The Rise and Fall of Saddle Finance: From Anticipation to Final Liquidation

Saddle Finance was once seen as a strong competitor to Curve, securing a total of $11.8 million in funding from several well-known investment institutions during two rounds of financing in 2021. However, recently the Saddle community proposed shutting down operations and liquidating funds. Data shows that Saddle Finance's total locked value (TVL) is now only $3.68 million, and the market value of its governance token $SDL has plummeted to $917,000. So, how did Saddle Finance fall from being a highly regarded project to this point?

One main difference between Saddle and Curve lies in their underlying code implementation. Saddle uses the Solidity language, while Curve uses Vyper. This choice has spared Saddle from the recent security vulnerabilities affecting Curve.

In January 2021, Saddle officially launched and announced that it had secured $4.3 million in seed funding. Before going live, the project also passed audits from multiple security agencies. Although Saddle did not issue governance tokens in its early stages, the market generally anticipated that it would conduct a token issuance. The support from top investors, strict security audits, and the potential for a token airdrop made Saddle highly regarded upon its release.

However, overly high expectations have also brought about problems. In the early stages of launching, a large number of users flooded in to provide liquidity, leading to price imbalance in the asset pool, and some users suffered severe slippage losses as a result.

In November 2021, Saddle announced the issuance of governance tokens and the launch of liquidity mining rewards, planning to airdrop a total of 15% of the tokens to users. In addition to the $SDL airdrop, other related projects also provided additional rewards for Saddle's early users. These initiatives garnered widespread attention during the project's early stages and the airdrop period.

However, on April 30, 2022, Saddle suffered a major blow. Its sUSDv2 pool was hacked, resulting in a loss of $11 million. Although $3.8 million was returned by white-hat hackers, this incident severely undermined user confidence. Since then, Saddle's locked volume has sharply declined from $280 million to $120 million.

Immediately following the collapse of UST in May 2022, the locked value of Saddle further dropped to $70 million, and it has not recovered since.

Recently, the Saddle community proposed a dissolution plan, mainly due to reasons including: the core team planning to leave, potential security risks, and the treasury value exceeding the token market value. The proposal suggests distributing the remaining funds (mainly 1.545 million $ARB) to users based on their holdings of $SDL and veSDL.

Currently, most community members support the liquidation plan. However, specific execution details are still controversial, such as the weight ratio between $SDL and veSDL, and the choice of snapshot time, among other issues that need to be resolved.

The story of Saddle Finance teaches us that in the rapidly changing cryptocurrency market, even the most promising projects can face failure. Security issues, market volatility, and loss of user confidence can all lead a project to fall from its peak. For investors and users, staying vigilant and diversifying risks remain crucial strategies.