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The Complicated Launch of New Cardano-Based DEX SundaeSwap

After a long wait, many Cardano blockchain supporters saw SundaeSwap launch on the market a few days ago. This decentralized exchange (DEX) is the first experiment on the entire Cardano network.

However, as we will see in this article, SundaeSwap has disappointed the first expectations of the market. Therefore, this article will analyze the SundaeSwap initiative and its initial problems that made traders nervous.

Beyond these complaints, we will look beyond this initial DEX stop. In particular, we will propose some reflections on the impacts of SundaeSwap on the Cardano network.

Users’ complaints

SundaeSwap was hoping to persuade investors with a great start. However, the first Cardano-based DEX collected many complaints from users on its first day. Just like other new networks recently, SundaeSwap suffered from congestion.

The DEX went live last Thursday, and it took less than 5 minutes for users to storm the project’s Discord with complaints. 

Those managing to insert transactions could not see their coins in the wallet. Other users could not even enter a market order through the platform.

Since handling the complaints volume appeared hard, SundaeSwap launched an Ask-Me-Anything (AMA) Twitter session. Unfortunately, as is often the case in the blockchain universe, users were faster to locate issues than developers.

Specifically, users reported that it could launch orders in a few minutes before users agreed to them. Anyone with the right expertise could ignore the SundaeSwap user interface (UI) and enter an order.

The DEX appears to be going back to regular activity and apologized for the initial outages.

A few words about SundaeSwap

SundaeSwap has recently received negative publicity in the market on another matter. Before understanding what happened to its launch, we find it helpful to talk about the SundaeSwap – CardStarter case.

CardStarter, in spring 2021, announced its intention to create its DEX platform. A Uniswap campaign asked investors to provide cash in exchange for CSWAP tokens. A few weeks later, CardStarter stated that they had given up on creating their DEX, signing a partnership with SundaeSwap.

The message that CardStarter communicated to the market was not particularly clear in this passage. Instead, CardStarter promised great rewards to anyone who would provide liquidity to SundaeSwap. 

Everything could go smoothly, up to CardStarter’s announcement of the conversion of CSWAP tokens into CARDS coins.

This conversion, allegedly agreed with SundaeSwap, was equal to 400: 1. The millions of dollars invested by those who believed in CardStarter have this kind of conversion. As a result, many in the market found this exchange rate too low.

The strong impression that the conversion did not correspond to the promised great rewards. Some investors have even announced class action deals against CardStarter. The company accused SundaeSwap of being the cause of the misunderstanding.

On the other hand, SundaeSwap felt the need to distance itself from CardStarter, addressing its community. Cardano’s founder, Charles Hoskinson, shared a 20-minute video session to comment on the incident.

Why does Cardano attract new exchanges?

Moving beyond the first issues recorded by SundaeSwap, we will likely see more DEX appearing on Cardano. There are several features of this network that are beginning to look attractive to DEX creators:

  • Architecture: Cardano has a settlement layer to perform transactions and a computational layer for governance and intelligent contracts execution
  • Fast execution: while Ethereum can generally handle 15 transactions per second, Cardano can manage hundreds of them
  • Lower fees: the POS protocol allows Cardano to use much lower gas fees compared to Ethereum
  • More substantial decentralization: since anyone can become a node validator, the network potentially becomes more decentralized with time
  • Thinking about the environment: if we compare the POS protocol to the POW technology, we know for a fact that its environmental impact is much lower.

Implications for ADA

The market was looking with high hopes at SundaeSwap’s launch. However, it is hard not to spot the 50% increase before the DEX went live by observing ADA’s price.

Having a first decentralized crypto exchange using your intelligent contracts is a way to increase your presence on the market. Hoskinson is aware of it, as he ironically posted a video of himself eating a sundae ice cream before the launch.

When you aim to become an “Ethereum killer”, you need to have high ambitions like Cardano. SundaeSwap represents one of the first Dapps on the system, in a clear challenge to Ethereum.

SUNDAE – Final thoughts

While it is understandable to see users’ frustration, SundaeSwap is a project that one should monitor. However, the system appears to have quickly solved its initial issues, and developers have learned a valuable lesson.

As explained in the article, Cardano has a considerable interest in the success of this new DEX. The blockchain network expects to deliver solid results to the market after pushing up everyone’s expectations.

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The DeFi world now has a new player, and traders will look more closely into it after its initial problems.

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