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

Saddle Finance was once regarded as a strong competitor to Curve, having secured $11.8 million in funding through two rounds of financing in 2021, with investments from several well-known venture capital firms.

However, over time, Saddle Finance's development has fallen into difficulties. According to data from the platform, the current total locked value of Saddle Finance ( TVL ) is only 3.68 million dollars, and the market value of its governance token $SDL has dropped to 917,000 dollars. On August 8, the Saddle community proposed a plan to shut down operations and liquidate funds. So, how did Saddle Finance go from being a highly regarded rising star to this?

A major difference between Saddle and Curve lies in the underlying code implementation. Curve uses the Vyper language, while Saddle has ported the relevant code to Solidity. This difference allows Saddle to avoid the fate of recently suffering an attack due to a Vyper vulnerability.

In January 2021, Saddle officially launched and announced that it had secured $4.3 million in seed round financing, with participation from several top venture capital firms. Before the launch, Saddle also passed audits from multiple security agencies. Although governance tokens were not issued initially, the market widely anticipated that Saddle would conduct a token airdrop, which brought significant attention to the project.

However, overly high expectations have also led to some problems. In the initial launch phase, a large number of liquidity providers flocked in, resulting in a serious imbalance in the asset pool. Some users suffered significant slippage losses, which also cast a shadow over the project.

In November 2021, Saddle announced the issuance of governance tokens and the launch of liquidity mining rewards, airdropping 15% of the total token supply to users. By mid-2022, the $SDL token began circulating. In addition to $SDL, other related projects also provided token rewards to early Saddle users, further increasing the project's popularity.

However, on April 30, 2022, Saddle suffered a heavy blow. Its sUSDv2 liquidity pool was hacked, resulting in a loss of 11 million dollars. Although 3.8 million dollars was returned by white hat hackers, this incident severely undermined user confidence. TVL plummeted from 280 million dollars before the attack to 120 million dollars.

In May 2022, following the collapse of UST, Saddle's TVL plummeted again to $70 million, after which it never recovered.

In response to the ongoing sluggish situation, on August 8th, the Saddle community proposed a liquidation plan. The main reasons include: the project vision has been basically achieved, potential security risks, and the treasury value exceeding the market value of the tokens, etc. The proposal suggests distributing the remaining funds (, mainly 1,545,000 $ARB), to users according to the proportion held in $SDL and veSDL.

Currently, most community members support the liquidation plan. However, there are still some controversies regarding specific implementation details, such as the weight distribution of $SDL and veSDL, and the choice of snapshot timing. In any case, this DeFi project, which was once full of hope, seems to have come to an end.