Inspiration
The inspiration for building a Web3 native Revenue-Based Financing system like Equalizer lies in the potential to revolutionize traditional financing models, increase accessibility to capital for Web3 businesses with strong and proven business model, and create a more decentralized and inclusive financial ecosystem.
Here are the key factors that inspired us to build Equalizer on Linera:
i-Decentralization and transparency: Linera offers a decentralized and transparent framework for financial transactions. This transparency can be applied to Revenue-Based Financing, ensuring that all stakeholders can verify revenue flows and distributions, reducing the risk of fraud and increasing trust among participants.
ii-Democratization of finance: Linera and Web3 tech stack allow for a more inclusive and open financial ecosystem, enabling individuals and businesses from around the world to participate in funding and investing. Equalizer can democratize access to capital and provide funding opportunities for a broader range of entrepreneurs and projects.
iii-Smart contracts automation: Equalizer can utilize smart contracts to automate the Revenue-Based Financing process. Smart contracts can facilitate revenue-sharing agreements, automatically distribute funds to investors based on revenue, and ensure compliance with the terms of the contract, reducing administrative overhead.
iv-Programmable money and tokens: Equalizer allows the creation of programmable money in the form of cryptocurrencies and tokens. Equalizer can tokenize revenue streams, allowing investors to receive their share of revenue in the form of tokens, which can then be traded or used for other purposes within the Web3 ecosystem.
v-Interoperability and composability: Linera encourage interoperability between different decentralized applications and protocols. This enables Equalizer to integrate with other DeFi (Decentralized Finance) applications, creating a more robust and interconnected financial ecosystem.
vi-Decentralized autonomous organizations (DAOs): Web3 enables the creation of DAOs, which are organizations governed by smart contracts and community voting. Equalizer could be integrated into a DAO structure, allowing the community to collectively make funding decisions and manage revenue distribution.
vii-Alignment of incentives: Equalizer can align the interests of investors and entrepreneurs better. Since investors' returns are tied in real-time to the revenue generated by the funded projects, they have a vested interest in supporting the success and growth of the ventures they invest in.
What it does
Equalizer is a Web3 Native Revenue-Based Financing protocol on Linera enabling Web3 businesses to turn their recurring revenue streams into upfront capital. This can be done in Linera with streams. The general workflow works like this:
- A business would set up a stream for their recurring revenue, such as subscription payments.
- They would then mint a tradable cashflow NFT representing a percentage of that stream.
- Investors could then purchase these NFTs, providing upfront capital to the business in exchange for a share of the revenue. This would allow businesses to access capital without taking on debt or giving up equity, while also providing investors with a new type of asset to invest in.
How we built it
Protocol, Streaming, Interface To start with, it would help to clarify the differences between the various components of "Equalizer", some of which may confuse users. -The Equalizer Protocol: A collection of persistent, upgradeable smart contracts on Linera that together create a protocol that facilitates payments, interactions, and transactions between Web3 businesses and investors. -The Aquaduc Protocol: A collection of persistent, non-upgradeable smart contracts that together create a protocol that facilitates the streaming of assets on Linera. -The Equalizer Interface: A web interface that allows for easy interaction with the Equalizer Protocol.
Challenges we ran into
1. Smart contract security: Developing secure smart contracts is crucial in any Web3 project. Security vulnerabilities such as reentrancy, arithmetic overflow, and permission control flaws can lead to financial losses and compromise user funds. Rigorous auditing and best practices in smart contract development were essential to ensure the safety of Equalizer. 2. Oracle integration: Revenue-Based Financing relies on external data to calculate revenue, such as revenue generated by a business. Incorporating accurate, reliable, and decentralized oracles to fetch this data securely is critical. Ensuring data integrity and avoiding oracle manipulation is vital for the platform's trustworthiness. 3. User experience: Web3 Revenue-Based Financing is new, and the user experience can be challenging for non-technical users. Providing clear instructions, and designing intuitive interfaces are crucial to attract users. 4. Interoperability: Equalizer might interact with various DeFi protocols and decentralized applications. Ensuring smooth interoperability with other systems might require standardized interfaces, and thorough testing and understanding cross-chain messaging and micro-chain concept on Linera
Accomplishments that we're proud of
1-We have built and deployed a Dapp on Linera with back-end and front-end fully functional
2-We have built and deployed the Aquaduc Protocol on Linera bringing real-time finance on Linera Aquaduc is a crypto-asset streaming protocol of Equalizer developed with Linera smart contracts, designed to facilitate by-the-second payments for cryptocurrencies and assets on Linera. The protocol employs a set of persistent and non-upgradable smart contracts that prioritize security, censorship resistance, self-custody, and functionality without the need for trusted intermediaries who may selectively restrict access. As long as the Linera continues to exist, every version of Equalizer and Aquaduc that gets deployed will operate continuously and without interruption, with a guarantee of 100% uptime. To understand the unique characteristics of Equalizer and Aquaduc, it is helpful to examine two aspects: the concept of streaming as an alternative to conventional payment methods, and the permissionless nature of the protocol compared to traditional systems.
Streaming vs conventional payments Traditional payment systems generally involve lump-sum transfers, which rely on trust between parties, have slow processing times, and are prone to errors. In the context of bank transfers, payments are also subject to substantial fees and can face delays due to intermediaries. By contrast, Equalizer with its Aquaduc protocol introduces the concept of asset streaming on Linera, enabling users to make continuous, real-time payments on a per-second basis on Linera. This innovative approach enables seamless, frictionless transactions and promotes increased financial flexibility for users, businesses, and other entities. Aquaduc makes the passage of time itself the trust-binding mechanism, unlocking business opportunities that were previously unavailable. A good mental model to contrast streaming with conventional payment models is to view the former as "real-time finance" or "continuous finance", and the latter as of "discrete finance".
3-We have built the smart contracts to create NFT on Linera
What we learned
1-We learned how to build a Dapp and smart contracts on Linera with the recent published SDK.
2-We learned how to build a front-end Dapp on Linera.
3-We learned how to create programmable money in the form of cryptocurrencies and tokens to facilitate the streaming of assets on Linera.
4-We learned how to create NFT on Linera.
What's next for Equalizer
Next, we will achieve the following milestones: 1-Release the private beta of Equalizer
2-Build V2 of the UI/UX of Equalizer
3-Build and release the Streaming Infrastructure Protocol on Linera for developers, designed to facilitate by-the-second payments for cryptocurrencies and assets on Linera, enabling them to build streaming micro-payments, subscriptions, salaries, vesting, and rewards to crypto-native entities and businesses on Linera.
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