The decentralized exchange Saddle Finance, operating on an automated market maker (AMM) model, has launched. The platform raised $4.3 million in a seed round.
#SaddleUp
We’re launching Saddle to unlock the potential of pegged value crypto assets like tokenized #BTC in #DeFihttps://t.co/3r2LH2RZww— Saddle (@saddlefinance) January 19, 2021
Investors included Framework Ventures, Polychain Capital, Electric Capital, Coinbase Ventures, Nascent, Dragonfly Capital, Alameda Research and Divergence Ventures.
The Saddle Finance startup spun out of the Thesis project, backed by Silicon Valley’s leading venture capital firm Andreessen Horowitz (a16z). It is known for developments such as Fold, tBTC and Keep.
The new DEX will initially focus on the automated exchange of so-called “Bitcoin on Ethereum” — renBTC, WBTC, sBTC and tBTC. In the future, developers plan to add trading of other Ethereum tokens and stablecoins.
Saddle aims to reduce the problem of so-called [simple_tooltip content=’Slippages are the difference between the expected and actual execution price of a trade order’]slippages[/simple_tooltip], which are the difference between the expected and actual execution price of a trade order, characteristic of AMMs.
As Saddle’s founder Sunil Shrivatsa Shrivatsa explained, “If you want to swap $100 in USDC for USDT, you would expect to receive around $100 in USDT. For a long time this wasn’t possible. You could pay $100 in USDC and receive about $97–98 in USDT. We are trying to unlock liquidity deep in the blockchain so that traders incur minimal slippage and transaction costs when executing trades,”
A potential breakthrough could come from Saddle’s planned integration of Synthetix’s concept of “virtual synths”.
A withdrawal fee is in place to encourage long-term liquidity providers. It decreases linearly to zero over one month. The team promises to introduce new incentives soon.
The project underwent three parallel audits of its smart contracts by Certik, Quantstamp and OpenZeppelin. Saddle operates using a Proof of Authority mechanism.
A Smooth Start
Support from prominent crypto industry figures did not shield Saddle from post-launch issues.
Presumably due to low liquidity, one trader managed to achieve 12.6x in a single trade. The user bought 4.3 WBTC on Saddle.finance immediately after launch. Subsequently, for unknown reasons, he managed to buy them back at a price far below the market.
BTW you guys just got Rekt. x13 btc arb not bad right…?
From 12k to 160k 🚀https://t.co/rKg8FfODwL pic.twitter.com/6JJLkdeAEp
— Julien Bouteloup (@bneiluj) January 19, 2021
Quantstamp Audit showed Saddle’s exposure to attack vectors previously used against Curve.
“Because Saddle’s smart contracts implement counterparts on Curve, they are vulnerable to the same attack,” the report says.
Back in November, an unknown attacker withdrew $2 million from the Akropolis project’s YCURVE and sUSD pools. The hacker carried out a series of attacks using flash loans.
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