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sundaeswap

SundaeSwap

SundaeSwap is a decentralized exchange (DEX) protocol that implements an automated market maker (AMM) model on the Cardano blockchain. It was the first DEX to use AMM and the second DEX project with smart contracts on Cardano. SundaeSwap quite literally changed the face of the Cardano landscape as delegators moved their staked ADA to take advantage of free Sundae tokens from the initial IPO and subsequent reverse IPO. SundaeSwap v3 is an upgrade from the v1 protocol, which launched in early 2022 and faced several challenges such as low throughput, high fees, limited flexibility, and at times, poor user experience. However, the Sundae Labs team learned from these experiences and quickly pivoted to address them, improving the Cardano blockchain for everyone as a result.

As a participating “Scooper” pool on SundaeSwap, we have observed the evolution of SundaeSwap and the Sundae Labs team’s response to issues and feedback. We have made several noteworthy observations during our two years of close engagement with their team.

●  Continual improvements. They are continually working to improve the product, actively collaborating with the scoopers, seeking feedback, testing ideas, and iterating on improvements..

●  Integrity. We’ve spent dozens of hours conversing with Sundae Labs folks, during which time they have demonstrated integrity, choosing safety, accountability, and an absolute dedication to protecting their users’ assets. They enlist 3rd party auditors to check their work and set a high bar for themselves..

●  Cardano improvements. After the initial congestion at the launch of SundaeSwap v1, Sundae Labs worked with IOG and proposed changes to the Cardano parameters, such as memory enhancements, allowing more transactions to fit into a block.

And all of this while Sundae Labs operates the DEX as a public good, with the 2.5 ADA fee on each trade going to the 30 different scoopers. Instead of profiting directly from the DEX fees, they have built a business around the skill, expertise, and reputation they have built on top of SundaeSwap, offering audits, consulting, and other Cardano products.

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SundaeSwap V3 Update

Sundae V3 is the latest update to the SundaeSwap protocol created specifically with scalability and extensibility in mind. This latest version of SundaeSwap features a switch from Plutus to Aiken, creating an opportunity for lower user fees as a part of each trade by introducing more efficient contracts and larger batch sizes. Utilizing other sources of income for infrastructure costs, such as staking rewards, could push fees even lower..

Lower fees would attract more trade volume and TVL to the protocol, benefitting every user. This change is especially useful in a landscape dominated by DEX aggregators which search for these savings on behalf of users and puncture through “platform tribalism”.

Being competitive in the fee department is an opportunity to attract a lot of attention to the new Sundae V3 contracts. These improvements have not gone unnoticed by the crypto community as Coinecta has announced a collaboration with SundaeSwap in their contract auditing process.

Improvements of SundaeSwap V3 Update

The V3 update offers several improvements, including greater scalability, extensibility, and lower fees.

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Greater Scalability

V3 contracts represent a significant advancement in scalability from the Sundae  team. Combining 2 years of practical real-world knowledge, V3 contracts are a stepping stone into the future of the blockchain. These updated contracts will have the capacity to process nearly 10 times as many orders as the V1 contracts in practice while requiring less than a tenth of the block space.

Extensibility

The integration of greater extensibility features will be a staple of the V3 update that everyone in the community will benefit from. The features will be leveraged with new types of diverse pools. Some examples of what SundaeSwap is trying to accomplish are found in their Fund 11 Catalyst proposals, all of which were approved via Catalyst votes.

●  Strategies: there is now the ability to have programmable swaps written in any programming language you want, and that don’t telegraph your trading strategy to the world

●  A permissioned DeFi capability leveraging the ADA Handle social layer

●  The ability to trade on margin to leverage liquidity in the pool itself for greater earning potential

In addition, two other recent Catalyst proposals which won Fund 11 funding by Sundae Labs will also benefit the Cardano ecosystem:

●  The creation of the “Gummiworm” protocol, a scalability-enhancing layer 2 protocol on top of the Cardano Hydra protocol. For example, Liqwid could build an amm-lending pool that generated revenue for both protocols by serving as both an AMM and a lending protocol

●  A “time-traveling” debugger for UPLC code to allow developers to execute their smart contract step-by-step to identify and resolve any issues

Lower Fees

V3 contracts offer a far more dynamic pricing model, which is made up of the base fee and an incremental fee. The base fee is collected for the protocol as a part of each scoop, while the incremental fee is collected from each order. The base fee is shared by all participants in a scoop. For example, a single order would pay the whole base fee. If there are 25 orders in a batch, they would each pay 1/25 of that fee. The incremental fee is paid by each user. After the total fees are collected into the pool itself, they can be paid out to the scooper in a large batch, which removes the 20% overhead on fee collection that scoopers are currently paying, leading the way for SundaeSwap to become the lowest-priced DEX on the Cardano network.

With all of these changes and the constant work we see Sundae Labs, we’re excited for the community to visit or re-visit SundaeSwap to check it out.

We also strongly urge the Sundae DAO to vote for proposals that will take a portion of the earnings from SundaeSwap and invest them back into the SundaeLabs team. This will help pay for their infrastructure and development time, to keep those great improvements coming. The team has shown repeatedly that they are competent, imaginative, and place integrity at the center of their work.

Check out the community and everything that SundaeSwap has to offer on their discussion forum.

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