Cardano has even more drama.
Two major projects are fighting, and this is
spilling over into the Cardano ecosystem,
and people are worried,
So I decided to take this into my own hands
and find out what in the world is going on.
And let's start off with the beef.
There are two companies in question here.
SundaeSwap, who is the most
popular decentralized exchange on Cardano,
this is where people on the network
can swap tokens, and CardStarter
who is the first launchpad on Cardano.
You can think of a launchpad
like a crypto startup incubator.
Now to the timeline.
April 24th, CardStarter announces their decentralized exchange, CardSwap
April 29th, CardStarter announces their
liquidity mining program on Ethereum.
This did a few things which would allow investors
to provide liquidity to the CARD ecosystem.
Meaning once they launch on Cardano, they would have the
money to make sure that things run smoothly and investors
would ideally receive a nice return on investment,
in the meantime.
Anyone providing liquidity at this
stage would eventually see their tokens
migrated over to Cardano once CardSwap
was up and running on that blockchain.
June 12th, CardStarter offers a sneak peek
on how their DEX will look.
And here we have a bit of dead air.
It's where things get pretty strange.
And I'm going to come back to this time period
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So the last update we had was June 12th.
Then SundaeSwap and CardStarter announced
a partnership on July 1st.
These two companies were looking to have
a kind of mutually beneficial agreement.
Basically, CardStarter would benefit in the crypto projects
that they launch would then have a large
platform to trade those tokens on.
And SundaeSwap would benefit because Carstarter
would deposit some amount of liquidity onto
the Sundae platform to help make trades
flow much more smoothly upon launch.
Then the next day on July 2nd,
a press release from Cointelegraph states,
"all current and future TVL raised from CardStarter's initial DEX
offerings would be directly funneled to SundaeSwap."
At this point, there was some agreement made between
SundaeSwap and CardStarter, where CardStarter would receive an
amount of Sundae tokens in exchange for the money
that they would bring to the Sundae platform.
And it's important to note that at this
point in time, CardStarter had much more popularity
and name recognition than Sundae did,
who was a very, very new project at the time.
Now, going back to that strange period in the
matter of about two weeks between mid June and
early July, CardStarter went from announcing how their DEX
will look, to ending the project completely in order
to partner with SundaeSwap.
Now, this isn't necessarily weird in and
of itself that they ended the project.
It's weird that I can't find an actual post
online about the decision to end the project.
Not on their medium, where they post multiple times
every week, not on their Twitter, where there's somehow
zero mention whatsoever of CardSwap ever existing.
And this matters because, remember, they were already offering
this token for sale to investors with the promise
to eventually port over to Cardano from Ethereum.
This means in the new partnership, card token holders
will somehow benefit from the Sundae token upon launch
because of this merger of some kind.
We don't have the exact details though,
because apparently these details are in agreement.
That's protected by an NDA.
So I did a bit of digging and I found an
AMA with Ashwin, who is the Senior Operations Advisor of CardStarter.
They were talking about this new partnership.
In this AMA, it said that the
partnership is a very deep connection.
- [Ashwin] This is an amalgamation.
This is in essence, a merger.
- 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.
- [Ashwin] We have, I guess, multiple legal departments and we
thought our legal team was strict, but our partners are just as strict.
- Then everyone should remain faithful.
- Ultimately, what I can say is everyone
should remain faithful and have an idea
that, they will be taken care of.
As far as Cswap, I mean, you guys
are getting obviously an amazing end of this deal,
- that there's nothing to be worried about.
- Rest assured, there's nothing to be worried about.
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.
- So at this point, holders are left with a
few answers and a whole lot of questions.
All they know is their investment in CardSwap
will be worth some amount of Sundae upon launch.
And due to the fact that both teams have
rigorous lawyers, not much else can be said.
Unfortunately, from here, we have months of dead air,
between July and the end of October.
It's at this point where we can
see there's a screenshot from the CEO
of CardStarter chatting with the Sundae team.
He said that the CardStarter community
is very frustrated, understandably, that they
haven't received information on how much
they'll receive in this Card/Sundae token conversion.
And you might think that this sounds strange right out
of the gate, this message is more than
in that AMA, CardStarter seemed
pretty certain that those two teams of
lawyers had already
They're good to go.
They just can't announce those details due to the
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
Remember those words, "set aside",
This took the heat off of the CardStarter
team for a while, until January 18th, just
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 then
go into an uproar saying that they were tricked
and rugged and the Card token tanks more than
60% in just a few days.
But it's not over yet.
Then we have the actual launch of the
SundaeSwap DEX on the 20th January.
At this point, many people who tried to use the
DEX experienced errors and issues due to network congestion.
This frustrated many who lost faith in the project,
but it didn't surprise anyone who's paying attention because
they actually made a blog post before the launch,
basically saying to expect these exact problems.
But that didn't seem to matter to investors who
saw the Sundae and CardStarter beef and then
felt that the project simply wasn't up to par.
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 I think happened.
I 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.
Looking at this chart, we can see CardStarter
had about $60 million locked on platform.
Both teams saw this as a great partnership and expected
TVL to only increase on CardStarter, but it didn't.
In fact, by January it had dropped by more
than 70%, meaning this deal was now worth 70%
less to SundaeSwap, who was now the most
popular dApp on Cardano and no longer needed CardStarter.
But what about the contract, you ask?
Well, we know for certain that the contract
didn't contain actual figures on how much Card
token holders would receive in equivalent Sundae because
we have screenshots of their discussion from October
where the agreement is yet to be made.
This is an issue because the CardStarter team
had the AMA where they flat out say, don't
worry, Card holders, you'll be pleasantly surprised.
- Ultimately, what I can say
is everyone should remain faithful.
Rest assured there's nothing to be worried about.
- They said this without actually
being sure of that fact.
So January comes along, and I'm sure the Sundae
team was sitting around talking about how they have
to give away 7.5% of
their business for very little benefit.
And they took advantage of the fact that
there was no signed contract on how much
they absolutely needed to give CardStarter.
o they lowered that distribution from 7.5%
down to 0.5%, 10 million tokens.
Then the community, of course, gets mad.
There's backlash, and SundaeSwap doubles it to
20 million tokens in attempt to save face.
While still coming out ahead, they're still saving
6.5% of their business.
To me, more than anything, this highlights the lack of
experience on both ends, CardStarter being pretty obvious, giving
false promises on tens of millions of dollars and Sundae
for not resolving these issues and having everything in writing
in a contract in the first place.
Crypto is a new space filled with many people who
simply haven't done that many deals in the past, and
things like this can get glossed over even if they
say they have multiple legal teams working on the details.
If only there was someone who warned
us about the concerns and potential inexperience.
- Many have said that the team is too
inexperienced and not having enough of a background
to successfully make this massive undertaking happen.
So how does this impact Cardano as a whole?
Fundamentally, it doesn't at all.
IOHK has no control over who builds on
Cardano, nor who fights with who so well,
it's not a great look.
It doesn't highlight any
fundamental issues with Cardano.
And the second question is, with all these issues on
the functionality of SundaeSwap as a DEX, can we
even trust a functioning dApp can be built on Cardano?
And the short answer is yes.
Cardano is a much more robust blockchain
than many others and uses a completely
different accounting model than something like Ethereum.
So entirely new solutions are having to be
built, and this is taking a long time.
The good news is these solutions can be overcome.
There's another blockchain called Ergo that uses the
exact same accounting model as Cardano, and they
have fully functional DEXes as we speak.
On top of this, this is
the year of scalability for Cardano.
Once we see these scaling solutions roll
out this year, we'll see far less
congestion and issues on the network.
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 and I would
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and that's going to do it for today.
I would like to thank you so much for
watching and I hope you have a profitable day!