The team behind the Cardano-based decentralized exchange MuesliSwap has made a decision to refund users that have been hit with high slippage over the past year.
On Aug. 8, the MuseliSwap team said it “fell short in providing adequate clarity” on the slippage feature within its protocol.
Slippage is the price difference between when a transaction is submitted and when the transaction is confirmed on the blockchain.
MuesliSwap users have been paying high slippage for at least a year due to the way the decentralized matchmaker was set up, the team explained.
Important Announcement! At MuesliSwap, transparency and user education are paramount. We recognize that we fell short in providing adequate clarity on the slippage feature within the MuesliSwap Pool DEX protocol. Our decentralized matchmaker setup allowed each matchmaker to…
— MuesliSwap Team (@MuesliSwapTeam) August 7, 2023
Matchmakers — who scan for buy and sell orders to match up and fulfill — were able to “fill the limit order and choose whether to return the additional slippage amount or retain the difference at their discretion,” MuesliSwap noted.
The slippage difference was an incentive for decentralized matchmakers, it added, but this caused confusion for users.
“To make amends, we will be refunding affected users who encountered high slippage on the MuesliSwap pools in the last 12 months from our project funds.”
Additionally, immediate action has been taken to remedy the slippage issue in the MuesliSwap order book, it added.
Users have been highlighting slippage issues on all Cardano DEXs. On Aug. 4, one trader said:
“Currently completing a LARGE trade on any CARDANO DEX is subject to HUGE slippage which diminishes trader’s value by a large percentage.”
They claimed MuesliSwap was supposedly working on a DEX aggregator to split large trades and limit losses due to slippage.
MuesliSwap is the fifth-largest protocol on Cardano, with a total value locked of $17.3 million, according to DeFiLlama. However, MuesliSwap TVL has tanked 27% since the beginning of the month and is down 68% since its all-time high in April 2022.
In December, MuesliSwap launched an “organic APR” feature that increased token emissions as more liquidity went into pools as a way to incentivize users to add collateral.