Catalyst: Decentralized Trust & Investment Infrastructure for Emerging Markets

Catalyst is a blockchain-powered financial inclusion platform that transforms Nigeria’s 40 million invisible micro, small, and medium enterprises (MSMEs) into a globally investible asset class. By replacing traditional collateral requirements with verifiable digital trust, Catalyst bridges the $32.2 billion SME financing gap while creating regenerative capital flows that benefit all stakeholders in the ecosystem.

The Problem: A $32B Trust Deficit

Nigeria’s economy faces a critical paradox. While MSMEs contribute 58% of the nation’s GDP and represent 96% of all businesses, they remain systematically excluded from formal financial services. Traditional banks view these enterprises as “too risky” despite their economic significance, forcing entrepreneurs to rely on predatory lenders charging interest rates exceeding 50% annually. The fundamental issue is not a lack of capital, but a trust deficit—a $3 billion problem that forces investors to park funds in “safe” assets while the real economy starves.

Youth entrepreneurs face even steeper barriers. Without physical collateral such as land certificates or established business documentation, talented individuals with viable business plans cannot access the capital needed to launch their ventures. This systemic exclusion perpetuates cycles of unemployment and informal economic activity, leaving vast human potential untapped.

The Solution: Two Paths to Capital

Catalyst addresses this trust deficit through a novel dual-path approach that replaces physical collateral with verifiable digital trust. The platform recognizes that trust can be built through two complementary mechanisms: demonstrated performance and human vouching.

Performance Trust enables SMEs with existing marketplace presence to build credibility through verifiable sales data, customer reviews, fulfillment metrics, and financial history. The platform’s reputation engine synthesizes these data points into a comprehensive trust score, making business performance transparent and investible.

Human Trust provides a pathway for aspiring entrepreneurs who lack business history but possess viable plans and community support. Through our Agent sponsorship system, established community members can vouch for individuals, effectively providing “human collateral” that bridges the gap between potential and capital access.

Both paths converge on a shared investment platform where investors can deploy capital across multiple currencies (Nigerian Naira, Cardano ADA, or USDM stablecoin) with full transparency into where their funds go and how returns are calculated. The system replaces extractive interest-based lending with regenerative profit-sharing, aligning incentives across all participants.

The 4-Way Split: Regenerative Capital Model

Catalyst’s economic model is built on the principle that sustainable growth requires fair value distribution. When SMEs generate profits, the platform employs a “4-Way Split” mechanism that allocates value across four stakeholder groups:

Investors receive their proportional share of profits based on their investment contribution, replacing fixed interest payments with performance-linked returns. This structure means investors benefit when businesses thrive, creating natural alignment between capital providers and entrepreneurs.

SMEs retain the majority of profits to reinvest in business growth, working capital, and capacity expansion. Unlike predatory lending models that extract wealth from communities, Catalyst ensures entrepreneurs maintain control and ownership of their enterprises.

Agents earn a 5% commission on profits generated by businesses they sponsor, creating a “generational income” model. This structure incentivizes Agents to identify promising entrepreneurs, provide ongoing support, and build portfolios of successful ventures. As sponsored businesses grow over years, Agents benefit from compounding returns on their human capital investment.

The Platform collects service fees (10% from investors, 20% from SMEs) to sustain operations and fund ecosystem development. Notably, 10% of platform revenue flows into a Risk Mitigation Fund designed to handle edge cases, defaults, and community insurance mechanisms.

This structure creates positive-sum economics where every participant’s success depends on the collective prosperity of the ecosystem.

Why Cardano?

The choice of Cardano as the blockchain infrastructure is deliberate and strategic. While multiple blockchain platforms exist, Cardano offers unique advantages for building long-term financial infrastructure in emerging markets.

Formal Verification and Security: Cardano’s smart contracts are built using Plutus, a language designed with formal verification principles. For a platform handling real people’s livelihoods, the mathematical certainty that escrow contracts behave exactly as specified is not optional—it’s foundational. Traditional audits can miss edge cases; formal verification provides proof.

Transaction Economics: With transaction fees averaging $0.20, Cardano makes micro-investments economically viable. In a market where the average investment might be ₦50,000 ($60 USD), high blockchain fees would consume meaningful portions of returns. Cardano’s fee structure preserves value for end users.

Sustainability and Longevity: Building financial infrastructure requires thinking in decades, not quarters. Cardano’s peer-reviewed development process, academic foundation, and commitment to energy-efficient proof-of-stake consensus signals long-term viability. Emerging market users cannot afford to build on platforms that might not exist in five years.

Real-World Commitment: Cardano’s partnerships in Ethiopia and focus on African markets demonstrate alignment with the mission of financial inclusion in developing economies. This is not theoretical blockchain use—it’s infrastructure being deployed where traditional systems have failed.

Key Features

Multi-Currency Investment System

Investors can deploy capital in Nigerian Naira (NGN), Cardano (ADA), or USDM stablecoin with seamless exchange rate management and fair profit distribution across currencies. The system handles on-chain escrow for crypto investments while maintaining platform-managed wallets for fiat operations.

Automated Profit Distribution

When SMEs report profits, the 4-Way Split algorithm automatically calculates allocations for investors, SMEs, agents, and platform with precision. Payment schedules generate upon full funding, tracking installments and distributing returns proportionally to all stakeholders.

Reputation Engine (1,000-Point Model)

The trust scoring system synthesizes Platform Trust (300 pts), Marketplace Performance (350 pts), Customer Feedback (150 pts), and Financial History (200 pts) into quantifiable credibility scores. SMEs with higher scores attract more investment capital at better terms.

Blockchain-Secured Escrow

Smart contracts written in Aiken ensure crypto investments remain locked on-chain until predefined conditions are met. Investors maintain custody of private keys through client-side transaction signing with popular Cardano wallets (Nami, Eternl, Flint).

KYC and Verification Workflows

Identity verification, address confirmation, and business registration checks ensure platform integrity while maintaining user privacy. Verification status feeds into reputation scores, creating incentives for transparency.

Technical Stack

Backend: Node.js, Express, Prisma ORM, PostgreSQL, JWT Authentication
Frontend: Next.js 14, TypeScript, React, Tailwind CSS
Blockchain: Cardano, Aiken Smart Contracts, Lucid Library, Blockfrost API
Infrastructure: Vercel (Frontend), AWS/Railway (Backend), Cloudinary (File Storage)
External APIs: CoinGecko (Exchange Rates), ExchangeRate-API (Currency Conversion)

Quick Start for Developers

Prerequisites

Node.js 18+, PostgreSQL 14+, Git
Cardano wallet (Nami/Eternl/Flint) for testing
Blockfrost API key (free tier available at blockfrost.io)

Backend Setup

git clone https://github.com/your-org/catalyst-project.git
cd catalyst-project/backend
npm install
cp .env.example .env
# Configure DATABASE_URL, JWT_SECRET, BLOCKFROST_API_KEY in .env
npx prisma generate
npx prisma migrate dev
npm run dev  # Starts on http://localhost:8000

Frontend Setup (Investor Dashboard)

cd investor-dashboard
npm install
cp .env.local.example .env.local
# Configure NEXT_PUBLIC_API_URL and NEXT_PUBLIC_BLOCKFROST_API_KEY
npm run dev  # Starts on http://localhost:3000

Repeat frontend setup for sme-portal and marketplace applications (each runs on different ports).

Smart Contracts

cd aiken-contracts
aiken build  # Compiles to plutus.json
aiken check  # Runs tests

Architecture Overview

Catalyst employs a microservices architecture with three specialized web portals, a unified REST API backend, and blockchain integration layer.

Investor Dashboard enables capital providers to browse opportunities, execute multi-currency investments, track portfolios, and manage wallet connections.

SME Portal allows entrepreneurs to create funding requests, report profits, manage payment schedules, and monitor reputation scores.

Admin Platform provides operational oversight for KYC verification, request approval, risk monitoring, and platform analytics.

Backend API handles authentication, business logic, database operations, exchange rate management, and blockchain transaction coordination.

Smart Contracts manage on-chain escrow for ADA/USDM investments with formal verification guarantees.

[For detailed architecture diagrams, database schema, and API specifications, see DOCUMENTATION.md]

Current Status

Phase 1 MVP is complete as of January 2026 with the following capabilities:

✅ Multi-currency investment (NGN, ADA, USDM)
✅ Two-step Cardano investment flow with wallet signing
✅ Automated payment schedule generation
✅ 4-Way Split profit distribution
✅ KYC verification workflows
✅ Portfolio tracking and analytics
✅ Smart contract escrow integration

Recent Improvements (January 2026):

Fixed duplicate investor share creation bug
Implemented exchange rate round-off adjustment
Added minimum investment validation (₦1.00)
Enhanced error handling with detailed logging

Phase 2 Roadmap (Q1-Q2 2026):

Full Agent sponsorship system
E-commerce marketplace integration
Mobile applications (iOS/Android)
Enhanced reputation engine with real-time data

Business Model

Revenue derives from platform fees that scale with ecosystem growth: 10% of investor profits and 20% of SME profits. At ₦100 million in monthly profit distributions, this generates ₦18 million in platform revenue. Agent commissions (5% of SME profits) create network effects without direct platform costs—Agents become growth drivers who recruit participants to build their portfolios.

A 10% allocation of platform revenue flows into the Risk Mitigation Fund, providing financial cushion for defaults and building long-term sustainability. Unit economics are favorable: average funding request of ₦500,000 with ₦1,000,000 in reported profits generates ₦180,000 in platform revenue over 3-month lifecycle.

Impact Metrics

Beyond financial sustainability, Catalyst tracks social impact:

Number of MSMEs funded
Total capital deployed
Jobs created or sustained
Youth entrepreneurs supported
Default and repayment rates
Geographic distribution of investment

These metrics demonstrate value to impact investors, development finance institutions, and partners interested in financial inclusion outcomes.

Contributing

Catalyst welcomes contributions from developers, designers, researchers, and domain experts. See CONTRIBUTING.md for guidelines.

How to Contribute:

Fork the repository and create feature branches
Submit pull requests with clear descriptions and test coverage
Report bugs or request features through GitHub Issues
Join development discussions in Discord

Development Standards:

TypeScript with strict type checking
ESLint configuration enforcement
Unit tests for business logic
Documentation updates with code changes

Security

Catalyst implements defense-in-depth security:

JWT authentication with bcrypt password hashing
Role-based access control (RBAC)
Smart contract formal verification
Client-side transaction signing (user key custody)
Data encryption at rest (AES-256)
HTTPS/TLS for API communications
Rate limiting and input validation
Comprehensive audit logging

For security issues, contact security@catalyst.africa with details. We follow responsible disclosure practices.

Documentation

Complete Technical Documentation: See DOCUMENTATION.md for comprehensive coverage of architecture, database schema, API specifications, testing procedures, and deployment guides.

API Reference: Backend exposes RESTful endpoints for authentication, wallet management, funding requests, investments, profit reporting, and KYC workflows. All endpoints require JWT authentication except public registration/login.

Smart Contract Docs: Aiken validators implement investment escrow with formal verification. See aiken-contracts/README.md for contract specifications and testing procedures.

License

MIT License - See LICENSE file for details.

Contact

GitHub: github.com/your-org/catalyst-project
Email: team@catalyst.africa
Twitter: @CatalystAfrica
Discord: [Community server link]

For business inquiries, investment opportunities, or partnerships, contact the core team directly.

Acknowledgments: This project emerged from the CATS (Cardano Action-Learning Training School) Hackathon 2025 and represents collaborative work by developers, designers, and researchers committed to solving real-world problems in emerging market finance.

Sme Problem