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MuesliSwap, a prominent decentralized exchange operating on the Cardano network, recently acknowledged a deficiency in transparency concerning the "slippage" feature within its system. On August 8, the MuesliSwap team openly admitted that they had not adequately explained this feature to their users.
Slippage refers to the price variance from transaction initiation to blockchain verification. Over the past year, a significant number of MuesliSwap users experienced higher-than-expected slippage, impacting the value of traders' transactions.
The team shed light on the root cause of this issue. In their setup, decentralized matchmakers – individuals responsible for pairing buy and sell orders – had the option to either return the extra amount from slippage or retain the difference. Initially intended to incentivize these matchmakers, this approach instead led to confusion among platform users.
MuesliSwap addressed its user base, announcing plans to reimburse affected users from the project's reserves for instances of high slippage over the past year. Swift steps have also been taken to rectify the slippage problem within their order book, aiming to prevent future issues.
This slippage issue isn't unique to MuesliSwap. Several Cardano decentralized exchanges have faced similar complaints. On August 4, a trader expressed concerns that executing substantial trades on any Cardano decentralized exchange could lead to significant slippage, adversely affecting transaction worth. There were discussions about MuesliSwap exploring mechanisms to manage large trades and mitigate slippage-induced losses.
Presently, MuesliSwap holds the distinction of being Cardano's fifth-largest protocol, with a total locked value of $17.3 million. However, the platform has witnessed a decline, experiencing a 28% total value drop since the month's start and a staggering 69% fall since its peak in April 2022.
Last year, MuesliSwap introduced a feature to incentivize users to contribute more liquidity, enhancing token outputs as pooled funds increased.
