Everybody hates slippage.
That’s the problem Saddle, the freshly launched dApp “designed to enable efficient trading between pegged value crypto assets,” aims to tackle. And while the project quickly reached its initial deposit cap, it wasn’t without a couple of hiccups.
Saddle is a new automated market maker (AMM) that intends to provide liquidity for pegged-value crypto assets—or tokens with their value attached to an underlying asset—by using Synethetix’s synthetic Bitcoin. The founder hopes that launching with a tokenized Bitcoin pool (with four options available at launch: tBTC, WBTC, sBTC, and renBTC) will help minimize slippage.
Lack of Liquidity
Volatility and lack of liquidity in the DeFi market makes slippage—the difference between an expected trading price and the actual trading price when a transaction executes—a constant headache for traders.
Saddle aims to avoid some of the volatility and fees that affect even the most stable stablecoins by using placeholders for the transaction and then settling afterwards.
“So one of the problems that we’re setting out to solve is to basically unlock deep on-chain liquidity for pegged value crypto assets,” Saddle founder Sunil Srivatsa told Coindesk. “That means you’re able to make trades and lose a very minimal amount to slippage and transaction fees.”
Having already raised $4.3M in seed funding from funds including Alameda Research, Coinbase Ventures, Electric Capital, Polychain Capital, and Framework Ventures, investors see potential in Saddle’s proposed solution.
But There Was Slippage
Still, Saddle’s initial launch had a somewhat rocky start, as some transactions did suffer from slippage.
“From our initial investigation the smart contracts are functioning as expected, but individuals may not have yielded to warnings of high slippage when using the deposit form and subsequently reviewing their deposits,” the team wrote in a launch update post.
Saddle updated their high slippage warnings on the front-end in response, and hopes to learn from their early transaction issues.
Some members of the DeFi community have been critical of the new AMM. “Congrats on the launch [Srivatsa] but when you say ‘building’…. you mean ‘Forking’ right? I’m a little bit confused here. I mean it’s 1:1 Curve maths….” tweeted Stake Capital founder Julien Bouteloup.
Other prominent community members like ChainLinkGod also questioned how the project would differentiate from Curve Finance, the first AMM to include stablecoin-only liquidity pools to reduce slippage, and now also offers tokenized bitcoin pools.
Bouteloup pointed to blockchain security company Quantstamp’s audit of Saddle, which reads: “Due to the poor documentation we were not able to determine how the developers have derived some of the implemented formulas from the StableSwap whitepaper.”
The project was also audited by OpenZeppelin and Certik. OpenZeppeli said the lack of explanation for complex math formulas was “in part because the code is merely a re-implementation of Curve’s StableSwap.”
It’s yet to be seen if Saddle will live up to its goal within the coming weeks, but at least by last night the project said it had reached the initial maximum deposit limit of 150 BTC.