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

Saddle Finance was once regarded as a strong competitor to a well-known DeFi protocol, having raised a total of $11.8 million from several prominent investment firms in two rounds of financing in 2021.

Recently, the Saddle community initiated a proposal to cease operations and liquidate funds. Data shows that the total locked value in Saddle Finance is only $3.68 million, with the market value of its governance token $SDL being just $917,000. How did this once highly regarded project end up in its current situation?

( Project Launch and Early Development

One of the main features of Saddle is that it has ported the Vyper code of a well-known DeFi protocol to Solidity, which has also helped Saddle avoid the recent security issues faced by that protocol.

In January 2021, Saddle announced that it had raised $4.3 million in a seed round. Before officially launching, Saddle underwent audits by several well-known security agencies. Although the project did not issue governance tokens in its early stages, the market generally expected a token issuance, which brought considerable attention to Saddle.

However, excessively high expectations have also brought some issues. In the early stages of the launch, the influx of a large number of liquidity providers caused a price imbalance in the asset pool, resulting in significant losses for some users.

In November 2021, Saddle announced the issuance of governance tokens and the launch of liquidity mining rewards, planning to airdrop 15% of the total tokens to users. In addition, some related projects provided extra rewards for Saddle's early liquidity providers, further enhancing Saddle's popularity.

) Security incidents and the beginning of decline

On April 30, 2022, a liquidity pool of Saddle was attacked, resulting in a loss of approximately 11 million dollars. The attack exploited a calculation error in an old version of the library. Although 3.8 million dollars were returned by the security team, this incident severely undermined user confidence.

From the TVL data, it can be seen that the liquidity in Saddle dropped sharply from $280 million before the attack to $120 million after the attack. The subsequent market turbulence further exacerbated this trend, and by May 2022, Saddle's TVL had fallen to $70 million and continued to decline.

![The Tragedy of Saddle Finance: From a Strong Competitor to Curve to Liquidation Closure]###https://img-cdn.gateio.im/webp-social/moments-703ed28d1ce4c724409e1c1b25d69e9b.webp###

( liquidation proposal

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

1. The project's basic objectives have been achieved, and the core team plans to stop working in the near future.
2. Recent security incidents in the DeFi sector highlight potential risks.
3. The value of the protocol treasury has exceeded the market value of the tokens, it is recommended to distribute the tokens obtained from the airdrop to the holders.
4. Continuing operations face long-term management and coordination challenges.

The proposal suggests converting all remaining funds into tokens of a certain public chain, and distributing them to everyone according to the weights of their holdings in $SDL and veSDL. Based on preliminary calculations, the airdrop value that each $SDL may receive is slightly higher than the current market price.

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