MuesliSwap, Tippage or Slippage?

About the Report

The report aims to inform readers about a controversy regarding Cardano’s first Decentralized Exchange, "MuesliSwap." The DEX uses a combination of Order Book and Automated Market Maker. The DEX controversy concerns the user’s ability to set slippage to execute a trade. The accusation is that this slippage was not slippage but a fixed fee collected for a so-called "Batcher." A Batcher is supposed to be a decentralized actor who, together with other actors, is incentivized to "match" orders. At this moment, MuesliSwap has already admitted that the fees were indeed mislabeled and that they are willing to refund all affected users. We started our report by showing that the most likely administrator of this specific Batcher is indeed part of the larger MuesliSwap organization.

We believe this to be true because of the proximity of core team members to these specific wallets underlying the Batcher, in addition to other indicators. We further explore the value flows within the DEX and conclude that the underlying architecture of MuesliSwap is doing exactly what the MuesliSwap Team claimed its utility would be, fundamentally aligning with their official announcement. In the next step, we look at the historical and current interface of the DEX and note that the way it was designed can be considered misleading. Additionally, we explore the exponential rise in ADA Balance within the Batcher and conclude that is fully in line with the growth of the increase in transactions on the platform itself. It is important to note that the ADA taken has not moved and remains in the target wallet.

Unfortunately, we could not verify all affected wallets at this point based on lack of specific information about which transactions are affected by this issue. However, the MuesliSwap team has been cooperative and has been providing us with data and insights into the exact order matching rules upon request to jointly to determine the genuinely effected.

One interpretation of the situation is that the MuesliSwap team could have done more earlier to fix the misleading interface. However, they did acknowledge the problem publicly and are willing to compensate all affected users. We repeated our offer and commitment to support the MuesliSwap team, exploring the exact number of affected users to restore trust.

Read the Full Report here: