The Story of Saddle
3 min read

The Story of Saddle

A look at how Saddle got to now, and what lies ahead in the future
The Story of Saddle

A look at how Saddle got to now, and what lies ahead in the future

If you’re new to Saddle, we are an AMM specialized for trading frictionlessly and cheaply between pegged value crypto assets, starting with wrapped bitcoin. Saddle was born from the need to bring together three distinct but adjacent worlds: bitcoin, pegged value assets, and Ethereum DeFi.

Pegged Value Crypto Assets

Pegged value crypto assets are two or more assets that are meant to retain the same value to one another. The most common examples are stablecoins like USDC and DAI, and wrapped tokens like wrapped BTC (renBTC, tBTC, and more). Though these assets have the same value as others of their like kind, each type has different tradeoffs between, say, security, utility, decentralization, and more.

DeFi users and protocols have different reasons for preferring to hold a variety of different types of pegged value crypto assets, and oftentimes need to trade in between two types. The issue with many decentralized AMMs is high slippage, meaning trading in between two assets meant to have the same 1–1 value actually results in significant loss of value.

Bitcoin and DeFi

BTC (blue) v. ETH (red) search. Google 2016–2021.

To this day, bitcoin remains the crypto market leader in terms of market cap and global recognition. (05.25.21 BTC = $715b, ETH = $298b). The issue with bitcoin is its lack of smart contract capability. Unlike Ethereum, a robust ecosystem of composable applications cannot be built on top of the Bitcoin network, rendering BTC less expressive than ETH. Wrapped BTC allows BTC holders to bring their funds into Ethereum as an ERC20 token and begin to benefit from the yield-generating opportunities in the growing DeFi ecosystem.

Some of the most popular wrapped bitcoin types are WBTC, renBTC, sBTC, and tBTC. WBTC is centralized, with deposited BTC held in custody by BitGo. Open source renBTC has been transparent about its gradual path towards decentralization. Like renBTC, tBTC has no central party custodying the deposited BTC. However, tBTC is minted by groups of randomized, autonomous signers that deposit ETH in order to participate on the network. This process renders it more decentralized than WBTC.

The variety of wrapped bitcoin types and their growing dominance in the market has made one thing clear: bitcoin still looms large in the minds of the crypto ecosystem, and Ethereum users recognize that.

With pegged value crypto assets like wrapped bitcoin poised for the Ethereum DeFi ecosystem, and yet facing slippage issues on AMMs, a solution was needed to bring together these opportunities.

Enter Saddle Finance.

Saddle: Bringing These Worlds Together

Saddle was built to bring the worlds together of Ethereum DeFi, BTC, and pegged value crypto assets in a single, elegant solution. The idea for Saddle was born shortly before the 2020 DeFi summer took off, when the Ethereum ecosystem was rumbling with the beginnings of another boom of innovation and adoption.

We set out to take a BTC-first approach to DeFi and pegged value assets, deciding to create a protocol that was friendly to BTC holders first and foremost, before additionally expanding into other pegged value assets on the Ethereum ecosystem. Saddle solves the pegged value crypto asset problem of wrapped BTC by offering an AMM specifically tailored to allow users to trade with minimal slippage. Saddle achieves this through the StableSwap algorithm, enabling an autonomous market maker that allows for the transfer of pegged value assets with minimal slippage.

Who is “we”?

Saddle is built by a team of DeFi natives. As regular DeFi users ourselves, we’ve seen first hand how important an active and vibrant community is for a project’s success. You might have interacted with our founder Sunil (aka devops199fan) in the YFI community (a multisig signer), or used tools created by members of our team, like by John (aka Weeb_Mcgee).

So, what are you waiting for? Learn how to get started with Saddle.