Recent Turbulence
In a bid to be transparent and accountable, MuesliSwap, the prominent Cardano-based DEX, has released a report explaining recent turbulence caused by the advanced matchmaker slippage feature on their platform. The focal point of contention was the “matchmaker premium” feature, initially mislabeled as “advanced slippage,” which gave matchmakers a premium incentive for prioritizing orders. Eventually, this confusion led to profits accruing to a matchmaker wallet.
The MuesliSwap team acknowledges that its labels and warnings aren’t perfect. The report has a breakdown of the wallets linked to matchmaker activities, distinguishing between funds that belong to slippage and those that don’t. They announced that a refund process is being put into motion, offering immediate resolution through Discord tickets and an automated refund website for streamlined claims. MuesliSwap also emphasized their move to a decentralized matchmaker DEX governed by MILK.
What is Slippage?
While researching MuesliSwap ‘slippage’, I contacted RJ, founder of CRCI, who has built a refined review process that delves into multiple projects on Cardano. The views shared by CRCI are not investment advice, but can be brought up to help elevate our ecosystem on important considerations about user protections and project sustainability. Laura, one of the many talented writers here at AdaPulse, recently wrote a deep-dive on CRCI which you can read here.
CRCI shared an X Post providing some basic information about slippage that you may find helpful while dissecting the MuesliSwap situation. With their permission, I’m quoting the X Post here:
“Slippage is the difference between the anticipated price and the actual execution price of a trade. It is affected by market volatility, liquidity, and the size of the trade. For example, if a trader expects to buy a token at $100 but ends up paying $102, the $2 difference represents a slippage of 2%. The slippage tolerance set by the user defines the upper limit of this trade range, ensuring that the transaction will not execute if the price exceeds this limit. Fee markets are competitive environments in which users offer fees to validators to prioritize their transactions. This process is driven by network congestion and user demand. A situation in which an additional percentage is taken on top of the required slippage for a transaction does not conform to the conventional definitions of slippage or fee market.”
RJ from CRCI
Trust the Process
RJ reminded me that any blockchain project’s success or failure isn’t just a matter of isolated events, but also of the intricate processes that led up to them. The journey of building and launching projects on Cardano is a series of actions that are intertwined. There are a lot of steps in the pursuit of innovation, or building complex systems, and without a reliable process there are many opportunities for missteps. Just like divorce isn’t an abrupt occurrence but the culmination of a failed process, success on Cardano isn’t a spontaneous achievement but the result of meticulous planning, collaborative effort, and iterative refinement. The lessons drawn from both triumphs and setbacks alike propel projects forward, forcing teams to scrutinize and adapt their strategies thoroughly. This nuanced perspective emphasizes the importance of recognizing the journey as a whole and understanding that success is a continuous process, not a solitary event.
When I asked RJ what the core of the problem was in the MuesliSwap slippage situation, he shared the following:
“It seems, with wide consensus, that this was a case of lack of transparency. This is the ground we need to cover as an ecosystem. Many projects are now looking closely at their own platforms to make sure that their mechanisms are being clearly communicated.”
RJ from CRCI
It’s all about the complexity of the systems at play, which has created a big gap between how these systems work and what users understand. This intricate web has caused users to get frustrated, resulting in backlash. In light of MuesliSwap users’ dissatisfaction, comprehensive solutions are urgently needed. Was this slippage confusion the result of nefarious intent, or was it an oversight brought about by the high levels of complexity involved in operating a functional DEX in these early days of Cardano?
I asked RJ what he thought of MuesliSwap’s presentation of the ‘slippage’ mechanic on their platform and he said the following:
“I feel the issue is that this was an intentional design, and it was well understood from the Muesliswap team what this would mean for users opting to use this feature. When we see the specific clarity on minute details such as Cardano transaction fees, platform fees and all other relatively minor costs associated with a transaction, the lack of clarity offered on this specific feature that has significantly higher cost implications sticks out… It seems this feature essentially functioned as a static price adjustment as opposed to a maximum limit trade range, and that is what catches the community off guard… Let’s put it this way. Bad actors have used this kind of tactic to intentionally deceive users. I personally don’t think the MuesliSwap team are bad actors. They have worked hard to build in the Cardano ecosystem and have provided great value, but they need to move forward and take every opportunity to demonstrate their commitment to excellence.”
RJ from CRCI
The Response
In response to the slippage controversy, MuesliSwap has pledged to provide more transparency to users and an increased focus on education. The company acknowledges that their previous communication regarding the slippage feature of the MuesliSwap Pool DEX protocol was unclear, leading to confusion among new users. As a result of their oversight, MuesliSwap intends to refund users who experienced ‘high slippage’ over the past 12 months.
Cardano Community members have had mixed reactions to MuesliSwap’s response, which indicates they are not entirely satisfied with where things are at the moment. After the story broke, MuesliSwap hosted an X Space and their representatives’ remarks were criticized for being being dismissive and not fully accurate. Many users have been shocked and surprised by the initial behavior. According to many members of the community, the term “high slippage” is being used in a way that downplays its significance.
In contrast, some people think MuesliSwap handled the situation pretty well. They feel MuesliSwap has shown a refreshing departure from the norm by acknowledging the impact of their recent actions. They view MuesliSwap’s actions as a showcase of dedication to addressing concerns head-on. As opposed to letting issues “blow over” and fade into obscurity, the team has engaged in open dialogue and shown a willingness to fix things. As well as highlighting their responsibility, this bold approach aligns seamlessly with Cardano values.
The Road Ahead
The Cardano Community is known for its discerning nature and high standards. The MuesliSwap team’s commitment to clarity and accountability has garnered praise and admiration, with many hailing it as a shining example of how responsible conduct can reverberate positively within the ecosystem. This proactive stance has the potential to resonate deeply and foster a sense of trust that can be hard to come by in the often-turbulent world of blockchain and cryptocurrency.
This incident has even given investors an unexpected opportunity. If MuesliSwap follows through with their demonstrated transparency and accountability that has been appreciated, which has inadvertently created a buying opportunity for those who realize the potential long-term value of aligning with a team unafraid to admit its shortcomings.
There are respected individuals who support MuesliSwap’s reaction to the controversy, but many view it as a forced consolation rather than a sincere response. Given the Cardano Communities’ concerns about timing and transparency, we should be cautious about accepting the response as a sufficient resolution. Overall, this situation is a reminder of the importance of transparent and genuine communication, proactively addressing core platform issues, and ensuring that responses aren’t influenced solely by external pressures.
