Cardano is even more volatile. People are concerned because two large projects are at odds, and this is spilling over into the Cardano ecosystem. So we decided to figure out what was going on. Let’s get started with the beef.
In this case, there are two corporations in question. SundaeSwap, the most popular decentralized exchange on Cardano, and CardStarter, the first launchpad on the network, are two of the most popular decentralized exchanges on the network. A launchpad is similar to a crypto startup incubator.
Now let’s look at the calendar. CardStarter announced its decentralized exchange, CardSwap, on April 24th. CardStarter announced its Ethereum liquidity mining program on April 29th. This accomplished a number of goals, including allowing investors to supply liquidity to the CARD ecosystem.
In other words, after they debut on Cardano, they will have the funds to ensure that everything runs successfully, and investors will ideally earn a good return on investment in the meantime. Once CardSwap was up and operating on that network, everyone contributing liquidity at this time would have their tokens moved over to Cardano.
CardStarter released a sneak glimpse of their DEX on June 12th. And now there’s some dead air. It’s here that things start to become odd.
So the most recent update occurred on June 12th. Then, on July 1st, SundaeSwap and CardStarter announced a collaboration. These two businesses were seeking a way to work together in a mutually beneficial way.
CardStarter would gain in the sense that the crypto projects they start would have a huge platform to trade their tokens on. SundaeSwap would profit as well because Cardstarter will deposit some liquidity on the Sundae platform to assist transactions to run more easily when it launches.
“All current and future TVL raised through CardStarter’s inaugural DEX offers would be immediately routed to SundaeSwap,” according to a press release from Cointelegraph the next day, July 2nd.
At this time, SundaeSwap and CardStarter reached an arrangement in which CardStarter would get a certain number of Sundae tokens in exchange for the money they would bring to the Sundae platform. It’s also worth noting that, at the time, CardStarter was a lot more well-known and well-known initiative than Sundae, which was a brand-new project at the time.
Returning to that peculiar period between mid-June and early July, CardStarter moved from unveiling how its DEX will appear to cancel the project entirely in order to join with SundaeSwap in a matter of roughly two weeks.
The fact that they abandoned the initiative isn’t inherently strange in and of itself. It’s strange that I can’t locate an official announcement regarding the project’s termination on the internet. Not on their medium, where they post numerous times a week, and not on Twitter, where there’s no mention of CardSwap at all.
This is significant because, as previously stated, they were selling this token to investors with the promise of someday porting it over to Cardano from Ethereum.
This means that, as a result of the new partnership, card token holders will profit in some way from the Sundae token when it launches. However, we don’t know the specific information because these details appear to be in accord.
An NDA protects this information. So we did some research and discovered an AMA with Ashwin, CardStarter’s Senior Operations Advisor. They were discussing their new partnership. The partnership has a really deep connection, according to this AMA.
Later, SundaeSwap would say that this was nothing but a Marketing and Collaboration Agreement. Ashwin goes on to say that there are two legal teams working hard at the details on this.
And here’s what they had to say about how Card token holders will be redeemed for Sundae at merger.
” The folks that have been diligently mining away and providing liquidity will be excited, if not surprised at the benefit relative to what was expected.”
Holders are left with a few answers and a lot of questions at this stage. All they know is that when CardSwap launches, their investment will be worth a certain number of Sundae. There isn’t much else to say because both teams have zealous attorneys on their side.
Unfortunately, between July and the end of October, we have months of dead air from here. It’s at this time that we notice a snapshot of CardStarter’s CEO conversing with the Sundae team. He stated that the CardStarter community is very frustrated since they have yet to know how much they would receive in the Card/Sundae token conversion.
And you might think that this sounds strange right out of the gate, this message is more than 3 months after the AMA that we just discuss, and remember in that AMA, CardStarter seemed pretty certain that those two teams of lawyers had already ironed everything out. They’re good to go. They just can’t announce those details due to the pesky SEC.
That can’t be the case given it’s now October, and even the CardStarter CEO doesn’t know the terms. So Sundae responded to the request and said 150 million tokens are set aside for the Cardstarter partnership.
Remember those words, “set aside”, This took the heat off of the CardStarter team for a while, until January 18th, just 2 days before the SundaeSwap official launch.
According to a screenshot provided by CardStarter, the Sundae team sent an email stating they are lowering the allocation from 150 million tokens to 10 million, in exchange for CardStarter’s Liquidity.
They were doing this because CardStarter’s Liquidity was far lower than originally expected. They would be providing far less benefit to SundaeSwap, who is now much more popular than CardStarter. And they have their own liquidity.
Of course, the CardStarter team and investors erupt in rage, claiming that they were duped, and the Card token plummets by more than 60% in only a few days. But the battle is far from over. On the 20th of January, the SundaeSwap DEX will be officially launched.
Many individuals who attempted to use the DEX at this time encountered difficulties and troubles as a result of network congestion. Many people became disillusioned with the project as a result of this, but it shouldn’t come as a surprise to anybody who has been paying attention because they warned of these issues in a blog post before the launch.
So where does this leave us?
Well, from CardStarter, we have the screenshots that I showed you. From Sundae, we have a blog post. In this post, SundaeSwap states that despite their June agreement being bound by an NDA, so we can’t get the full details, there was nothing in that agreement about explicit token exchange rates.
The only verbiage was that they would have a good-faith discussion regarding trading Card tokens for Sundae tokens upon full DEX launch. This seems plausible to me. However, of course, we don’t have the actual documents to look at, so it’s their word versus CardStarter’s.
Here’s what we think happened. we think Sundae was just starting off. They solved a few technical problems on their DEX and impressed CardStarter, who was the big dog on campus with all the liquidity back in June of last year.
CardStarter had around $60 million locked on the platform, according to this graph. Both teams regarded this as a fantastic collaboration and expected TVL to skyrocket on CardStarter, but that did not happen.
In reality, by January, it had decreased by more than 70%, implying that this transaction was now worth 70% less to SundaeSwap, which was now Cardano’s most popular dApp and no longer required CardStarter. But, you could argue, what about the contract?
We know for sure that the contract didn’t include real figures on how much Card token holders would receive in equal Sundae since we have screenshots of their October chat while the deal was still being worked out.
This is an issue because the CardStarter team had the AMA where they flat out say, don’t worry, Cardholders, you’ll be pleasantly surprised. They stated this without being certain of the fact. So, when January rolled around, we’re sure the Sundae team was muttering about how they had to give away 7.5 percent of their business for very little gain.
They also took advantage of the fact that there was no written agreement on how much money they had to provide to CardStarter. So they reduced the payout from 7.5 percent to 0.5 percent, resulting in a total of 10 million tokens.
The community, understandably, becomes enraged. In an attempt to preserve face, SundaeSwap boosts the amount to 20 million tokens. While they are still profitable, they are conserving 6.5 percent of their revenue.
For us, this demonstrates the lack of experience on both sides, with CardStarter being the most evident, making false promises for tens of millions of dollars, and Sundae not resolving the issues and having everything in a paper in the first place.
Because crypto is a new industry with a lot of people who haven’t done a lot of agreements before, problems like these might be overlooked, even if they claim to have numerous legal teams working on the intricacies. If only someone had forewarned us about our concerns and lack of expertise.
So how does this impact Cardano as a whole?
In the end, it doesn’t matter. It’s not good that IOHK has no control over who builds on Cardano or who fights with whom so skillfully. It doesn’t point out any major problems with Cardano. And, given all of these concerns with SundaeSwap’s capability as a DEX, can we even believe that a working dApp can be constructed on Cardano?
And, in a nutshell, the answer is yes. Cardano is a far more reliable blockchain than many others, and it employs an entirely different accounting approach than Ethereum.
As a result, completely new solutions must be developed, which takes a long time. The good news is that these problems can be solved. There’s a blockchain called Ergo that employs the same accounting model as Cardano and has fully working DEXes right now.
Furthermore, for Cardano, this is the year of scalability. We’ll see significantly less congestion and difficulties on the network once these scaling solutions are implemented this year.
Does this mean Cardano is a guaranteed Ethereum killer?
No, of course not. We can’t be certain however we can be certain that Cardano and its dApps are getting better and better with time. As I’ve mentioned before, Cardano is taking the tortoise approach.
Looking back at history, we’ve seen examples of this working with companies like Apple but we’ve also seen the reverse work quite well like Facebook so only time will tell who wins in the end. I hope that this was helpful in understanding what in the world is going on with Cardano
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