CARDANO PRIME — Protocol Readiness, Incentives, and Market Expansion

This proposal is a culmination of months of communications with the Cardano ecosystem members, who provided constructive and critical feedback to the proposal. Without these key participants, the proposal would not have arrived at its final form.

We are grateful to all stakeholders across the Cardano ecosystem who shared their vision, challenged our thinking, and helped us contribute more meaningfully to this community. We are especially thankful to Mr. Charles Hoskinson for sharing his vision for Cardano and the broader mission that animates this ecosystem.

And to the many contributors across the Cardano community who offered feedback, asked hard questions, and pushed us to think more carefully — this proposal is better because of you.

This is a living draft. Community input is what makes proposals like this stronger. If you have feedback, suggestions, or points we may have missed, there is a feedback form at the end of this article — we read every submission.

What PRIME does.

PRIME brings competitive DeFi to Cardano. Cardano's smart-contract era, eUTxO architecture, and the recent infrastructure additions (USDCx, LayerZero v2, Pyth, Dune) are world-class — what is missing is the competitive depth in the applications, liquidity products, and capital flows that turn that infrastructure into a destination DeFi users actually choose. PRIME closes that gap.

AlphaGrowth audits the entire Cardano DeFi ecosystem against the leaders, makes the existing apps better while bringing the new apps Cardano is missing, leads incentive programs at industry-leading cost-efficiency, and works behind the scenes with the LPs and structured-product issuers that actually move capital on-chain. The result is sticky, durable TVL on Cardano — TVL that compounds, not TVL that runs the day incentives stop.

AlphaGrowth leads the program, chosen after the proposer team conducted a structured evaluation of candidate growth operators and selected AG to go forward. PRIME runs in three phases:

• 1 Phase 1 (Months 1–2): Current-State Audit
• 2 Phase 2 (Months 2–4): Gap Analysis and Implementation Recommendations
• 3 Phase 3 (Months 5–12): Incentive and Capital Deployment — with the Operating Group voting on Phase 3 release at the end of Month 4.

Quantitatively: PRIME targets net qualifying TVL growth of $200M+ over 12 months (Cardano DeFi moving from ~$90M to ~$290M). This implies approximately $0.073 of treasury spend per $1 of TVL grown at the maximum compensation point — broadly comparable to Arbitrum's STIP ($85M for ~$1B TVL growth ≈ $0.085/$) and meaningfully more capital-efficient than Optimism's earliest growth programs.

The gap is real. The runway is substantial.

As of June 2026, Cardano's DeFi ecosystem holds approximately $90M in total value locked and $45M in stablecoin supply (sources: Defillama Cardano page; Cardano Foundation telemetry).

These figures represent real progress. They also show how much runway remains: comparable ecosystems with similar infrastructure maturity have reached multiples of this liquidity within similar timeframes. Sui has crossed $1B+ TVL within 18 months of mainnet; Aptos $400M+; Sei $300M+.

The gap is not primarily technical. Recent additions — USDCx native deployment, LayerZero v2 cross-chain messaging, Pyth oracle integration, Dune analytics support — have brought Cardano materially closer to parity with leading DeFi ecosystems. What has not kept pace is the conversion of infrastructure availability into active, durable liquidity.

Cardano DeFi faces three interlocking liquidity challenges that must be addressed in order: fragmented liquidity, inefficient liquidity, and insufficient liquidity. Solving fragmentation and efficiency before chasing volume is the difference between durable growth and a subsidy treadmill.

The remaining substantive gap is concentrated in four areas:

• 1 Execution & solver markets. Limited routing infrastructure and no native solver competition reduces trade efficiency for sophisticated LPs.
• 2 Advanced liquidity products. Programmable pool architectures and eUTxO-native vault standards remain underdeveloped, narrowing the strategies available to LPs. Cardano's eUTxO model and native, non-custodial liquid staking are structural advantages that most competing ecosystems do not have — converting that structural advantage into LP-ready primitives is a core Phase 2 priority.
• 3 Risk & insurance tooling. Limited on-chain risk management restricts the size of capital that institutional LPs are willing to commit.
• 4 Distribution & awareness. Outside of long-time Cardano builders, ecosystem awareness among non-Cardano institutions, LPs, and protocols remains low.

DeFi is the foundation of long-term treasury sustainability. On-chain activity, fee generation, and capital retention all depend on a functioning, attractive DeFi ecosystem. PRIME is designed to convert Cardano's existing infrastructure investment into durable, retained liquidity through a structured, publicly accountable process grounded in objective analysis.

The bottleneck is LP unit economics, not infrastructure availability.

PRIME's working hypothesis: the bottleneck on Cardano DeFi TVL growth is not infrastructure availability but durable LP unit economics . Structured incentives bridge the LP profitability gap during a 6–9 month window; shared infrastructure (eUTxO vaults, solver markets, risk tooling) lands in parallel via PRIME grants and Pentad coordination; the combination produces TVL growth that persists beyond the incentive period.

On TVL as a metric

TVL is the practical headline metric — the catch-all the broader community can verify against public data (DefiLlama, Cardano Foundation telemetry). It is not perfect. PRIME's actual objective is to grow what we call organic APR : real user activity (accounts, transactions, fees generated) that compounds the on-chain economy independent of any incentive subsidy. Organic APR is what minimizes the long-run cost of incentivized TVL — when fees and users grow alongside TVL, the incentive bill shrinks because the market itself is paying LPs to stay. PRIME reports volume, raw transaction fees, monthly active users, and 6-month rolling TVL persistence alongside the headline TVL number every quarter. TVL is the easiest number to track and prove; organic APR is the number we're actually working toward.

Falsification trigger

If month-6 qualifying TVL growth is below $80M with incentives flowing per schedule, the model is wrong. AG recommends to the OG to redirect remaining liquidity-incentive capital to direct LP partnerships, restructure the incentive cohorts, or pause new incentive launches pending a Phase 2 recommendation revision.

Three sequential phases. Phases 2 and 3 are separated by a gate.

PRIME is a 12-month program executed in three sequential phases. Phases 2 and 3 are separated by the Phase 3 Release Gate at the end of Month 4 — Phase 3 capital does not flow without OG affirmation. All phases operate under the same Operating Group oversight and publication requirements.

Phase 3 Release Gate

Phase 3 capital release is gated on Operating Group affirmation. At the end of Month 4, the OG reviews the Phase 1 audit, the Phase 2 Integration and Ecosystem Support Recommendations, and AG's proposed Phase 3 deployment plan, and votes on release.

The release Recommendation is a single, named decision record published in tamper-evident form. AG has no vote and cannot direct its own outcome.

Phase 1 — Current-State Audit (Months 1–2)

Phase 1 is a structured, objective baseline that creates a shared, publicly documented picture of Cardano DeFi across approximately 20–25 categories so that downstream recommendations are grounded in evidence and defensible to the community.

Categories reviewed span bridges and cross-chain messaging, oracle providers, custody and asset management infrastructure, analytics and data infrastructure, DEXs and AMMs, lending and borrowing protocols, stablecoin issuers, liquid staking and yield products, perpetuals and derivatives, prediction markets, institutional on-ramp infrastructure, and distribution partnerships. Each category is benchmarked against comparable ecosystems.

The resulting Cardano DeFi Current State Analysis is published as a public good by the end of Month 2. It serves as the baseline input for Phase 2, as the Operating Group's primary reference for the Phase 3 release vote, and as a community resource independent of the program itself.

Phase 2 — Gap Analysis and Implementation Paths (Months 2–4)

Phase 2 identifies the highest-value gaps from the Phase 1 audit and assigns each an implementation path. The primary Phase 2 deliverable is the Integration and Ecosystem Support Recommendations document, detailed in Appendix C.

This document is community input, not binding instruction. PRIME's Phase 3 deployment proceeds against the priorities identified in this document; outside parties may or may not act on the broader recommendations, and PRIME does not require their action.

Phase 3 — Incentive and Capital Deployment (Months 5–12)

Phase 3 puts treasury resources to work, subject to the Phase 3 release gate above. Deployment is milestone-gated and action-gated: incentives flow only when the market can retain liquidity beyond the subsidy period, and only against recommendations that have cleared the Operating Group review window.

AG uses LP dealmaking, cohort-based liquidity analysis, and asset-by-asset optimization to structure incentive campaigns. Protocols and liquidity providers qualify based on objective, published eligibility criteria including TVL thresholds, audit status, transparency standards, and protocol age. Any qualifying protocol can participate on equal terms.

Preference toward Cardano-native teams. Where AG assesses a Cardano-native team can deliver against equivalent confidence to an external alternative at reasonable cost, PRIME defaults to the Cardano-native team. Remediation paths — targeted technical or operational support to bring a Cardano-native option to equivalent confidence — are offered before substitution. PRIME's purpose is to grow Cardano DeFi, not to displace it; "buy" and "partner" paths are reserved for cases where Cardano-native confidence cannot be achieved within the program window or where institutional counterparties (funds, wallets, structured-product issuers) will only deploy via known external parties.

Some Phase 3 deployments are structured as treasury-owned recoverable capital (seed LP positions, solver infrastructure loans). Principal and yield return to the Cardano Treasury where the deployment expressly creates return rights. The distinction between recoverable and non-recoverable spend is documented in each Disbursement Memo.

Coordination with the Cardano Pentad

The Cardano Pentad is the coordinated executive body formed by Input Output Global (IOG), the Cardano Foundation, EMURGO, Intersect, and the Midnight Foundation, aligning priorities and accelerating delivery of critical ecosystem infrastructure.

PRIME coordinates with the Pentad where objectives align. A designated PRIME liaison maintains direct working relationships with the Pentad executive group. Where PRIME's Phase 2 recommendations and a Pentad workstream overlap, PRIME defers to the Pentad on infrastructure already in Pentad scope. The Pentad defers to PRIME on incentive design and LP-facing programs. PRIME will recommend growth opportunities and partnerships in all facets of chain and ecosystem health but defer to the Pentad on infrastructure and integrations.

₳120M total. ~75% gated on Phase 3 vote.

The total withdrawal request is ₳120,000,000 ($19,200,000 at a $0.16/ADA planning assumption). The budget is a single consolidated request — subject to the Phase 3 release gate at the end of Month 4. All disbursements are executed by Intersect MBO through institutional custody. The Operating Group holds no funds.

Budget Breakdown

Budget classification. AG Fixed Advisory Fee and the Performance Fee Reserve are AG compensation. Ecosystem Grants, Liquidity Incentives, and Marketing are program spend; AG is not eligible to receive compensation from those envelopes unless AG is separately approved as a direct vendor through the standard Recommendation / Disbursement Memo process. Legal & Compliance and Independent Audit are oversight spend.

Total maximum AG compensation = $1,760,000 + $4,640,000 = $6,400,000 ($1.76M floor, $6.4M ceiling), all paid in ADA at the $0.16 planning rate or actual ADA price at disbursement.

AG Performance Fee — Structure and KPIs

The performance fee is a declining marginal rate against verified qualifying TVL growth, capped at $4,640,000 at $264M of qualifying TVL growth. Qualifying TVL growth is defined under the attribution methodology in Appendix B. Volume and raw fees generated are reported alongside qualifying TVL in every quarterly update.

The Performance Fee Reserve of $4,640,000 / ₳29,000,000 fully covers the contractual cap. Any unearned portion at program conclusion returns to the Cardano Treasury under return trigger 1. No performance fee is disbursed prior to the Operating Group's sign-off on the TVL attribution methodology (M2 gate condition).

Milestone & Drawdown Schedule

Disbursements track each budget category to the phase in which it unlocks. Phase 3 envelopes (M3 and M4) are subject to the Phase 3 Release Gate at the end of Phase 2 (Month 4).

Phase 1–2 spend (months 0–4): approximately ₳30M / $4.8M . Phase 3 gated capital (months 5–12): approximately ₳90M / $14.4M . If the Phase 3 Release Vote does not affirm, the gated tranches stay under Operating Group governance.

Recoverable Capital

A portion of program deployment may be structured as treasury-owned deployable capital with return rights. Each such deployment requires a Disbursement Memo specifying return rights, recovery timeline, conditions, and risk treatment.

Treasury exposure caveat. Any deployment under Recoverable Capital carries non-zero risk of partial principal loss. The OG and AG bear no fiduciary responsibility for losses absent breach of duty. DReps approving this proposal acknowledge this exposure.

Unused Funds — Six Return Triggers

Any funds not disbursed at program conclusion — including unabsorbed yield on held funds and any unearned portion of the Performance Fee Reserve — return to the Cardano Treasury under the following triggers:

• 1 End-of-program unused balance. Any balance in custody at Month 12 closeout returns to the treasury within 30 days.
• 2 Contract termination with undisbursed funds. If the AG contract is terminated (for-cause or for-convenience per Termination Authority), undisbursed funds return to treasury within 30 days of termination effective date.
• 3 Unresolved vetoed recommendations expiring within the program timeline. A recommendation that is vetoed and not successfully revised before Month 12 cannot result in disbursement; reserved funds return.
• 4 Milestone gate failure where remediation is infeasible, including a negative Phase 3 Release Gate vote. If a milestone gate fails and the OG determines (3-of-5 vote) that remediation is not feasible within the remaining program timeline, the tranches associated with the failed gate remain under Operating Group governance.
• 5 AG determination that material market change makes continued disbursement inappropriate. AG may, with OG concurrence, recommend program suspension and return of undisbursed funds. Trigger conditions: ADA price movement >50% from $0.16 planning assumption (either direction) sustained 60+ days; material change in NCL; collapse of Cardano DeFi TVL >40% from baseline.
• 6 Excess attribution-verified earnings beyond the Performance Fee cap. The Performance Fee is capped at $4.64M; any growth-attributable upside above that cap accrues solely to the ecosystem, not to AG, and reserve balances above earned fees return to the treasury.

No single party controls the full stack.

PRIME uses a delegated execution model with narrow checks. AG develops program recommendations and disbursement instructions. The Operating Group reviews them and holds majority-rule veto. Intersect MBO executes approved disbursements through institutional custody.

Operating Group

Five voting members, each with one vote. Composition is finalized after the public comment period. We are looking for objectivity, DeFi literacy, and good community standing. No seat is filled by an active employee or principal of AlphaGrowth. Final composition is confirmed and signed by Intersect MBO as Constitutional Administrator before the M1 milestone.

OG Term, Replacement, Vacancy, Removal

Community First — Composition Rationale

Cardano DeFi protocol teams bring direct, day-to-day insight into technical, liquidity, and market-structure barriers. To preserve actual and perceived objectivity, those teams participate via the non-voting DeFi & Community Advisory Council rather than serving as voting OG members. This gives PRIME access to protocol-level expertise without giving any participant veto rights, payment authority, or preferential access to funds.

Decision Mechanics & Materiality Threshold

A Recommendation record is created for each substantive program decision above the materiality threshold. AG creates and publishes the Recommendation, which enters an OG review window. Any OG member may veto with written rationale tied to program criteria. A veto requires 3-of-5 members to take effect (3-of-4 with one vacant seat).

• Materiality Threshold
  ₳400,000 (~$64,000 at $0.16/ADA), USD-pegged — recomputed quarterly if ADA price moves ±25% from planning assumption.
• Cumulative-Cap Protection
  Aggregate disbursements to any single recipient or affiliated group above $250,000 per quarter trigger full OG review even if individual disbursements are below threshold.
• Standard Review Window
  7 calendar days for material recommendations.
• Accelerated Review Window
  3 calendar days for time-sensitive matters with OG-chair concurrence.
• Vacation Handling
  OG members may pre-delegate veto authority to one other member for up to 14 days per year; delegations published in real time.
• Vetoed Recommendations
  Returned to AG with written rationale; AG may revise and resubmit for a fresh review window.
• Non-Vetoed Recommendations
  Authorize Intersect to execute the corresponding Disbursement Memo.

Recusal Standards

To address conflicts of interest from OG members whose employers may be counterparties, beneficiaries, or contractual instructors, the following recusal rules apply:

• Mandatory Recusal — Counterparty Matters
  Any OG member whose employer is a counterparty to a recommendation, disbursement, or contract amendment must recuse from all votes related to that matter.
• Mandatory Recusal — Beneficiary Matters
  Any OG member whose employer (or affiliated entity) is a beneficiary of a grant, incentive, or capital deployment decision must recuse.
• Mandatory Recusal — Instructor Matters
  Any OG member whose employer is the contractual instructor on any program contract must recuse from votes related to that contract's amendment, scope change, or termination.
• Threshold Adjustment on Recusal
  When one member recuses, the 3-of-5 veto threshold reduces to 3-of-4 (still requires a majority of voting members). When two members recuse on the same matter, action requires unanimous consent of the remaining three.
• Publication
  All recusals and the matter triggering them are published in real time.

AG's Role and Operational Independence

AG designs the program, produces the Current-State Analysis, drafts the Integration and Ecosystem Support Recommendations, develops the incentive strategy, and manages capital deployment workflows. AG operates with independence on program substance: recommendations reflect AG's professional judgment, not instructions from the OG or the contractual counterparty.

AG does not hold or control program funds, does not have signing authority over the custodian account, and cannot direct or authorize its own payment. All compensation flows through Intersect's execution of non-vetoed Disbursement Memos.

Termination Authority

The AG contract may be terminated as follows:

Cause includes: material breach of the master services agreement; sustained non-performance against published milestone targets; conflict of interest violation; regulatory action against AG that materially impairs program execution. On termination, undisbursed program funds return to treasury under return trigger 2.

Constitutional Administrator TBD

The Constitutional Administrator and custodian arrangement is to be finalized before the on-chain vote . Current considerations under active discussion: Intersect MBO as Constitutional Administrator and payment administrator, with BitGo Trust as the institutional custodian.

Under the contemplated arrangement, funds would be held in a dedicated auditable account separate from any other Intersect program funds. Program funds would not be delegated to any SPO. Governance voting weight on held funds would be set to abstain or as directed under applicable constitutional requirements. The Constitutional Administrator would execute disbursements operationally based on non-vetoed Recommendations and Disbursement Memos from AG, and would provide custody, audit infrastructure, and reporting support — but would not direct program substance.

Custodian Setup Specifics (under consideration)

• Multisig structure: 2-of-3 (Constitutional Administrator officer, custodian officer, OG-elected signer)
• Signing quorum at custodian level: institutional custodian's standard institutional-account controls
• Wire instructions and on-chain disbursement procedures: per custodian's standard institutional account agreement

Contracting Structure

The contractual counterparty (to be selected) serves as counterparty for both AG and the Operating Group. The contract between the counterparty and AG expressly states that the counterparty has no unilateral control over AG's recommendations, incentive design, counterparty selection, analytical conclusions, or disbursement memos. AG's work is governed by the published scope of this proposal and the Operating Group's majority-veto process.

This proposal serves as the source-of-truth exhibit for the AG master services agreement. Before contracting, the counterparty publishes a selection rationale, statement of work summary, conflict check results, and commercial terms summary.

DeFi & Community Advisory Council

The non-voting DeFi & Community Advisory Council brings ecosystem expertise to program design without granting any participant veto rights, payment authority, or preferential access to funds. The Council exists to ensure existing Cardano DeFi participants get fair input and representation into the program. Council members assist the Operating Group; they do not work directly with AlphaGrowth on PRIME implementation.

Council seats are not on the Operating Group itself because Council members may be grant or incentive recipients during the program — sitting on the OG would create direct conflicts of interest. The Council gives Cardano-native protocols delegated representation and a published input channel without those conflicts.

• Composition. Cardano-native DEX, lending, stablecoin, perpetuals, liquid-staking, and yield-product builders. Final composition is confirmed by the OG at program launch.
• Information-asymmetry mitigation. AC participation in incentive-program design discussions is open to observer status for any qualifying protocol that requests it. AC meeting notes are published in real time alongside other program records. AC members do not see eligibility criteria before public publication.
• Voice & disclosure. Where the AC provides input that the Operating Group declines to act on, the declination and rationale are recorded in the next quarterly report, so AC input cannot be quietly ignored.
• Compensation. No AC participant receives any salary, stipend, or direct compensation from this withdrawal.

Eight identified risks. All mitigated.

PRIME identifies the following risks and corresponding mitigations. This is a brief inventory; full mitigation working plans are produced as part of Phase 1 and updated at each milestone.

$160K / ₳1.0M dedicated to legal work in Month 1.

The Legal & Compliance budget line ($160K / ₳1.0M) funds the following work, completed in Month 1 and refreshed annually:

• Jurisdictional Analysis
  The contractual counterparty's jurisdiction and tax status documented. AG entity structure and operating jurisdiction documented. Constitutional Administrator (Intersect MBO) jurisdiction and authority documented.
• AML / KYC
  Standard AML/KYC checks for all grant recipients above ₳100,000 per disbursement, performed by an independent compliance vendor. Eligibility criteria require recipient legal entity disclosure.
• Securities & Tax Treatment
  Outside counsel opinion on whether the performance fee constitutes a security or other regulated instrument in the relevant jurisdictions. Tax treatment of yield on held funds documented for both Intersect (administrator) and AG (recipient).
• Participant Agreements
  Template agreements for grant recipients, LP incentive participants, marketing-budget vendors, and the AG master services agreement, all reviewed by outside counsel.
• Sanctions Screening
  All grant and incentive recipients screened against OFAC SDN list and relevant non-US sanctions lists.

Forward commitment, not a backward-looking log.

Pre-submission engagement is a DRep-norm expectation under CIP-1694 governance practice. AG commits to workshopping this proposal with the following audiences before on-chain submission and to publishing the engagement record here.

What PRIME does not fund.

The following are not funded by this treasury withdrawal and are not authorized under the scope of this governance action:

• 1 Infrastructure builds, primitives, and shared integrations that don't clear PRIME's process. This proposal does not categorically exclude infrastructure work — it excludes commitments that do not clear PRIME's Recommendation, budget, and review process. Production hardening of the limit order book, eUTxO-native vault infrastructure, scaling work, and shared protocol or language-level work may be funded inside the program where necessary for PRIME delivery (cap: aggregate $4M of Ecosystem Grants & Build Support); items too large or structurally separate route through the Integration and Ecosystem Support Recommendations deliverable and external funding paths.
• 2 Year 2 program continuation. A second year requires its own governance action and community approval.
• 3 Pentad or other liquidity-growth work. Pentad member activities require their own governance actions.
• 4 Direct dApp investment beyond program scope. Catalyst and venture vehicles are the appropriate mechanisms for equity or token-based dApp investment.
• 5 Cardano Community Initiative (CCI) V1 maintenance and CCI V2 enhancements. Covered by separate CCI Budget governance actions.
• 6 Outsized third-party grant, partnership, or integration packages. The OG may determine that an opportunity is too large, controversial, structurally separate, or outside delegated scope for this withdrawal. Outsized = individual grant >$1,000,000 or aggregate >25% of the Ecosystem Grants & Build Support envelope. Such opportunities are submitted through their own on-chain proposal, routed through Pentad or another aligned ecosystem effort, or deferred for separate community review.
• 7 OG and Advisory Council operational overhead. Participant time and any costs incurred by OG members or Advisory Council participants are not covered by this withdrawal.

Operational Governance Detail

Decision Mechanics (detail)

A Recommendation record is created for each substantive program decision above the materiality threshold of ₳400,000 (USD-pegged, recomputed quarterly if ADA moves ±25%). Cumulative-cap protection applies for any single recipient or affiliated group above $250,000 per quarter.

The OG review window opens upon publication of the Recommendation. Members vote within the window:

• 3-of-5 (or 3-of-4 with recusal/vacancy) vote with written rationale → Recommendation is vetoed. Returned to AG with rationale. AG may revise and resubmit for a fresh review window.
• Fewer than 3 vetoes within review window → Recommendation authorizes Intersect to execute the corresponding Disbursement Memo.

All Recommendations, vetoes, written rationales, and final outcomes are published in tamper-evident form within 5 business days of resolution.

Veto Standards

Veto authority is reserved for material objections tied to program criteria: scope violations, eligibility failures, disbursement errors, conflict of interest concerns, or clear departures from the program's public-good mandate. Veto authority is not a general override mechanism. Each vetoing party bears public accountability for its written rationale. A veto without written rationale has no effect.

Custody and Disbursement Flow

AG issues Recommendations and Disbursement Memos → OG review window → non-vetoed recommendations authorize Intersect to execute → Intersect executes from the custodian account. Blockchain-based execution is used where compatible with the recipient and disbursement type. Vendor and partner payments flow through traditional rails per the custodian's standard institutional payment processes.

Contract Standards

All contracts executed under this program include: defined scope and obligations; reporting requirements aligned to PRIME's reporting schedule; drawdown conditions tied to milestone gates; dispute resolution provisions (governing law: [TBD before submission]; venue: [TBD]); and public reporting obligations. Vendors and partners receiving program funds must comply with transparency and public-good commitments.

Cardano Addresses

Program funds are received and held under Intersect's administrative authority. The custody address is confirmed with BitGo Trust or the appointed equivalent custodian before submission.

Reporting Requirements & TVL Attribution Methodology

Reporting Schedule

All program reports are public. AG and the Administrator publish reports on the schedule below. The Operating Group maintains private working sessions during active build and deployment, with summary notes published quarterly.

Reporting cadence consolidation note: The quarterly updates at Month 6 and Month 12 serve as the bi-annual summaries; no separate bi-annual report is published.

Report Contents

Each milestone and quarterly report contains:

• Financial Summary & Treasury Reconciliation. Balance of program funds in custody; total disbursed to date by category; recovery status of seed capital and loans; yield accrued on idle/deployed assets net of approved costs; amounts returned to treasury; reconciliation against approved budget.
• Workstream Status. Phase 1 audit progress; Phase 2 gap analysis and recommendations; Phase 3 incentive campaign performance; capital deployment updates.
• Audit & Compliance Statement. Confirmation of compliance with OG veto requirements, publication requirements, and constitutional obligations. Results of most recent independent audit if completed.
• Ecosystem Impact Assessment. Quantitative metrics per attribution methodology. Headline qualifying TVL, stablecoin supply, monthly active users, transaction volume, raw fees generated, and 6-month rolling TVL persistence.
• Veto Record. Complete log of Recommendations submitted, vetoes taken, written rationale, resolution status.
• Advisory Council Disclosure. Items the AC raised that the OG declined to act on, with rationale.
• Governance & Forward Outlook. Program health; material changes to market conditions or deployment strategy; forward-looking commentary on remaining milestones.

TVL Attribution Methodology

The Performance Fee is paid against verified qualifying TVL growth. The full attribution methodology is drafted by AG, signed off by the Operating Group as an M2 gate condition (no performance fee disbursement before M2 OG sign-off), and published.

• Baseline date. Date of NCL ratification. Baseline TVL snapshot: independent third-party data (Defillama Cardano + Cardano Foundation telemetry) on baseline date.
• Measurement cadence. End of each calendar quarter beginning Month 3.
• Persistence requirement. Quarterly measurement requires TVL to hold for at least 30 days at measurement date. The headline TVL figure is reported alongside a 6-month rolling persistence number to distinguish durable from mercenary capital.
• Permissionless platform clarification. Cardano DeFi is a permissionless platform; TVL flows are not exclusively attributable to any program. Qualifying TVL is the net additional TVL that, after the carve-outs below, would not have arrived in the absence of PRIME activity.
• Supplementary metrics. Alongside qualifying TVL, every quarterly report includes raw transaction fees generated, monthly active users, and trading volume (not transaction count) so the OG can sanity-check headline TVL against on-chain economic activity.
• Carve-out: ADA price effects. USD-denominated TVL recomputed using rolling 7-day mean ADA price. Price-attributable gains/losses are excluded from "qualifying" growth.
• Carve-out: Pentad-delivered TVL. TVL attributable to USDCx, LayerZero v2, or other Pentad-program launches occurring during the program period is excluded. Methodology specifies how Pentad-attributable share is computed per protocol.
• Carve-out: Externally-funded protocol launches. New TVL from protocols whose primary funding source during the program is external (non-PRIME) venture or grant funding is excluded.
• Anti-double-counting. Cross-protocol TVL (e.g., LP tokens deposited into lending markets) counts once at originator protocol only.
• Dispute resolution. OG-level disagreement on attribution methodology application escalates to an independent technical panel (3-of-5 OG votes to convene). Panel composition: 1 AG nominee, 1 OG nominee, 1 independent ecosystem researcher (mutually agreed).

The attribution methodology may be amended only by 4-of-5 OG super-majority + AG concurrence; amendments are not retroactive.

Marketing & Ecosystem Awareness — Indicative Allocation

The $2.4M / ₳15.0M marketing budget is indicatively allocated as follows. Final allocation is set by AG Recommendation in M2/M3 with OG sign-off:

Integration and Ecosystem Support Recommendations (Phase 2 Deliverable Shape)

During Phase 2, AG produces the Integration and Ecosystem Support Recommendations document. It is community input, not binding instruction; PRIME's Phase 3 deployment proceeds against the priorities identified, regardless of whether outside parties act on the broader recommendations.

The document covers five areas:

• 1 Shared infrastructure. Limit order book hardening, DeFi Gateway SDK with custody adapters, eUTxO-native vault standards. Where eUTxO + native non-custodial liquid staking can be combined into a primitive that no competing ecosystem can replicate, that combination is prioritized.
• 2 Critical integrations. Bridge and cross-chain messaging providers; oracle networks; custody providers; analytics platforms; distribution partnerships. Assessment of live options, emerging paths, and lower-cost or better-fit alternatives.
• 3 Integration assessment. Full assessment of live and emerging bridge, messaging, oracle, custody, analytics integrations available to Cardano. Coverage gaps, redundancy, cost efficiency, sequencing.
• 4 Primitives and sequencing. Recommended protocol-level enhancements, scaling improvements, language features expanding Cardano's DeFi primitive layer. Recommended order of operations.
• 5 Funding path. Routing recommendations for each out-of-scope priority (Pentad coordination / protocol-led / separate treasury action / Catalyst).

Conflict of Interest and Public-Good Protections

Conflict-of-Interest Protections (structural, not discretionary)

• 1 No directive authority. No OG participant directs AG's program recommendations, incentive design, counterparty selection, analytical conclusions, capital deployment, or disbursement memos. AG's operational independence is contractually protected in the AG MSA.
• 2 Mandatory recusal — counterparty, beneficiary, and instructor matters. Per Recusal Standards above.
• 3 No preferential allocation. OG participants and their affiliated protocols compete for any incentive allocations on the same published objective criteria as any other qualifying protocol. Before any disbursement to an OG-affiliated protocol, the record must show: fewer than 3 OG vetoes; Intersect confirmation that the Recommendation completed required process before payment; written independent audit committee confirmation of objective eligibility.
• 4 Public eligibility criteria. Objective eligibility criteria (TVL thresholds, audit status, transparency standards, protocol age) are published at least 14 calendar days before any incentive campaign launches. Criteria cannot be modified retroactively.
• 5 Annual independent audit. The independent auditor examines all program disbursements annually, including any disbursements to protocols affiliated with OG participants. Audit findings are published publicly.
• 6 No salary, stipend, or direct compensation from program funds to OG / AC participants. Hard prohibition. Not subject to OG discretion. Applies to individual participants. OG members' employer organizations may compete for program grant or liquidity-incentive allocations only via published, objective criteria — and only with full recusal of the affiliated OG member from any related decision per Recusal Standards. A grant or liquidity allocation to an OG-member-affiliated organization that clears the published process is not "direct compensation" to the OG member.

Non-Discrimination and Public-Good Commitments

• 1 Comprehensive scope. PRIME covers all material DeFi categories: DEXs/AMMs, lending/borrowing, stablecoins, liquid staking, yield products, perpetuals/derivatives, prediction markets. No category is excluded from the Phase 1 audit or Phase 2 recommendations.
• 2 Open publication. Current-State Analysis, Integration and Ecosystem Support Recommendations, incentive eligibility criteria, all disbursement records, and all program outcomes are published in tamper-evident form.
• 3 Equal access. Any qualifying DeFi protocol may participate in PRIME incentive campaigns on equal terms. Access determined by published objective criteria, not relationships, prior engagement with AG, or affiliation with the OG.
• 4 Relationship independence. AG's recommendations are based on documented objective criteria and professional analysis. No recommendation is made on the basis of a commercial or personal relationship between AG and a protocol, partner, or vendor.
• 5 Open publication of outcomes. All final recommendation records, veto records, disbursement records, and program outcome data are published. No confidential carve-outs for program results.
• 6 No exclusivity. PRIME does not establish any exclusivity arrangement with any protocol, partner, vendor, or service provider. All program relationships are non-exclusive.