On Friday (January 7), SundaeSwap Labs, the team behind SundaeSwap, SundaeSwap, which calls itself “the sweetest decentralized exchange on Cardano”, told its community about “some of the expected operational constraints and limitations that the blockchain and the DEX will exhibit on opening day and through the first few weeks after launch.”
What Is SundaeSwap ($SUNDAE)?
SundaeSwap is “a native, scalable decentralized exchange and automated liquidity provision protocol”.
It is backed by cFund (“an early-stage sector agnostic venture firm in the Blockchain industry anchored by IOHK and managed by Wave Financial”); Alameda Research (the quantitative cryptocurrency trading firm and liquidity provider founded by FTX CEO Sam Bankman-Fried); and Double Peak Group (“a family office focused on investments in the digital asset and blockchain space”).
Here is why the SundaeSwap team decided to build a DEX on Cardano:
“… in simple terms Cardano is faster and cheaper than the alternative smart contract platforms. It also is run by a non-profit foundation and regularly collaborates with high profile academic institutions. All in all it is more advanced and a better option for future projects to be built upon.“
SundaeSwap Goes Live on Public Testnet
On 6 December 2021, the SundaeSwap team announced that they had gone live on Cardano’s public testnet, which prompted a seemingly delighted Charles Hoskinson (Co-Founder and CEO of IOG) to invite members of the Cardano community to “go get some ice cream.”
SundaeSwap’s Upcoming Mainnet Launch
In a blog post published on January 7, SundaeSwap Labs started by telling fans that they could “expect a very exciting announcement in the next few days”, which has to be related to the upcoming mainnet launch (likely to occur later this month).
The SundaeSwap team then tried to set expectations of the Cardano community ahead of the launch of the Cardano-powered DEX on the mainnet.
They first pointed out that during their testnet launch event, they “noticed a large backlog in processing user actions”, which was “partially due to continued improvements to the Scooper order batching program, but was more due to the current maximum throughput parameters of the Cardano blockchain.”
Although they admit this is “likely to negatively impact the user experience,” they point out that “congestion is a sign of the Cardano network operating as intended by gradually applying backpressure.”
They then mentioned that as part of their discussions with IOG about protocol parameters, they “conducted a mainnet load test on December 18th.” They claim that to — the best of their knowledge — “these are the first smart-contract backed automated market maker (AMM) transactions on Cardano mainnet.”
Here are some results from this test:
“Over the course of this 40-minute load test, a single SundaeSwap Scooper performed 139 scoops (i.e., transactions which aggregate many user operations), which is approximately 3 scoops a minute. This is lower than the roughly 7 scoops per minute we saw on the testnet.
“Additionally, due to lower protocol parameters on the mainnet compared to testnet, these scoops on average aggregated 3 user operations each. This is lower than the 5 to 8 operations we observed during SundaeSwap’s operation on the testnet.“
Although SundaeSwap Labs cannot precisely predict what the load will be like in the first week of going live on the mainnet, they do want to remind the community of a few things:
- “There is a much lower barrier to entry compared to testnet; there’s no need to interact with a faucet, switch your wallet to testnet, etc.
- There is greater incentive to participate in the DEX to capitalize on its utility with real funds
- There is greater risk of participation since users are exposed to losses of real funds through trading activity
- The SundaeSwap DEX must share network bandwidth with other launching protocols, themselves driving additional network demand.“
Due to the huge amount of interest in the project from the Cardano community, the SundaeSwap team are expecting “a large backlog on mainnet as well” and want their users to be aware that although orders (including swapping, providing liquidity and withdrawing liquidity) may take days to process,” they can rest assured that “everybody’s orders will be processed fairly and in the order they were received and executable.” Furthermore, it will “be possible to cancel orders at any time before they are processed by the Scoopers.”
Finally, they mention that “while this demand surge will result in network congestion and longer order processing times,” they “don’t expect this situation to last indefinitely” and that “eventually the network will catch up,” something which will be “further improved as IOG implements a planned series of improvements and enhancements to scale Cardano network capacity throughout 2022.”
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