There was turmoil this week in the Cardano ecosystem when CardStarter (CARDS), a decentralized accelerator and swapping platform, made claims that SundaeSwap stole millions from their investors. SundaeSwap is a recently launched decentralized exchange (DEX), the first of its kind in the Cardano (ADA) ecosystem. SundaeSwap was already having its fair share of problems after last week's launch, wherein users saw days-long wait times for their transactions.
In July 2021, it was announced that SundaeSwap and CardStarter were teaming up to solve the liquidity problems that SundaeSwap was anticipating at the time of their launch. Part of this deal involved an agreement that CardStarter was going to cease development on their DEX. In a Twitter Q&A, a CardStarter senior operations advisor said this was a merger between the two companies.
In October, according to the CardStarter CEO, a deal was reached for 150M SUNDAE tokens (7.5% of the total supply) to be given to the CardStarter community for providing liquidity. The text communications between the two companies wherein this was agreed upon were publicly released.
This past week, according to private messages released by the CardStarter team, SundaeSwap’s co-founder said the amount of SUNDAE being allocated to the partnership was being cut to 10M. From these messages, SundaeSwap says the reduction is due to the CardStarter team being massively short in terms of the promised Total Value Locked (TVL) they brought to the table. The initial promise was $200M in liquidity, and the real number at launch of the SundaeSwap DEX was roughly $10M.
Many investors are calling this a rug pull. Charles Hoskinson, the founder and figurehead behind Cardano, took to Youtube to request the teams stop disputing in public, and go through standard business operations of litigation and negotiations. He warned investors to consider the maturity of the people making these projects when they invest, after noting that the two teams didn’t make any contracts. Ultimately, his view on the situation was for the teams to “be f**king professionals” and to “get their s**t together!”
Responding to the public dispute, SundaeSwap released a blog post offering to increase their offer to 20M SUNDAE tokens.