hedging, structured strategies, and market-making activity.

This is the value-for-money case: the proposal funds public metadata, reusable tooling, production DeFi primitives, and integration paths together. If delivered successfully, Cardano gains not only new DeFi products, but also reusable patterns and tooling that can support future financial applications.

The proposal requests 3,333,000 ADA in total, consisting of 3,300,000 ADA for delivery and 33,000 ADA for the 1% budget administration fee. Minswap Labs will serve as the budget administrator, supporting fund administration, milestone review, and accountability.

Work Package and Budget Summary

Milestone-Based Delivery

The proposal is structured so progress can be assessed against concrete deliverables.

WP1 – DeFi Kernel Registry Website and Submission Process

This work package maintains DeFi Kernel as a public standard, website, and registry process for Cardano DeFi contracts. It focuses on the practical registration path: how other dApps can follow the DeFi Kernel pattern, publish required metadata, and make their contracts easier for wallets, bots, indexers, and protocols to discover and integrate.

DeFi Kernel is intended to be an open, fee-free, and royalty-free compatibility standard. Registration will not require payment, licensing fees, certification fees, listing fees, revenue share, or smart-contract open-sourcing. Instead, compatible protocols must publish enough integration metadata for wallets, bots, indexers, frontends, and dApps to interact with them safely.

Milestone 1: Registry Website and Submission Flow
Deliverables include DeFi Kernel compatibility requirements, registry data structure, submission template, review checklist, metadata requirements, public website updates, and compatibility documentation for at least two smart contract packages.

Milestone 2: Registry Operations, Onboarding, and Reporting
Deliverables include ongoing registry maintenance, submitted contract status updates, developer onboarding support, monthly public progress reports, and a final impact report.

WP2 – Spot Leverage Order Book

This work package delivers a Cardano-native Spot Leverage Order Book protocol compatible with DeFi Kernel. The protocol supports leveraged spot trading intent where users can open and close leveraged positions through orders that coordinate collateral, borrowing, debt accounting, swap execution, risk parameters, and settlement.

This is different from a vanilla spot order book such as cardano-swaps. A vanilla spot order book swaps one asset for another. A Spot Leverage Order Book involves lending: the protocol must track collateral, borrowed exposure, position state, repayment, and liquidation conditions. It is also not a smart-contract bridge or router for existing AMM/batcher DEXs. Off-chain bots and indexers may be used for discovery, execution coordination, and frontend support, but the core deliverable is the leveraged position lifecycle.

Leveraged spot trading is a high-utility DeFi primitive because it combines trading, lending, collateral management, and risk controls. A DeFi Kernel-compatible Spot Leverage Order Book can make leveraged trading intent discoverable and composable with other Cardano DeFi applications.

Milestone 1: Protocol Design and Testnet
Deliverables include protocol specification, smart contract design, datum/redeemer schema draft, testnet deployment, and initial integration documentation.

Milestone 2: Security Review and Mainnet Release
Deliverables include security review or audit report, issue resolution report, mainnet deployment, published script hashes and schemas, and DeFi Kernel compatibility documentation.

Milestone 3: Adoption, Reporting, and Integration
Deliverables include usage reports, integration guide updates, registry entry updates, and final work package reporting.

WP3 – American Options Protocol

Options are a core financial primitive. They support risk management, hedging, structured products, and more advanced market participation. A DeFi Kernel-compatible options market-making protocol can compose with lending, swaps, and future synthetic assets, increasing Cardano's DeFi utility.

This work package delivers a Cardano-native American Options market-making protocol using an extended concentrated-pool model. Liquidity providers supply capital into an options market-making pool, and users can buy or exercise pool-priced American options when the pool terms meet their strategy.

The goal is to make options liquidity easier to access than a purely manual order model. Instead of requiring every option buyer and seller to negotiate individual terms, the pool provides reusable liquidity and pricing logic for supported assets and ranges.

A standard spot concentrated pool is not enough by itself. The pool logic must be extended for option-specific behavior: strike, expiry, premium, collateral/exposure, exercise conditions, settlement, and LP risk accounting.

Milestone 1: Protocol Design and Testnet
Deliverables include American Options Market-Making protocol specification, smart contract design, datum/redeemer schema draft, testnet deployment, and initial integration documentation.

Milestone 2: Security Review and Mainnet Release
Deliverables include security review or audit report, issue resolution report, mainnet deployment, published script hashes and schemas, and DeFi Kernel compatibility documentation.

Milestone 3: Adoption, Reporting, and Integration
Deliverables include usage reports, integration guide updates, registry entry updates, and final work package reporting.

WP4 – Composable DeFi Transaction Builder SDK

This work package delivers an SDK for DeFi Kernel-compatible contracts. The SDK will help wallets, bots, indexers, market makers, and other dApps discover on-chain financial intent, read registry metadata, construct transactions, and compose with DeFi Kernel-compatible order book and options contracts.

The SDK is intended to reduce integration friction. Instead of every builder reimplementing order discovery, schema parsing, transaction construction, and contract-specific adapters, the SDK will provide reusable libraries, examples, tests, and documentation for the DeFi Kernel pattern.

Cardano DeFi composability is limited when every protocol requires custom integration work. A shared SDK makes the DeFi Kernel registry actionable: integrators can discover contracts, understand schemas, build transactions, and compose protocols faster. This supports developer activity, wallet and bot integrations, and recurring transaction volume from real usage rather than temporary TVL campaigns.

The expected value is reusable developer infrastructure for a global order-book pattern on Cardano. The SDK is not a replacement for protocol audits or wallet review, but it gives builders a practical starting point for integrating with DeFi Kernel-compatible contracts.

Milestone 1: SDK Architecture and Alpha Release
Deliverables include SDK architecture, public API specification, registry schema reader, metadata parser, discovery helpers, transaction-construction helper design, initial order-book adapter, alpha release, documentation, and examples.

Milestone 2: SDK v1, Protocol Adapters, and Integration Examples
Deliverables include SDK v1 release, order-book adapter, American Options adapter, transaction examples, tests, typed examples, and integration documentation.

Milestone 3: Ecosystem Integration Support and Final SDK Report
Deliverables include integration support for wallets, bots, indexers, and dApps, SDK issue resolution, release updates, external integration status report, developer-support report, and final SDK report.

KPI Framework

The primary proposal KPIs are:

DeFi Kernel

• Standard and registry live with public documentation, script hashes, schema references, and integration instructions.
• At least two smart contract packages from this proposal are documented as DeFi Kernel-compatible.

Spot Leverage Order Book

• Mainnet protocol deployed after security review.
• At least USD 1,000,000 in rolling 30-day trading volume within 90 days of mainnet launch, measured using public on-chain data.

American Options Protocol

• American Options Market-Making mainnet protocol deployed after security review.
• At least USD 1,000,000 in rolling 30-day option notional volume within 90 days of mainnet launch, measured using public on-chain data.
• Any incentive-supported American Options TVL must also report 60-day post-incentive retention.

Composable DeFi Transaction Builder SDK

• SDK v1 released with public documentation, examples, package distribution, and integration guides.
• SDK supports discovery, filtering, and transaction construction for DeFi Kernel-compatible order book and options contracts.
• At least one external wallet, bot, indexer, or dApp integration started or completed using the SDK.

Stretch KPIs:

• Order Book trading reaches USD 3,000,000 to USD 5,000,000 in rolling 30-day trading volume within 180 days of mainnet launch.
• American Options reaches USD 3,000,000 to USD 5,000,000 in rolling 30-day option notional volume within 180 days of mainnet launch.
• DeFi Kernel-compatible contracts from this proposal generate measurable recurring transaction volume.
• At least one wallet, bot, indexer, or protocol begins integration work using the DeFi Kernel registry or schema documentation.

Accountability and Risk Controls

This proposal includes several accountability mechanisms:

• Minswap Labs serves as budget administrator.
• Work is divided into clear work packages.
• Each work package has milestones and acceptance criteria.
• Smart contract workstreams include security review or audit before mainnet release.
• Critical unresolved security issues block affected mainnet milestones.
• Public reports will show progress, deployment status, registry status, KPI status, and remaining risks.
• Unused funds should remain unspent and be returned or not disbursed according to the administrator's process.

Under what circumstances would a repayment occur?

Repayment or non-disbursement would occur under the following conditions:

• Unused or unearned funds: Any funds not disbursed, not earned through approved milestones, or not needed for approved delivery work will remain unspent or be returned to the Cardano Treasury according to the administrator's process.
• Cancelled or blocked milestones: If a milestone is cancelled, cannot be delivered, or is blocked by unresolved critical security issues, the unused portion of that milestone budget will remain unspent or be returned according to the administrator's process.

Dano Finance will not treat Treasury funds as a speculative ADA position. Treasury funds will be managed for delivery, not investment. The team will convert or retain funds only as needed for milestone execution, payroll, contractors, audits, infrastructure, and operating expenses.

In addition, Dano Finance will return 5% of protocol fees generated by the Treasury-funded Spot Leverage Order Book and American Options market-making pool contracts for 12 months after mainnet launch, calculated after any direct transaction costs, refunds, or protocol-level settlement costs, and reported publicly.

Conclusion

This Treasury withdrawal gives Cardano a focused, measurable path toward a more connected DeFi stack. It funds public DeFi Kernel registry work, production DeFi primitives, and reusable SDK tooling. The expected outcomes are better discoverability, stronger composability, deeper liquidity, improved developer experience, and more recurring on-chain activity.

The requested ADA is tied to concrete deliverables and measurable ecosystem outcomes: DeFi Kernel adoption, mainnet protocol releases, trading and options volume, SDK integrations, public reporting, and reusable infrastructure for future Cardano DeFi applications.