The Rise and Fall of Saddle Finance: From Curve Competitor to Liquidation Endgame

Saddle Finance was once seen as a strong competitor to Curve and gained favor from several well-known institutions in 2021. However, the Saddle community recently proposed to shut down operations and liquidate funds. According to data, Saddle Finance's total locked value (TVL) is only $3.68 million, and the market value of its governance token $SDL has also fallen to $917,000. How did this once highly regarded project come to this point?

Highly anticipated launch and airdrop

One of the main differences between Saddle and Curve is that Saddle is implemented in Solidity rather than Vyper. This choice allows Saddle to avoid the security issues that Curve has encountered recently.

In January 2021, Saddle announced that it had secured $4.3 million in seed funding, with several well-known institutions as investors. Before the project launch, Saddle also passed audits from multiple security agencies. Although governance tokens were not issued initially, the market generally anticipated a token release, which brought significant attention to the project.

However, overly high expectations have also brought some problems. In the initial stage of launch, the influx of a large number of liquidity providers led to an imbalance in asset ratios, resulting in losses for some users.

In November 2021, Saddle officially announced the issuance of governance tokens and the launch of liquidity mining rewards, planning to airdrop 15% of the tokens to users. In addition, other related projects also provided additional rewards for Saddle's early supporters, further increasing the project's popularity.

Security Incidents and Decline

In April 2022, Saddle experienced a significant security incident, with its sUSDv2 pool being attacked, resulting in a loss of approximately $11 million. Although $3.8 million was returned by a security company, this event severely undermined user confidence. TVL data shows that after the attack, Saddle's locked value plummeted from $280 million to $120 million.

In May 2022, following the turmoil in the cryptocurrency market, Saddle's TVL further decreased to $70 million and has not recovered since.

Proposal of the settlement plan

Recently, the Saddle community proposed a dissolution agreement and allocation of remaining assets. The main reasons given for the proposal include:

1. The basic vision of the project has been realized, and the core contributors plan to leave.
2. Potential security risks.
3. The value of the protocol treasury exceeds the market value of the tokens, it is recommended to distribute the airdrop obtained by the DAO to the token holders.
4. Continuing operations faces management difficulties.

The proposal suggests distributing the remaining funds (mainly 1.545 million $ARB) to users according to their holdings of $SDL and veSDL. According to the plan, each $SDL can receive approximately $0.0026 worth of $ARB, slightly higher than the current market price of $SDL.

Although most community members support liquidation, there are still some disputes regarding the specific execution details, such as the weight distribution of different tokens and the choice of snapshot time. These issues still need further discussion and resolution.