Blockchain Integration

Why Cardano?

Catalyst chose Cardano as blockchain infrastructure for strategic reasons:

Formal Verification and Security

Cardano’s smart contracts use Plutus, a language designed with formal verification principles. For a platform handling real people’s livelihoods, 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 energy-efficient proof-of-stake consensus signal long-term viability.

Real-World Commitment

Cardano’s partnerships in Ethiopia and focus on African markets demonstrate alignment with the mission of financial inclusion in developing economies.

Smart Contract Architecture

Investment Escrow Contract

Written in Aiken 1.0, the escrow contract implements:

// Core escrow logic
validator investment_escrow {
  // Parameters
  beneficiary: PublicKeyHash
  deadline: POSIXTime
  
  // Spending conditions
  spend(datum, redeemer, ctx) {
    // Release to beneficiary if funded
    // Refund to investors if deadline passed
    // Verify signatures
  }
}

Key Features:

Funds lock on-chain until conditions met
Multiple investors can contribute to same escrow
Automatic refund if funding target not reached by deadline
Beneficiary (SME) can claim after full funding
Time-locked for security

Two-Step Investment Flow

Step 1: Prepare Transaction

Investor calls /api/cardano/prepare-investment
Backend generates transaction parameters
Returns UTxO references, amounts, and contract address

Step 2: Sign and Confirm

Investor signs transaction using wallet (Nami, Eternl, Flint)
Broadcasts to Cardano blockchain
Submits tx hash to /api/cardano/confirm-investment
Backend verifies on-chain and records in database

Profit Distribution

When SME reports profits, the system:

Calculates each investor’s share based on contribution %
Generates release transaction from escrow
SME signs to release proportional amounts
Each investor receives their share directly to wallet

Blockfrost Integration

Blockfrost provides Cardano blockchain access without running a full node:

const blockfrost = new BlockFrostAPI({
  projectId: process.env.BLOCKFROST_PROJECT_ID,
  network: 'preprod' // or 'mainnet'
});
 
// Query transaction status
const tx = await blockfrost.txs(txHash);
 
// Get UTxOs at address
const utxos = await blockfrost.addressesUtxos(address);

Security Considerations

Self-Custody Model

Users never expose private keys to the platform
Wallet applications (Nami, Eternl, Flint) handle signing
Platform backend never has custody of crypto assets
All blockchain interactions are transparent and auditable

Contract Auditing

Smart contracts undergo:

Formal verification using Aiken’s type system
Manual code review by experienced Cardano developers
Testnet deployment for real-world testing
Community audit before mainnet deployment

Multi-Signature Safety

For high-value operations, the system supports:

Multi-signature escrow requiring multiple approvals
Time-locks preventing immediate withdrawal
Admin override for dispute resolution (with governance)

Mainnet Readiness

Current Status: Preprod Testnet

Before mainnet deployment:

Core escrow contract implemented
Two-step investment flow functional
Blockfrost integration complete
Security audit by external firm
Stress testing with 1000+ concurrent transactions
Insurance coverage for smart contract risk
Mainnet deployment with gradual rollout

Network Fees

Average transaction costs on Cardano:

Lock funds in escrow: ~0.3 ADA ($0.20)
Release from escrow: ~0.3 ADA ($0.20)
Total per investment cycle: ~0.6 ADA ($0.40)

Compare to Ethereum: $5-50+ per transaction depending on gas prices.

Future Enhancements

NFT reputation tokens for top-performing SMEs
On-chain governance for platform parameter changes
Decentralized oracle integration for automated profit verification
Cross-chain bridges to accept Bitcoin, Ethereum, Solana

Architecture Database