In a bid to address the confusion and losses caused by high slippage, the MuesliSwap team, the force behind the Cardano-centric decentralized exchange, has taken the decision to refund users impacted by these issues.
The MuesliSwap team acknowledged its shortcoming in providing transparent clarity regarding the slippage mechanism inherent in its protocol. Slippage refers to the variation in price from the moment a transaction is initiated to its confirmation on the blockchain.
For the past year, MuesliSwap users have been grappling with significant slippage due to the intricacies of the decentralized matchmaker's setup. These matchmakers play a pivotal role in identifying compatible buy and sell orders for execution. The matchmakers were given the ability to fulfill limit orders and decide whether to return surplus slippage funds or retain the difference, creating a variance that led to user confusion.
The MuesliSwap team swiftly acted to rectify the slippage problem within the platform's order book. Furthermore, it revealed that efforts were underway to develop a DEX aggregator aimed at minimizing losses related to slippage by dividing substantial trades.
MuesliSwap holds the position of the fifth-largest protocol on Cardano, boasting a total value locked (TVL) of $17.3 million as per DeFiLlama records (1). Nonetheless, the protocol's TVL has witnessed a decline of 27% since the commencement of the month and a substantial 68% drop since achieving its all-time high in April 2022.
In a bid to incentivize users to contribute collateral, MuesliSwap introduced an "organic APR" feature in December. This feature augmented token emissions in line with increased liquidity flowing into pools.