The Liqwid Core Team welcomes the Cardano community’s review and feeback on this proposal. Thanks for your time and effort reviewing the full proposal attachment.

1. Liqwid Bitcoin DeFi Portal (Powered by upcoming Cardano-Bitcoin bridging solutions) Summary: Build a dedicated Bitcoin portal within the Liqwid app UI with a simple user experience that enables BTC holders to complete multiple actions in the BTC-Cardano DeFi user journey including but not limited to: bi-directional bridging from multiple bridging solutions, lending BTC in Liqwid, borrowing any supported asset in the protocol against their BTC holdings and utilizing newly developed features such as “one-click” leverage trading while easily managing their collateralized debt positions and monitoring their interest earned. By developing an easy to use Bitcoin portal and abstracting the different processes into a “one-stop” UI we aim to create a Bitcoin DeFi aggregator for the core functionalities BTC holders have shown strong desire and willingness to bridge to a new network in order to access. The Liqwid BTC Portal will also support Babel Fees (Nestled Transactions) paid in BTC to create a low-friction user journey for successfully onboarding bridged BTC to Liqwid markets. 2025 Cardano Product Roadmap Alignment: Incoming Liquidity Lead: Liqwid Labs Core Development Team In Collaboration with: Liqwid Labs Product Development and Design teams Cost: $675,000 Comments: This roadmap item acknowledges multiple Cardano-Bitcoin bridges are currently in development and seeks to support multiple of the top solutions based on their user adoption, volumes and based on community feedback/requests.

2. Liqwid v3 Summary: Liqwid v3 protocol will be designed and implemented utilizing Aiken for ultimate Cardano developer experience and speed to market. A focus on reduced UTxO contention, increased speeds, greater decentralization, Babel Fees (Nestled Transactions), a complete overhaul of the current batching system and lower transaction costs are the major themes during v3 implementation. 2025 Cardano Product Roadmap Alignment: Incoming Liquidity, Programmable Assets, Developer/User Experience Lead: Liqwid Labs Core Development Team In Collaboration with: Third Party Security Audit Partners (MLabs, RuntimeVerification, Tweag (Modus Create) Cost: $2,350,000 Comments: Liqwid v3 is a significant advancement in reduction of contention, increased speeds and decentralization with lower transaction costs for users. The Liqwid Labs Core Team has gained deep experience developing onchain smart contract and offchain infrastructure that support UTxO peer-to-pool lending protocols, collateralized debt position creation/management, oracles, liquidations, batching and market ordering systems. The Core Team plans to leverage this prior implementation experience while utilizing the latest innovations in Cardano DeFi (Aike, Babel Fees, Programmable Assets to name a few) as well as more efficient and decentralized design patterns throughout all components of the protocol.

3. Liqwid Smart Contract Security Audits Summary: Liqwid v2 is set to receive two additional security audits before it is open sourced alongside an ongoing bug bounty program. Liqwid v3 Aiken smart contracts will similarly engage 4+ third party security auditors to review the smart contract codebase before a continuous bug bounty program is launched. 2025 Cardano Product Roadmap Alignment: N/A Cost: $1,079,000 Comments: Third Party Security Audit service providers will be retained via Fixed Price contracting to complete security audits of the Liqwid v2 and v3 onchain codebases.

4. Liqwid Core Development, Operations and Maintenance Summary: Liqwid Labs core developers responsible for monitoring multiple deployments of the protocol’s infrastructure across Cardano L1 and L2s including Midnight, running formalized bug bounty campaigns, grant programs, hackathons, reduction of technical debt in the current offchain codebase and updating protocol parameters as required to manage risks as liquidity environments across deployments evolve. This item includes the cost of running Liqwid infrastructure. Cost: $586,000 Comments: This item includes the yearly cost of running Liqwid offchain infrastructure across Cardano L1, Midnight, Midgard and other Cardano L2s.

Total Cost: $4,690,000 ( = ADA 7,215,384 @ $0.65 per ADA)

This proposal outlines multiple steps to transition the Liqwid protocol towards a fully open-source Cardano Public Good. There are significant obstacles and possibilities within the Cardano ecosystem as we progress towards Cardano serving as a fully integrated DeFi layer ready to onboard Bitcoin holders at scale.

Cardano-Bitcoin DeFi layer: The origin of Bitcoin as the first ever cryptocurrency has led to a strong sense of belief in BTC as the supreme crypto asset and a shared sentiment amongst early holders that spreads to new holders and results in a dynamic where BTC holders have little to no desire to hold any other crypto asset. A unique complex is created where many BTC holders prefer to simply hold BTC alone in their crypto portfolio and interact with crypto products in so far as they allow them to remain long their BTC holdings while accessing liquidity against their holdings usually in the form of USDT, USDC or some other stable currency.

As a result the majority of successful Bitcoin products are centered around servicing the loan demand for BTC holders borrowing stablecoins and USD against their holdings and allowing BTC holders to leverage their BTC holdings to tap into liquidity without needing to sell. Recently launched Bitcoin-backed loans by traditional finance institutions such Coinbase, J.P. Morgan and Ledn.

Liqwid as a Cardano Public Good: The open-sourcing of Liqwid v2 and v3 smart contracts will transform the protocol into a fully transparent, community-aligned public good. With the Liqwid Core Team maintaining and evolving the codebase, the protocol remains secure, adaptable, and everyone will be able to build upon it.

Developing complex, secure DeFi applications on Cardano is not trivial. The unique eUTxO accounting model introduces design challenges that require deep technical expertise and time-tested solutions. Peer-to-pool lending protocols—like Aave on Ethereum and Kamino on Solana—demand sophisticated smart contract architecture, liquidity provisioning models, and dynamic risk management. Liqwid is the only protocol on Cardano that has built and shipped this level of infrastructure.

Despite operating on a fraction of the budget of competitors like Aave or Kamino, Liqwid has achieved near-parity in functionality . This was made possible by four years of focused development, persistence, and world-class smart contract engineering.

Cardano future tailwinds such as successfully competing as a Bitcoin DeFi layer will depend on proven development teams who have built product market fit achieving DeFi products to build new applications that attract Bitcoin holders with simple to use but powerful DeFi primitives such as capital efficient pooled lending. Liqwid is one of the few Cardano DeFi protocols to have achieved this, and it has done so with a product—Bitcoin-backed loans—that BTC holders have consistently shown demand for.

Liqwid is the best positioned Cardano DeFi protocol to service this Bitcoin-backed loan demand with the development of a fully integrated Bitcoin portal once Cardano-Bitcoin bridge solutions are launched on mainnet.

1. Liqwid v2 and v3 protocols fully open-sourced (onchain and offchain codebases). 
   

2. Liqwid Bitcoin DeFi Portal (Powered by upcoming Cardano-Bitcoin bridging solutions) testnet and mainnet launches.
3. Liqwid v3 deployment on Cardano L1 testnet and mainnet.
4. Liqwid deployment on Cardano L2 testnets and mainnets.
5. Liqwid Smart Contract Security Audits for Liqwid v2 and v3.
6. Open-sourcing of the Liqwid v2 and v3 smart contracts.
7. Continuous bug bounty program for Liqwid v2 and v3 smart contracts
8. Formalized grants and hackathons programs that incentivized. Cardano Aiken & Plutarch developers to build on Liqwid.
9. Formalized knowledge-transfer process for Cardano developers to build upon the Liqwid protocol.

NOTE: Requested funding in this proposal are shown as USD ($) estimates only. Payment for services rendered will be requested in ADA. Provided this proposal is accepted, the USD-to-ADA rates will be determined during contracting process with Intersect. We are using the price of $0.65 per ADA.

Liqwid Labs staff will oversee the day-to-day product and project management of roadmap initiatives, ensuring each item is executed efficiently and in alignment with its defined scope. The core team consists of approximately 10 full-time equivalents (FTEs). The estimated development and audit resources required for these initiatives are projected across a 12-month development timeline, though the duration of individual initiatives may vary.

Many overlook the significant barriers to entry in Cardano DeFi development, particularly within the Cardano eUTxO accounting model, where design patterns, infrastructure and tooling are continuously evolving. Building a peer-to-pool lending protocol is inherently more complex than developing a DEX or a peer-to-peer lending protocol, as it requires robust risk management, liquidity provisioning, and smart contract security. Historically, in other blockchain ecosystems, liquidity tends to converge toward peer-to-pool lending protocols, such as AAVE (Ethereum) and Kamino (Solana), further highlighting their strategic importance to their blockchain L1.

To put this into perspective, Liqwid has achieved features and product parity with industry leaders such as Aave and Kamino, despite operating on a fraction of their budget. The Liqwid team’s persistence, ingenuity, and smart contract development expertise have enabled them to build and improve the protocol over the last four years. The Liqwid Core Team has proven their ability to overcome substantial development challenges and continue to provide significant value to the Cardano DeFi ecosystem.

Liqwid Labs Core Development team exclusively will be responsible for maintaining and supporting the proposal after initial development. A combination of open-source bug bounty programs, hackathons and a formalized knowledge-transfer process will be implemented to ensure that Cardano developpers have the full resources required to build upon and participate in the Liqwid protocol's core and product development.

Liqwid has established itself as a key liquidity hub for stablecoins on Cardano, supporting a wide range of assets across algorithmic, bridged, and fiat-backed categories. With a total of $18.02M supplied and $13.80M borrowed, it shows strong user engagement in lending and borrowing stable assets. Fiat-backed stablecoins dominate the platform, especially USDC and USDM. Even algorithmic stablecoins like DJED and iUSD see significant activity. This breadth underscores Liqwid’s systemic role in enhancing stablecoin utility and circulation on-chain

Such a strong market presence is a testament to both the trust Liqwid has earned from users and the quality of its protocol. Furthermore, Liqwid has demonstrated significant transaction volume, as reported by Messari (see their quarterly report). This high usage rate not only attracts users to the Cardano blockchain but also generates revenue for the protocol’s treasury, strengthening its long-term sustainability. Over the past two years since its mainnet launch, Liqwid has become a systemic component of the Cardano DeFi ecosystem, serving as a key driver of liquidity and utility.

• Cardano-Bitcoin bridging solutions
• Programmable Assets
• Babel Fees
• Midgard & Cardano L2s