The Decline of Saddle Finance: From Competitor to Liquidation Path

Saddle Finance was once viewed as a strong competitor, having raised a total of $11.8 million from several well-known investment institutions in 2021. However, the Saddle community recently proposed shutting down operations and liquidating funds. Data shows that the total locked value (TVL) of Saddle Finance has dwindled to only $3.68 million, with its governance token $SDL's market value plummeting to $917,000. How did this project fall from being highly regarded to its current state?

Saddle differs from a well-known DEX platform in its technical implementation. Saddle uses the Solidity programming language, which helps it avoid attacks that some recent projects have suffered from due to vulnerabilities in the programming language.

In January 2021, Saddle secured $4.3 million in seed funding from several top investment institutions at its launch. The project has also undergone audits by multiple security firms. Although governance tokens were not issued initially, there were widespread expectations of a token airdrop, which drew significant attention.

However, excessively high expectations also brought problems. In the early stages of the launch, a large number of users flooded in to provide liquidity, leading to a serious imbalance in the asset pool. Some users suffered significant losses as a result, while some arbitrageurs profited from it.

In November 2021, Saddle announced the issuance of governance tokens and the launch of liquidity mining rewards, airdropping 15% of the tokens to users. Additionally, other related projects also provided token rewards to Saddle's early users, further increasing the project's popularity.

In April 2022, Saddle encountered a major security incident. A liquidity pool was attacked due to a contract vulnerability, resulting in a loss of approximately $11 million in funds. Although $3.8 million was recovered by the security team, this incident severely undermined user confidence. The TVL plummeted from $280 million before the attack to $120 million.

In May of the same year, following the collapse of a well-known algorithmic stablecoin, Saddle's TVL further dropped to 70 million USD and has not recovered since.

Recently, the Saddle community proposed a liquidation plan. The main reasons include: the core team plans to resign, potential security risks, and the treasury value exceeding the token market value. The proposal suggests distributing the remaining assets (mainly 1.545 million $ARB tokens) to users based on the holding ratio of $SDL and veSDL.

Although most community members support the liquidation, there are still disputes over specific execution details, such as the weight distribution of different tokens and the choice of snapshot timing, which need further discussion.