The Rise and Fall of Saddle Finance: From Strong Competitor to Liquidation Outcome

Saddle Finance was once seen as a strong competitor to Curve, having raised a total of $11.8 million from several well-known investment firms in two rounds of financing in 2021. However, recently the Saddle community proposed a plan 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 capitalization of its governance token $SDL has fallen to $917,000. So, how did Saddle Finance get to this point?

Top-notch support and airdrop boost for early development

An important difference between Saddle and Curve lies in their underlying code implementation. Saddle has ported Curve's Vyper code to Solidity, which allows it to avoid the recent security issues that Curve has encountered.

In January 2021, Saddle announced that it secured $4.3 million in seed funding, with investment from several well-known institutions. Before the launch, Saddle underwent audits by multiple security firms. Although the project did not issue governance tokens in the early stages, the market widely anticipated a token airdrop, which brought significant attention to Saddle.

However, excessively high expectations have also led to some issues. In the early stages of the launch, the influx of a large number of liquidity providers caused an imbalance in the asset pool, resulting in some users suffering significant slippage losses.

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

Security incidents and market downturns lead to decline

On April 30, 2022, Saddle's sUSDv2 pool suffered a hacker attack, resulting in a loss of approximately 11 million USD. Although 3.8 million USD was returned by a security company, this incident severely impacted user confidence. Data shows that Saddle's total locked value plummeted from 280 million USD before the attack to 120 million USD.

Immediately following, the UST crash event in May 2022 once again impacted Saddle, causing its locked assets to further decline to $70 million, and it has since been unable to recover.

The emergence of the liquidation proposal

Recently, the Saddle community proposed to dissolve the project and allocate the remaining assets. The main reasons provided for the proposal include:

1. The basic vision of the project has been achieved, and the core contributors plan to leave.
2. Increased industry safety risks.
3. The value of the protocol treasury has exceeded the market value of the tokens, and it is recommended that the airdrop proceeds be allocated to token holders.
4. Continuing operations face management difficulties.

The proposal suggests that the remaining funds (, mainly 1.545 million $ARB ), be distributed to users based on their holdings of $SDL and veSDL. According to this plan, each $SDL can receive approximately $0.0026 in $ARB, slightly above the current market price of $SDL.

Most community members support the liquidation plan, but there are still some questions regarding the specific execution details, such as the weight settings for different tokens and the choice of snapshot timing.

This proposal reflects that in the case of low project utilization but still having remaining funds, liquidation may be a more reasonable way to end. However, this also signifies the end of the Saddle Finance project, which was once highly anticipated.