Saddle (SDL)

Basics

• Started in / Announced on: 2020
• Mainnet release: 19-1-2021
• Based in: came out of Silicon Valley (19-1-2021). With their head quarters in San Fransisco.
• AMM
• Focused on preventing slippage in value between different types of pegged-value assets like stablecoins and tokenized bitcoin. Within hours after its launch it got exploited and had an unacceptable amount of slippage (20-1-2021) for a protocol designed to “fix the problem of slippage in DeFi”

History

• Spun out of Thesis, the a16z-backed firm.
• A fork of Curve. Or as is said in CoinDesk (18-6-2021):

"“Personally, I think this is a knee-jerk reaction from Curve’s community members who are less technical or less familiar with clean room implementation cases,” Saddle engineer John Lim said in a direct message. He added that Saddle is a re-implementation of the StableSwap algorithm in Solidity, not a “line-by-line” reproduction of the entire project."

Audits & Exploits

• Bug bounty program can be found [insert here].
• Had a Quantstamp audit (10-12-2020):

"Quantstamp has performed a security review of the Saddle Finance implementation of StableSwap. It is important to note that this implementation is ported from in the Curve Finance contracts, which was used as a reference during the review. In total 14 security issues spanning across all severity levels were identified, along with a few deviations from the specification, code documentation issues and best practice issues. Due to the poor documentation we were not able to determine how the developers have derived some of the implemented formulas from the StableSwap whitepaper. Additionally, we have noticed that all tests in the current test suite use exactly 2 tokens in the pool. We strongly recommend adding more tests that use 3 or more tokens and addressing all identified issues before deploying the code in production.

The implemented relation looks different (from the original StableSwap). We are not able to understand how this relation is derived from the relation in the original StableSwap paper, mentioned at the beginning of this description."

• From their website (17-6-2021):

"The Saddle smart contracts were audited by OpenZeppelin, Quantstamp, and Certik."

Bugs/Exploits

• From Blockthreat (3-5-2022):

"On April 30, 2022 Saddle Finance lost $11M in a price manipulation attack."

• From Rekt (20-1-2021):

"After the Saddle Finance pools were arbitraged for millions within hours of launch, the Saddle team were forced to release a formal excuse for their performance, which contained an unacceptable amount of slippage for a protocol designed to “fix the problem of slippage in DeFi". Igor Igamberdiev released several warnings advising users to exit the Saddle Finance pools, while their founder Matt Luongo showed no sympathy for the users who lost money by using the protocol he had helped to copy.

At least three major arbs took over 7.9 BTC ($275,735) from the early liquidity providers within 6 minutes."

Governance

Admin Keys

• From their website (17-6-2021):

"Saddle's admin keys are controlled by a 3/5 Gnosis Safe multisig. The signers are Mariano Conti, Kain Warwick, DegenSpartan, Klim K, and Damir Bandalo. This multisig has capabilities to pause new deposits and trades in case of technical emergencies. Users will always be able to withdraw their funds regardless of new deposits being paused. The multisig can also change the swap/withdrawal fees and the per pool/account deposit limits."

DAO

• From their blog (11-2021):

"SDL token holders can vote on proposals to improve Saddle and allocate treasury funds.  Initially, the proposals will be on Snapshot, which the current community multisig will then enact. Discourse will be the platform for discussion of the proposals. We expect proposals in the next few months to migrate to fully on-chain governance using the Compound Governor Bravo and add additional token economics."

Token

Launch

• From DeFi Rate (20-1-2021):

"There is no native token attached to Saddle Finance at the moment."

• Token got announced (16-11-2021).

Token Distribution

• From their blog (11-2021):

"51% of the SDL genesis supply is allocated to Saddle community members, of which 15% has already been allocated to historical users (vested over 2-3 years)"

Technology

• Whitepaper can be found [insert here].
• Code can be viewed here.

Implementations

• Built on: Ethereum, will integrate Synthetix's synths (17-6-2021).
• Saddle Finance is copied directly from the Curve code, but whereas Curve is written in Vyper, Saddle rewrote it in Solidity.

Liquidity Mining

• From their blog (11-2021):

"5% of SDL (50,000,000 SDL) has been allocated to liquidity mining programs across Ethereum, Arbitrum, and (later) Optimism which can be earned without any vesting. "

• From DeFi Rate (20-1-2021):

"The DeFi protocol is bootstrapping liquidity through a deal with Keep Network (also built by Thesis) that will set aside 125,000 KEEP per week to payout to Saddle’s liquidity providers."

Roadmap

• Can be found [Insert link here].

• From CoinDesk (19-1-2021):

"Saddle plans to use Synthetix’s virtual synths. (Synthetix makes synthetic assets where instead of trading ETH for USD, users trade sETH for sUSD.) Srivatsa said there is currently a limitation with the Synthetix system, since trades between “synths” come with a five-minute settlement delay before a trader gets the underlying assets (this is to prevent front running). Virtual synths fix this by introducing a new token that basically represents a claim on that unsettled trade, Srivatsa said.

“So you can use that as a placeholder, atomically, and then settle after the fact,” he said. “The reason you want to do this is because synths also have this pretty exciting property where you can trade between them with no slippage – at any size, up to the size of Synthetix’s global pool.”

Usage

• Has a TVL of $89M (17-6-2021).

Projects that use or built on it

• Alchemix turned to (15-6-2021) Saddle for its alETH pool. The announcement attracted a lot of negative attention and even turned Curve to propose not giving them CRV rewards through one of Alchemix's strategies.

Competition

• Curve, Swerve
• From Curve's twitter (15-6-2021):

"Btw 99% sure that the way Saddle reimplemented the code (line-by-line translation from one language to another, unless anything changed) violates the license on Curve contracts. Just saying."

• Or as is said in CoinDesk (18-6-2021):

"“Personally, I think this is a knee-jerk reaction from Curve’s community members who are less technical or less familiar with clean room implementation cases,” Saddle engineer John Lim said in a direct message. He added that Saddle is a re-implementation of the StableSwap algorithm in Solidity, not a “line-by-line” reproduction of the entire project."

Pros and Cons

Cons

• Had investment from Alameda Research/FTX. This could mean fall-out risk.

Team, Funding, Partners

Team

• Full team can be found here.
• Sunil Srivatsa; founder
• John Lim; engineer
• Matt Luong; advisor
• Tarun Chitra; advisor
• George Lambeth; advisor
• devopsfan; egirl member and involved with Saddle (8-7-2021).
• From their website (17-6-2021):

"Saddle is built by DeFi natives with years of prior experience at Web2 companies like Uber, Amazon, and Square."

• Curve called out Saddle saying it is a 'line for line' code fork off of Curve (15-6-2021).

Funding

• Raised (19-1-2021) $4.3 million in seed funding from Framework Ventures, Polychain Capital and Electric Capital. Linda Xia and Qiao Wang are both also mentioned by Crunchbase (17-6-2021).
• Dragonfly Capital, Divergence, Alameda Research, Coinbase Ventures, BoostVC and Nascent are also mentioned on their website (17-6-2021).
• Raised another $7.5M, led by Polychain and Electric Capital with participation from Nascent, Project Galaxy and others (11-11-2021).

Partners

• Part of the second cohort (18-9-2020) of startups that joined the DeFi Alliance’s accelerator program.

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