zkUSD Deployment Readiness

charlie · December 18, 2024, 1:13pm

Title

zkUSD Deployment Readiness: The next stage of development

Project Background

zkUSD is an innovative algorithmic stablecoin being developed on the Mina Protocol. The project aims to fill a critical gap in the Mina ecosystem by providing a stable medium of exchange essential for DeFi applications such as lending platforms, DEXs, and synthetic assets.

The initial feasibility study, completed in November, validated the critical components necessary for building zkUSD. This included developing and testing minting/burning logic, computational feasibility assessments within o1js constraints, and exploring optimal architecture for zkUSD’s deployment. The study concluded with the successful demonstration of a local proof-of-concept (PoC), showcasing the core functionality of zkUSD.

For more details, you can find the code repository, architectural analysis, and final presentation laid out in the final update of the original feasibility study proposal.

Proposal Overview

Problem

The feasibility study successfully validated the critical assumptions for developing zkUSD on Mina. However, transitioning from a proof of concept to a production-ready solution requires further development, integration, and compliance considerations. Without deploying zkUSD in production, the Mina ecosystem continues to lack a native stablecoin, which is essential for the growth of DeFi applications on the platform. This absence hinders innovation, user adoption, and places Mina at a competitive disadvantage compared to other blockchain networks offering comprehensive DeFi solutions.

Solution

This proposal aims to next stage of development necessary to prepare zkUSD for a production-ready deployment. By the end of this propsal, zkUSD will have a full integration test suite, with the current version deployed on testnet, ready for alpha-testing. This will set the stage for a full security audit and protocol infrastructure development before its eventual deployment to the Mainnet. The deliverables in this proposal focus on completing the application specific technical, and compliance work required to transition zkUSD from a proof of concept to a production-ready system.

In Scope

Integration Testing and Protocol Refinement: Conduct extensive integration tests on Lightnet and Devnet, and implement architectural and protocol design changes based on test outcomes.
Initial Devnet deployment: Once we are happy with our integration test suite, we will open up our Devnet deployment for alpha testing with the community. This will enable users to deposit test Mina to open vaults, mint zkUSD, and liquidate undercollaterlised vault, simulating the full end to end functionality of the system
User Interface: Create an application focused intuitive and user-friendly interface that enables users to create and manage their vault positions.
Legal and Regulatory Compliance: Perform a comprehensive legal and regulatory study to understand the requirements for launching zkUSD, and implement any necessary governance changes to ensure compliance and decentralization.

Out of Scope

Oracle Off-chain Software Development: Developing the off-chain functionality for the protocols oracles to deliver prices on chain. For the intitial testnet deployment we will perform the oracle function of feeding the price data on chain, with the view to decentralise that as we build the oracle software moving to beta-testing.
Infrastructure Setup: Establishing the necessary backend infrastructure for managing the protocol, including a highly available, robust Proof-of-Stake (PoS) participating node.
Website and Documentation: The development of the website, including a landing page and accompanying documentation, is not included in this proposal. The focus will remain on the application itself.
Full Security Audit: A comprehensive security audit is not included in this phase. This will be a critical next step before deploying zkUSD to Mainnet.

Impact

Deploying zkUSD in production will:

Provide a Native Stablecoin: Fill a critical gap in the Mina ecosystem by offering a native stable medium of exchange.
Catalyze DeFi Development: Encourage developers to build DeFi applications on Mina, fostering innovation and ecosystem growth.
Financial Opportunity: Users will be able to natively leverage their MINA holdings by creating vaults to efficiently utilize their MINA without liquidating their assets, opening up pathways for yield generation and strategic investment opportunities.

Audience

Individuals and teams building or interested in building DeFi applications on Mina.
Users and enthusiasts seeking enhanced capabilities within the Mina ecosystem.
Stakeholders and investors evaluating the potential and growth of Mina’s DeFi landscape.

Architecture & Design

Link to diagram

Overview

Building upon the proof of concept, this next stage of development will solidify the architecture, ensuring scalability, security, and compliance. The key components and tasks include:

Integration Testing and Protocol Refinement

The journey toward zkUSD’s production deployment requires rigorous testing and iterative development. Integration testing will be conducted extensively on Lightnet and Devnet to validate the system’s functionality under real-world conditions. These tests will not only ensure the protocol meets its intended design goals but will also provide critical insights into potential challenges and areas for improvement.
As part of this process, the protocol will undergo continuous refinement, incorporating lessons learned from testing and community feedback. This iterative approach acknowledges that as zkUSD progresses toward a production-ready state, new insights may necessitate significant changes to the architecture or to underlying protocol logic. By embracing these learnings, we will ensure zkUSD remains robust, scalable, and aligned with the ecosystem’s needs.

User Interface Development

To ensure zkUSD delivers an exceptional user experience, this proposal includes the involvement of an experienced designer to craft a polished and cohesive brand aesthetic. While the initial proof-of-concept focused on functionality, this phase will emphasize both usability and visual appeal, recognizing that a great user interface (UI) is a crucial aspect of adoption and trust in DeFi applications.

The designer will work closely with the development team to create a modern and intuitive user interface that reflects the zkUSD protocol’s vision. This includes developing a visually appealing design language, optimizing user flows, and ensuring accessibility across devices. By leveraging Next.js, the frontend will seamlessly integrate with this design, offering users a smooth, responsive experience for managing vaults, tracking collateral, and interacting with the protocol.

With a strong focus on UI/UX, the interface will provide clarity and simplicity while maintaining a professional and attractive appearance. This approach not only enhances usability but also reinforces zkUSD’s position as a trustworthy and user-centered product, paving the way for broader adoption within the Mina ecosystem.

Legal and Regulatory Compliance

This research will serve as a fact-finding exercise to thoroughly understand the regulatory landscape and its implications for zkUSD. The outcomes of this analysis will significantly shape the protocol’s future development, both from a technical and business perspective. A key focus will be determining the degree of decentralization required before production deployment, which may necessitate further work to introduce structures like a DAO to govern the protocol.

The findings will also identify the jurisdictions where any DAO-adjacent entities can be established and clarify compliance requirements for partnerships with exchanges. By uncovering these critical insights, this work will provide a foundation for informed decision-making, ensuring the zkUSD Protocol aligns with legal standards while preparing for long-term scalability and success.

Vision

As Mina’s first native stablecoin, zkUSD will provide a foundational building block for other protocols and applications, unlocking the potential for lending platforms, DEX’s, and other innovative DeFi solutions.

zkUSD’s deployment will demonstrate the capabilities of Mina’s zkApps. This proof point will inspire developers to explore Mina as a platform for creating zk DeFi products. The groundwork laid by zkUSD—such as robust oracles, governance mechanisms, and compliance frameworks—will pave the way for a new generation of applications to flourish.

Budget & milestones

Deliverables

Operational zkUSD Protocol on Devnet ready for alpha testing including:
- Application UI/UX for interacting with user vaults
- Comprehensive integration test suite
Legal and Regulatory decisions made including entity set up.
Final presentation and detailed report.

Midpoint Milestones (1.5 Month)

Initial understanding of regulatory landscape and subsequent planning for entity creation.
Integration test suite completed on lightnet, able to provide a demo on lightnet showcasing early UI iteration

Project Timeline

2 Months

Budget Requested

85,000 MINA

Budget Breakdown:

Integration Testing and Protocol Refinement: 30,000 MINA
User Interface Development: 30,000 MINA
Legal and Regulatory Compliance Research: 25,000 MINA

Wallet Address

B62qnfDpwYS9u2uEcgdfcuWRqB5MmPQSeNdrVXMWF6cJXipzcGaMejM

Team Info

Proposer Github:

Charlie Mack

Education:

Self taught programmer, professional history as Scrum Master/Agile coach in large financial institutions

Experience:

Spent the last 3 years building full stack web3 projects including:

Nanobyte - browser wallet / payment processor for Nano
Notifly - AI powered personalised newsfeeds for crypto projects
Omnipus - LayerZero multi-chain defi memecoin project

Relevant Projects:

Chainmail - A ZK Email marketplace

Foundry-Stablecoin - A working implementation of DAI in Solidity

Achievements

ETHDam 2024 (Finalist) - BlockLock - on-chain password manager
ETH Berlin (Runner up) Chainmail - as above

Team Members

Team member:

Michał Adamczyk (anks)

Education:

Graduated IT from Warsaw University of Technology with a specialization in AI/ML.

Experience:

12 years in software engineering spanning research, machine learning, full-stack web development, mobile development, low-level cross-platform libraries, and web3 smart contracts development. Over 3 last years spent in web3: Cardano and then MINA.

The work included:

MinAuth - an o1js-based library and accompanying set of Typescript packages making it easy to set up authentication/authorization based on zero-knowledge proof verification.
liqwid finance DeFi - https://liqwid.finance/
cardano-transaction-lib - a Purescript library for building smart contract transactions on Cardano
Agora - governance modules for Cardano protocols

Achievements:

Protokit price at zkHack Kraków

Discord handle: anks_