<p>The Hedera network uses the hashgraph consensus algorithm, a system that determines how thousands of independent computers agree on transactions without any central coordinator. The algorithm is based on the two main mechanisms: gossip about gossip and virtual voting.</p><p>In this article, you’ll find out how hashgraph consensus works, why Hedera processes transactions the way it does, and how Hedera’s consensus algorithm actually impacts your experience when swapping or providing liquidity on platforms like SaucerSwap.</p><h2>What Is Hedera’s Consensus Algorithm?</h2><p>Hashgraph is Hedera&#39;s consensus algorithm. It functions as both a distributed consensus algorithm and the data structure used to record how transaction information spreads across the network.</p><p>This record helps nodes see which transactions were passed from one single node to another, when they were received, and how widely they spread. Using this information, Hedera nodes can reach consensus, which ultimately determines the transaction’s final place in the network record.</p><h3>Is Hedera a Blockchain?</h3><p>Technically, no. Blockchain networks group transactions into blocks, and each new block is connected to the previous one, forming an ordered chain of blocks.</p><p>Hedera organizes data through hashgraph consensus into a structure called a Directed Acyclic Graph (DAG). In this structure, multiple events are linked together in parallel, they don’t form one chain. Hedera and blockchain networks refer to the distributed ledger technology aiming to resolve the same issue: how to make a network of separate computers agree on one common record of transactions.</p><p>Still, the underlying data structure and hashgraph consensus approach differ, and this difference is what lets Hedera achieve some of its performance characteristics, such as faster transaction finality compared to Ethereum and other networks.</p><h3>Why Consensus Matters in Distributed Ledger Technology</h3><p>Hashgraph consensus is the main challenge of any decentralized network, and Hedera&#39;s hashgraph distributed ledger is no exception. You have thousands of computers spread around the world with no central server. However, they all must share an identical understanding of the transaction record.</p><p>Moreover, certain computers might have a slower connection, while others fully disconnect. The consensus algorithm is what helps the Hedera network still reach agreement despite these issues.</p><h2>How the Hashgraph Consensus Algorithm Works</h2><p>When you submit a transaction, whether it&#39;s a token swap or deploying smart contracts on Hedera, it goes through a specific sequence of steps before it&#39;s finalized:</p><ol><li>Nodes share transaction data through gossip</li><li>Events form the hashgraph data structure</li><li>Nodes calculate votes locally based on shared history</li><li>The network reaches hashgraph consensus</li></ol><p>Each step is explained in detail below.</p><h3>Step 1. Nodes Share Transaction Data Through Gossip</h3><p>You submit a transaction, and it reaches one of Hedera&#39;s nodes. The node first performs preliminary checks, such as verifying the transaction signature. These checks help ensure the transaction is eligible for processing.</p><p>If the transaction passes these checks, the node starts sharing information about it with other nodes. These then pass on the data to more nodes, and thus, the process continues throughout the network.</p><p>Many of these syncs happen in parallel across the network, so information spreads quickly. This is called a gossip protocol.</p><h3>Step 2. Events Form the Hashgraph Data Structure</h3><p>Every time two nodes sync, that sync creates what Hedera calls an event. An event is a small data package that usually contains:</p><ul><li>The transactions being communicated</li><li>A timestamp</li><li>Two hashes</li><li>A digital signature from the node that created the event</li></ul><p>The resulting structure is the hashgraph itself: a record of how information has spread across the Hedera network over time. Every node constructs and updates its own local copy, giving the consensus algorithm a shared foundation to work from. And since gossip ensures that every node eventually receives the transaction information, all copies converge toward being identical.</p><h3>Step 3. Virtual Voting Lets Nodes Calculate Votes Locally</h3><p>At this point, nodes have built very similar copies of the same hashgraph. Now, the network needs to reach an agreement on the transactions.</p><p>As nodes share information through gossip, they gradually build matching copies of the hashgraph. Each node can use this shared history — the basis of distributed consensus in hashgraph — to understand what the other nodes know and when they learned it. Node A looks at the hashgraph, sees when Node B learned about the transaction relative to other events, and can calculate how Node B would vote from that information. Node B does the same for Node A.</p><p>Once enough information has been shared across the network, every node performs the same calculation and reaches the same result — the consensus timestamp and final order of each transaction.</p><h3>Step 4. The Network Assigns Consensus Timestamps and Order</h3><p>At this stage, nodes have already calculated the same result independently. Now the network reaches the ultimate agreement. Once the transaction has its hashgraph consensus timestamp and position in the order , it becomes part of Hedera’s official record.</p><h3>Gossip About Gossip Explained</h3><p>Besides the gossip protocol, Hedera has a second layer of communication. While regular gossip means nodes share transaction data with each other, gossip about gossip means they also share the history of how this data traveled through the network.</p><p>Say Alice sends a transaction, it’s submitted to a Hedera node, and that node shares it with Bob’s node. Later, Bob’s node shares the information with Carol’s node. When it does, it doesn’t just pass along the transaction data. It also includes information about where it received the transaction from. When Carol’s node later shares information with Dave’s node, Dave receives the transaction along with the history of how it spread through the network.</p><p>This is what the two hashes inside each event represent. One hash points to the previous event created by the same node. The other points to the most recent event received from another node during gossip. Together, they create a traceable record of who communicated with whom and in what sequence.</p><p>Why is this important? Without knowing how information spreads across the network, nodes wouldn’t be able to vote virtually and achieve consensus.</p><h3>What Is Virtual Voting in Hedera?</h3><p>The term refers to each node performing the same calculation locally based on its own copy of the hashgraph. The term &quot;voting&quot; is used because, ultimately, results are similar: the network reaches agreement.</p><p>In a typical consensus algorithm mechanism, voting works this way:</p><ul><li>Each node forms an opinion about how transactions should be ordered and sends its vote to other nodes.</li><li>These votes are then gathered by these nodes, counted up, and all the nodes decide the outcome.</li></ul><p>When there are more nodes within the network, more messages must be exchanged, which can make this process slower. Let’s sum up the main differences between virtual and regular voting:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajQWNI1P9HI4Ust2_1-hedera-consensus-algorithms.png?auto=format,compress" alt="What Is Virtual Voting in Hedera" /></p><h3>Why Hedera’s Hashgraph Is aBFT</h3><p>What happens if some nodes act maliciously? A node could withhold information during gossip or communicate only with specific nodes. This issue is known as the Byzantine Generals Problem, named after the Byzantine Generals thought experiment, in which generals can’t trust each other&#39;s messages.</p><p>The solution is to design a system capable of achieving the right agreement even if some members are dishonest or inactive. A system that can do this is called Byzantine fault-tolerant, or BFT.</p><p>Hedera accounts for malicious participants by design and even takes this a step further. Its hashgraph is not just BFT but aBFT. aBFT stands for asynchronous Byzantine fault tolerant.</p><p>The majority of BFT systems need the messages between nodes to come within a certain time frame. If these messages are delayed, the system might halt progress until communication becomes normal again.</p><p>Hedera&#39;s hashgraph doesn&#39;t depend on such time windows. Even if messages are delayed or arrive out of order, the hashgraph consensus algorithm keeps working towards the correct outcome.</p><p>This is possible thanks to how the hashgraph data structure organizes the history of the network. Every event contains hashes linking it to previous events, so when a delayed message finally arrives, nodes can see exactly where it fits in the sequence. All of this works as long as more than two-thirds of the network’s stake is held by honest participants.</p><h2>Hashgraph Consensus Timestamping and Fair Transaction Order</h2><p>A hashgraph consensus timestamp is the time Hedera assigns to a transaction once the network has agreed on it. It’s calculated as the median of the times each node first received this transaction.</p><p>Transactions with earlier consensus timestamps usually appear first in the final sequence. So, as the order is decided together by the network, Hedera sets itself apart from systems where a block producer can affect the order of transactions within a block.</p><p>This is especially vital in DeFi, where each transaction can influence the following one. When you’re exchanging tokens on, for example, <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap</a>, a trade that is processed immediately before yours could change the pool&#39;s price and impact your exchange outcome.</p><h3>Hedera Consensus Service vs. Hashgraph Consensus Algorithm</h3><p>Hashgraph consensus algorithm is the core mechanism of the Hedera public network. HCS is a service that lets applications use that same ordering system for their own messages.</p><p>With HCS, an app can create a topic, which is like a channel for messages. Each created topic comes with its own ID. When the app sends messages to the topic, Hedera assigns each message a Hashgraph consensus timestamp and a sequence number, so that all people are able to view the precise order of these messages. Later, apps or users can read these ordered messages through a mirror node.</p><p>The Hedera Consensus Service is useful when an app needs a trusted, verifiable timeline of messages. Hedera orders and timestamps the messages, while the app decides what those messages mean and how to use them.</p><h3>Hashgraph vs Blockchain Consensus</h3><p>Because hashgraph is often compared with blockchain, it helps to look at the main differences side by side. Blockchain networks can work very differently from one another, so this table focuses on broad patterns:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajQWVI1P9HI4Ust-_2-hedera-consensus-algorithms.png?auto=format,compress" alt="Hashgraph vs Blockchain Consensus" /></p><h2>Why Hedera’s Hashgraph Consensus Matters for SaucerSwap and DeFi</h2><p>SaucerSwap is a decentralized exchange and liquidity protocol built on Hedera, and the properties of hashgraph consensus have direct implications for anyone using it, whether you need to buy HBAR safely, exchange tokens, or provide liquidity. Each of these actions benefits from what consensus delivers at the network level:</p><ul><li><strong>Fast finality</strong>: The entire process can take up to five seconds.</li><li><strong>Fair transaction ordering</strong>: Through consensus timestamping, the order is decided by the network collectively, which helps create a more consistent <a href="https://www.saucerswap.finance/swap" target="_blank" rel="noopener noreferrer">Hedera DeFi</a> experience.</li><li><strong>Low fees</strong>: Hedera’s fees are low mainly due to its fee model, but the consensus algorithm also plays a part: since nodes calculate votes locally and, thus, don’t have to send extra voting messages across the network, this helps reduce the network&#39;s operating costs.</li></ul><h2>Key Terms to Know</h2><ul><li><strong>Hedera</strong> — a public distributed ledger technology powered by the hashgraph consensus algorithm, with low fees and fast finality.</li><li><strong>Blockchain</strong> — a type of distributed ledger that groups transactions into blocks linked in a linear chain.</li><li><strong>Gossip about gossip</strong> — the way nodes share the history of how data travels through the network.</li><li><strong>Consensus timestamp</strong> — the time Hedera assigns to a transaction after reaching agreement, calculated as the median of the times when each node first received the transaction.</li><li><strong>Virtual voting</strong> — the process within a hashgraph where nodes calculate agreement locally using the shared hashgraph. This happens without needing to send actual vote messages across the network.</li><li><strong>Asynchronous Byzantine fault tolerant</strong> — a security standard describing a system that reaches correct consensus even if some nodes act maliciously or go offline, and even if messages are delayed or arrive out of order.</li><li><strong>Hashgraph</strong> — Hedera&#39;s distributed consensus algorithm and data structure, created by Dr. Leemon Baird. It relies on gossip about gossip and virtual voting to reach consensus.</li><li><strong>SaucerSwap</strong> — a decentralized exchange and liquidity protocol built on Hedera that offers fast finality and predictable fees.</li></ul><h2>FAQs About the Hedera Consensus Algorithm</h2><h3>Is Hedera blockchain?</h3><p>Hedera and blockchain networks like Ethereum are distributed ledger technologies, but they work differently. Blockchain networks chain blocks in a linear sequence. Hedera uses hashgraph, a DAG-based structure where multiple events can be recorded simultaneously rather than one after another, which contributes to faster finality.</p><h3>How fast are transactions on Hedera?</h3><p>Usually, transactions are completed in about three to five seconds. For native token and consensus services, the network can handle up to 10,000 transactions per second in its current configuration, though the actual throughput depends on network activity and the type of transaction being processed.</p><h3>How does gossip about gossip differ from regular gossip?</h3><p>Unlike regular gossip, it includes information about how the data traveled through the network, which creates a shared history that makes virtual voting possible.</p><h3>Why doesn&#39;t Hedera need actual voting to reach consensus?</h3><p>Because every node has the same hashgraph consensus, they all see the same communication history. This shared view is what makes distributed consensus possible without any vote messages crossing the network — each node calculates the result independently, making traditional voting unnecessary.</p><h3>Why does transaction ordering matter in DeFi?</h3><p>Transaction ordering plays a role in DeFi since the order in which transactions are processed can affect the outcome. For example, a swap that goes through just before yours could affect the results of your trade.</p><h2>Conclusion</h2><p>Hedera&#39;s hashgraph consensus algorithm relies on three connected mechanisms:</p><ul><li>Through the gossip protocol, nodes spread transaction data across the network.</li><li>Nodes also share the history of who communicated what and when.</li><li>Through voting, nodes use the history to calculate agreement locally, without sending additional messages.</li></ul><p>As a result, the network typically reaches finality within seconds while maintaining fair ordering. These are the properties that make Hedera a compelling foundation for DeFi exchanges like SaucerSwap.</p><p>Check out <a href="https://docs.hedera.com/" target="_blank" rel="noopener noreferrer">Hedera&#39;s documentation</a> for additional information. And if you want to experience Hedera-powered DeFi in action, start by exploring <a href="https://docs.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap docs</a>.</p>

Learn how Hedera’s hashgraph consensus algorithm works, including gossip about gossip, virtual voting, aBFT security, timestamps, and HCS use cases.

Hedera Consensus Algorithms: How Hashgraph Works

Hedera Consensus Algorithms and How They Work

Learn how to deploy smart contracts on Hedera step by step. Set up your environment, compile Solidity, deploy to testnet, verify, and troubleshoot common errors.

Deploying Smart Contracts on Hedera: Step-by-Step Guide - 2026

Deploying Smart Contracts on Hedera: Step-by-Step Guide

Want to buy HBAR but not sure where to start? This beginner-friendly guide explains where to buy HBAR in the USA, how to buy HBAR safely, which payment methods to compare, and how to store Hedera after purchase. HBAR is a crypto asset, so prices can move quickly and losses are possible.

Where & How to Buy HBAR Safely in the USA

Where and How to Buy HBAR Safely

<p>In decentralized exchange trading, you interact directly with a liquidity pool. When executing bigger orders, this often causes immediate price shifts. Time-weighted average price (TWAP) allows you to spread your trades over a specified time period to minimize the price impact of your trade, as well as the slippage that could occur when you’re executing a large trade. In this article, we answer the question “What is TWAP?”, break down how it works, and explain how to use execution algorithms to improve your performance and returns.</p><h2>What Is TWAP?</h2><p>TWAP stands for time-weighted average price, and it’s an execution strategy used to reduce excessive price impact when trading large positions. When you, as a trader, execute a large order in a single transaction, this may lead to significant price slippage, as your order can move the market against you.</p><p>But TWAP is designed to avoid this by breaking the order into smaller trades executed over a defined period. It helps minimize market impact, reduce the risk of drawing attention to large order types, and lower average slippage.</p><p>TWAP is widely used as a reliable on-chain price reference, which allows protocols to estimate fair market value over time. It’s helpful, since a single large trade can temporarily push the price up or down. So, if a protocol relies on a single price point, it may fail to represent what the market is actually willing to pay for the asset and can also be easily manipulated.</p><p>TWAP averages the price over a specific period of time, which provides a more stable and reliable price reference. This strategy works especially well on SaucerSwap because it’s built on Hedera, where transactions are fast, and gas fees are low. This results in more accurate and responsive pricing.</p><h2>Why TWAP Matters in Trading</h2><p>TWAP matters because, in on-chain markets, prices change with every trade. If you execute the full order at once, the trade moves the price up (or down) immediately. By spreading the trade out, you’re averaging your execution price over time.</p><p>One of the challenges TWAP helps address is market impact. In AMMs, liquidity is finite. The larger the trade, the more liquidity it consumes, which pushes the execution price higher. This is what leads to slippage. Therefore, if the order is split into smaller parts, then each trade is less impactful in terms of liquidity consumption.</p><p>Another concern you can address with TWAP is the visibility problem. A single large swap is easy to spot, and other market players can benefit from it through arbitrage or other approaches. The TWAP trading strategy helps reduce the visibility of a single large trade by distributing its execution over time. This has a direct effect on price stability. Price adjusts more gradually as trades are executed over time. This results in smoother pool behavior and more stable execution pricing.</p><p>It’s also useful to examine TWAP vs. VWAP. VWAP stands for volume-weighted average price, and it adjusts execution based on trading volume, placing more of the order when activity is higher. However, in DeFi, where liquidity is fragmented and uneven, volume isn’t always a reliable signal. TWAP&#39;s time-based approach brings more advantages here, as it’s more predictable during on-chain execution.</p><h2>How TWAP Works as an Execution Strategy</h2><p>To execute an effective order, you should first configure the core TWAP parameters:</p><ul><li><strong>The total size of the TWAP order in crypto</strong>: This refers to the total amount to be bought or sold</li><li><strong>Duration</strong>: This establishes how long you want the strategy to run.</li><li><strong>Interval frequency</strong>: This defines how often each smaller trade is executed. For example, an order of 10,000 tokens could be divided into 10 smaller orders of 1,000 tokens each and executed every 5 minutes.</li></ul><p>Once you determine all parameters, the TWAP algorithm divides the order into equal parts and executes them at regular intervals until the full position is completed.</p><p>Some TWAP crypto trading strategies also include randomization. One trade might execute a bit earlier, another a bit later, or one slice might be slightly larger than the next. This way, the market is less likely to detect the pattern.</p><p>Some strategies also rely on adaptive triggers to react to changing conditions. For instance, if slippage is rising too rapidly, execution may be suspended. Or if liquidity improves, execution may be sped up.</p><p>Execution can also be adjusted with market or limit order logic. With a market-order approach, each slice is executed when its time comes, regardless of small price changes. With the limit-order approach, each slice won’t execute until the market reaches a specified price. Here, users have more control over execution, but they also take the risk that part of the order won’t be filled.</p><h2>TWAP in DeFi and SaucerSwap</h2><p>As we’ve mentioned, TWAP in AMM pools serves as an on-chain price reference. On SaucerSwap, this becomes especially relevant in V2 pools, where liquidity is concentrated within specific price ranges. This concentration improves price efficiency when trades occur within the active range, as more capital is available near the current price. However, if a large trade pushes the price outside the range, this can lead to sharper price movements and increase the risk of impermanent loss for liquidity providers.</p><p>Since TWAP reduces the impact of sharp price movements by averaging prices over a specified period, it yields more stable price signals for core assets like the <a href="https://www.saucerswap.finance/stake" target="_blank" rel="noopener noreferrer">SAUCE token</a> and helps create a more predictable pricing environment for decentralized finance traders and liquidity providers.</p><p>Ultimately, liquidity is deployed more precisely, price movements become smoother and less reactive, and execution becomes more predictable. And because SaucerSwap operates on Hedera, this can be done at high frequency and in a cost-effective way.</p><h2>A Simple TWAP Example</h2><p>Let’s say you want to buy 10,000 tokens from a liquidity pool. You have two options:</p><ul><li>Execute the entire order at once</li><li>Spread the trade out using TWAP</li></ul><p>When you place one order for the full 10,000 tokens, the first portion fills at the best available price as the trade executes. But as you consume liquidity, the price starts to move. The subsequent portions of your order fill at worse prices.</p><p>Suppose your average execution comes to $1.10 per token. Even if the market price started at $1.00, your own trade pushed the price up. Now, consider the same order managed by a TWAP algorithm:</p><ul><li>Total size: 10,000 tokens</li><li>Duration: 50 minutes</li><li>Execution: 1,000 tokens every five minutes</li></ul><p>Between trades, arbitrage and trading activity help restore prices. Arbitrage traders bring the price closer to the broader market, and liquidity near the current price is restored. Execution prices over time might look like this:</p><ul><li>Trade 1 → $1.00</li><li>Trade 2 → $1.02</li><li>Trade 3 → $1.01</li><li>Trade 4 → $1.03</li><li>Trade 5 → $1.00</li><li>Trade 6 → $1.02</li><li>Trade 7 → $1.01</li><li>Trade 8 → $1.03</li><li>Trade 9 → $1.01</li><li>Trade 10 → $1.02</li></ul><p>In this example, you might achieve an average price of $1.015 per token. This is a significant difference, especially at a larger order size. In this example, the difference is $850 on a single trade.</p><h2>TWAP vs. VWAP: Key Differences</h2><p>Both strategies aim to improve trade outcomes but face the problem from different angles. As we&#39;ve noted earlier, TWAP is time-focused, while VWAP is volume-focused. Let’s compare TWAP vs. VWAP in greater detail:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajPhXY1P9HI4Urzs_2-twap-explained.png?auto=format,compress" alt="TWAP vs. VWAP: Key Differences" /></p><h2>Implementing TWAP Strategies</h2><p>The primary use case for a TWAP order in crypto is executing large orders. TWAP allows for slippage minimization and can also improve arbitrage execution by splitting trades into smaller increments, which reduces market impact.</p><p>It can also help liquidity providers manage their positions. By rebalancing gradually, they can adjust their positions with less market impact, especially in concentrated liquidity pools. All of this depends on how efficiently smaller trades can be executed. On SaucerSwap, this becomes much easier, thanks to low fees and fast transaction speeds.</p><h2>Advanced TWAP Configurations</h2><p>One of the advanced order-splitting strategies is the randomization we’ve mentioned earlier. It makes execution less predictable and reduces the likelihood that other participants will react to a detectable pattern.</p><p>You can also add price-based triggers to pause, accelerate, or skip trades based on market conditions. For example, a trade may be delayed until a more favorable price is reached before the next order is executed. Traders also often use hybrid execution algorithms that react to volatility or price movements.</p><p>Finally, all the above-described approaches can extend beyond a single trade. The TWAP trading strategy can be applied across multiple digital assets as part of broader portfolio strategies.</p><p>On SaucerSwap, tracking your holdings is straightforward via the portfolio dashboard. It gives you a real-time view of the tokens in your wallet — quantities, current values, and overall portfolio composition. Having this information readily available makes it easier to stay on top of your positions and make informed decisions.</p><h2>Risks and Limitations</h2><p>TWAP orders in crypto have limits, and the risks should be considered. First, because TWAP spreads execution over time, it reacts more slowly than strategies that execute orders immediately, which can be a disadvantage in trending markets. If prices are consistently trending in one direction, you may end up buying at higher prices or selling at lower prices due to TWAP execution.</p><p>Vulnerability over short time windows must also be considered. While TWAP can reduce the impact of single trades, it can still be subject to manipulation over short time frames, especially if the averaging period is too narrow.</p><p>These risks can be managed. Using longer time windows makes manipulation harder. Plus, historical testing can help you understand how a strategy performs under different conditions. And position sizing helps ensure that even if execution isn’t perfect, the impact stays controlled.</p><h2>When to Use TWAP in Trading</h2><p>If you need to enter or exit a position quickly, or you’re trading in a fast-moving market, waiting for an optimal average may cause you to miss the price movement. Thus, in certain cases, it can be more useful to trade quickly.</p><p>However, if you’re placing large trades, trading illiquid assets, or interacting with thinner pools, the TWAP algorithm can become a vital assistant in your execution strategy. Moreover, it is particularly effective in ecosystems like SaucerSwap, where, given its low transaction costs and near-instant finality on Hedera, it’s feasible to execute trades in smaller increments without significantly reducing returns.</p>

What is TWAP? Discover how Time-Weighted Average Price helps traders execute large orders efficiently and reduce price slippage in DeFi.

TWAP Explained: Using Time-Weighted Average Price in Trading

<p>In a full-range automated market maker (AMM), DeFi liquidity providers spread their capital across all possible price levels, and most of their funds remain underutilized. Traders also have less liquidity at the actual market price and experience higher slippage.</p><p>Concentrated liquidity (CL) lets providers focus their capital within active trading ranges, which results in less slippage. In this article, we break down how CL works and how providers and traders can benefit from it.</p><h2>Overview of Concentrated Liquidity</h2><p>In the case of full-range AMMs, liquidity is allocated uniformly across a theoretically infinite price curve. This is often inefficient when most trades happen within a relatively narrow price range, since the capital may be underutilized at price levels the market is unlikely to reach.</p><p>This is why liquidity providers on decentralized exchanges (DEXs) often opt for a more capital-efficient model: concentrated liquidity, which, in turn, can provide traders with deeper liquidity and more stable pricing around the active market price. It’s a model that allows providers to allocate liquidity within a specific custom price range, thereby boosting their capital efficiency.</p><p>Within this model, providers often need to take a more hands-on approach and monitor their positions more closely. This is because if the market level shifts outside the given range, the position becomes inactive and stops earning fees until the provider adjusts their parameters. Yet, this extra oversight may be worth it, as CL market makers (CLMMs) offer the potential for higher fee earnings.</p><p>In addition, DeFi traders can leverage the market depth generated by the CL model. Since capital is concentrated around the current market price, there is greater capital available at the price level where trades occur, which allows traders to buy or sell assets with reduced market impact. The result is a decrease in slippage. In a market with concentrated capital, traders are more likely to achieve their expected execution price, even when placing larger orders.</p><h2>Price Curve and Capital-Efficient Design</h2><p>The mathematical logic of each AMM is defined by the constant product formula: x · y = k, where x and y represent the quantities of the two assets in a liquidity pool, while k is a constant value.</p><p>The primary distinction between full-range AMMs and CLMMs is the interval over which liquidity is made available:</p><ul><li>In a traditional AMM, the x · y = k equation produces a curve that approaches but never intersects the axis. To support trading across this infinite range, funds must be distributed very thinly, which leaves much of the capital idle at prices the market is unlikely to reach.</li><li>CLMMs address the problem of idle capital by allowing liquidity providers to allocate capital within a specific range. Yet, in this case, providers accept that their capital will become “inactive” and stop earning fees while the price remains outside their selected range.</li></ul><p>Now, when capital is concentrated precisely where trades occur, significantly less liquidity can provide comparable depth and potentially generate fees comparable to those from much larger positions in traditional AMMs. This, in turn, creates a “thicker” market for traders and allows larger orders to be executed with reduced slippage.</p><h2>Liquidity Pool Structure and Pool Creation</h2><p>Differences in the use of capital directly affect the structure of <a href="https://www.saucerswap.finance/pool" target="_blank" rel="noopener noreferrer">liquidity pools</a> in both models. In a conventional AMM, the pool operates as a single bucket in which all deposited tokens are mixed into shared reserves.</p><p>When it comes to CLMMs, it’s still a single smart contract (one pool), but capital is distributed more segmentally here. The curve is divided into discrete points called ticks, and liquidity is allocated between selected tick boundaries. When participants provide liquidity, they deposit reserves into a specified range defined by ticks.</p><p>When establishing a CL pool, several parameters must be configured, such as asset pair, fee tier, and tick spacing. Further, we provide a broader checklist for pool creators.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajLhTo1P9HI4UpQm_1-concentrated-liquidity-in-amms.png?auto=format,compress" alt="Liquidity Pool Structure and Pool Creation" /></p><h2>Ticks, Active Tick, and Active Liquidity</h2><p>To determine the exact zones where the capital will be deployed, providers select an upper tick and a lower tick, which together define the entire price range with active liquidity. As trading occurs, the price moves incrementally across ticks.</p><p>Each time the price crosses the tick boundary (this is called tick crossing), positions whose ranges now include the current level become active, while others become inactive. That’s why keeping track of price movements is essential for adjusting their price ranges and remaining active in the market.</p><h2>Price Range and Tick Boundaries</h2><p>A provider can either place their liquidity closer to the current price to maximize fee generation or spread it across a wider range to capture fees from larger price movements.</p><p>Additionally, as we’ve mentioned, they can also reposition their liquidity in response to price changes. When the price moves, they might adjust their liquidity to a range closer to an active trading zone to keep earning trading fees.</p><p>Furthermore, liquidity positions can function similarly to limit orders. The provider can place liquidity only above or below the current price. Once the market enters this range, liquidity is used for trades, and the provider&#39;s tokens are gradually converted into the other asset. In this scenario, providers essentially accumulate one asset or the other based on the market price levels they have specified.</p><h2>Swap Mechanics: Price Impact and Swap Amounts</h2><p>Now, when it comes to how traders benefit from CL, it primarily depends on the size of the swap. The swap is executed against liquidity at the current price, and its size determines how much liquidity is used. If the trade is small relative to the available liquidity, it can be completed with minimal price movement. If it’s larger, it may start pushing the price toward the next tick boundary.</p><p>Execution also depends on how far the <a href="https://www.saucerswap.finance/trade" target="_blank" rel="noopener noreferrer">trade</a> moves across price ranges. The more ranges it moves through, the greater the price impact and the worse the final execution price becomes. Therefore, if liquidity is dense near the current price, even larger trades can be executed efficiently. If liquidity is thin or uneven, the trade may move the price more quickly, which increases slippage.</p><p>Providers of liquidity earn fees only from specific price ranges where their liquidity is active. As the trade moves across ranges, it interacts with different portions of liquidity, and fees are distributed to providers whose liquidity is used at each step.</p><h2>Implementation Checklist for Pool Creators</h2><p>Setting up a CL pool involves several key decisions that directly affect how efficiently liquidity is utilized and how attractive the pool is to providers and traders. When it comes to pool creation, creators typically follow these steps:</p><ul><li><strong>Select the token pair</strong>. Pick tokens with high organic demand. More trading volume means more fees.</li><li><strong>Note the fee tier</strong>. For example, SaucerSwap V1 liquidity pools operate under a fixed 0.3% fee tier. There&#39;s no selection to make here — it applies uniformly across all V1 pools. On SaucerSwap V2 (CLMM), however, liquidity providers can choose from four fee tiers — 0.05%, 0.15%, 0.30%, and 1% — based on the pair&#39;s volatility profile. V2 is currently permissioned, though a permissionless model is planned for the future.</li><li><strong>Choose the appropriate fee tier</strong>. It&#39;s a choice that involves some risk. Creators should opt for lower fees if the involved tokens are more stable than average. But if the tokens in a trading pair are more volatile, it’s best to choose higher fees.</li><li><strong>Define the price range</strong>. Providers choose the range within which their liquidity will be active. A tighter range can generate more fees when the market stays within it, but requires closer monitoring and more active management.</li><li><strong>Set the initial price</strong>. It must reflect the current market price as closely as possible. A significant divergence will be corrected, which typically comes at the pool creator&#39;s expense.</li><li><strong>Add initial liquidity</strong>. Both tokens in the pair need to be deposited upfront. This initial deposit is what enables the first trades to go through.</li><li><strong>Make the pool discoverable</strong>. Creators should ensure the liquidity pool is visible. Without this, potential liquidity providers and traders simply won&#39;t find it.</li></ul><h2>Operational Steps: From Pool Creation to Position Management</h2><p>Once the pool is created, providers step in. The first part is deciding on the range. A good starting point is to center liquidity around the current price with enough range to cover expected volatility.</p><p>Providers should also consider market behavior when adding liquidity. In a market with a stable price and predictable price movement, a tighter range is sufficient. A wider range must be provided in a market with volatile assets to avoid frequent repositioning.</p><p>If there’s a need for repositioning, it’s sometimes best not to adjust the position until it’s clear that the price has moved outside the current range. This is because continuously adjusting the range could result in lower returns due to transaction fees and rebalancing costs, particularly on Ethereum. But on platforms like SaucerSwap, built on Hedera, active management is much more cost-effective, thanks to much lower fees (usually fractions of a cent).</p><p>Finally, as providers collect fees, they should pay attention to how much they’re earning, as it reflects how effectively their liquidity is placed. If a position generates low fees, it may be poorly positioned relative to the trading activity, which suggests that the range needs to be adjusted.</p><h2>Conclusion</h2><p>Although concentrated liquidity requires a bit more effort and involvement than full-range AMMs, it is also where the edge lies. Providers can concentrate their capital where actual trading occurs, which allows them to boost their capital efficiency.</p><p>Traders, in turn, benefit from larger liquidity and lower market impact. Overall, CL is about smart, more intentional capital deployment.</p><p>And for those willing to stay a bit more hands-on, the payoff can be well worth it. CL also remains accessible to more passive providers thanks to SaucerSwap Auto Pools, which helps manage positions and mitigate exposure to impermanent loss.</p>

Explore how concentrated liquidity in AMMs boosts capital efficiency, reduces slippage, and increases fee earnings for traders and liquidity providers in DeFi.

Concentrated Liquidity in AMMs: What It Means for Traders

Concentrated Liquidity in AMMs: What It Means for Providers and Traders

<p>Most smart contract developers live inside the Ethereum network toolchain. That is exactly why EVM-compatible networks have an edge: developers arrive ready to build.</p><p>Hedera is one of them, but it also addresses what Ethereum cannot. Its key characteristics include non-fluctuating fees, protocol-level front-running prevention, and deterministic finality. Below, we tell you what that means in practice.</p><h2>What Is Ethereum Virtual Machine (EVM) Compatibility?</h2><p>The Ethereum Virtual Machine is the engine that runs smart contracts on the Ethereum blockchain. Understanding how the EVM operates is key. Solidity code goes in, the chain executes it, and any EVM-compatible network produces the same output — Hedera included.</p><p>The platform runs the EVM via its Smart Contract Service, built on Hyperledger Besu, an open-source implementation used across major Ethereum-compatible networks. The difference is what Besu sits on top of. It runs on hashgraph consensus, so Solidity deploys as-is, and existing tools like Hardhat and Ethers.js work without changes.</p><p>Most EVM-compatible networks use Ethereum&#39;s original architecture, where transactions compete for block inclusion, and finality takes time. Hedera hashgraph is used instead, executing EVM functions and locking in a consensus timestamp for each transaction immediately.</p><h2>Going EVM Compatible on Hedera: The Benefits</h2><p>EVM chain compatibility usually means the tools work and little else. The network adds fixed fees, finality in under three seconds, and a governance model built for stability.</p><h3>Easy Migration of Ethereum Apps</h3><p>Developers who have built on the Ethereum network can bring the same smart contracts to Hedera without rewriting anything. Solidity contracts compile identically, deployment scripts carry over, and reaching a new user base takes little more than a configuration change. There is no learning curve and no rebuild from scratch.</p><p>SaucerSwap is the clearest example of what that looks like at scale. Built using EVM-compatible smart contracts, it has processed over $5 billion in trading volume across 15 million swaps. Newly deployed projects can plug directly into that liquidity from day one.</p><h3>Access to Hedera&#39;s High-Performance Network</h3><p>The Hedera EVM layer supports up to 10,000 transactions per second — a scaling solution that processes 15 million gas per second, equivalent to what Ethereum targets for an entire block. Finality arrives in under three seconds, with no confirmations and no risk of reversal.</p><p>Ethereum network traders often wait through several block confirmations before treating a transaction as complete. That wait does not exist on the platform. Settlement is final the moment it happens, which matters most for anyone managing positions where timing is critical.</p><h3>Cost-Efficient Development</h3><p>Ethereum gas fees shift with network congestion and are never fully predictable at execution time. Hedera fixes fees in USD and converts them to HBAR at the moment of the transaction. A basic operation costs around $0.0001, and smart contract execution stays consistent regardless of traffic.</p><p>That predictability changes how projects get budgeted. Development teams can calculate costs upfront, and there are no failed transactions from a miscalculated gas limit estimate.</p><h3>Interoperability with the Ethereum Network Ecosystem</h3><p>As an EVM-compatible network, Hedera means the Ethereum tooling ecosystem carries over directly. MetaMask connects through the JSON-RPC relay, OpenZeppelin libraries deploy without changes, and ERC-20 and ERC-721 tokens work natively. A team that already has an Ethereum setup can point its tools at Hedera and get to work the same day.</p><p>Hedera Token Service assets can also be mirrored into the Ethereum Virtual Machine, where they behave like standard ERC-20 tokens within smart contracts. That compatibility extends to security as well. Contracts with established audit histories on Ethereum can be deployed on the network without starting the audit process over, saving both time and cost. SaucerSwap&#39;s smart contracts are based on Uniswap V2 and V3, have been audited by Hacken and Omniscia, and returned zero high-risk findings.</p><h3>Enterprise-Ready Features</h3><p>The network is governed by the Hedera Governing Council, a body of up to 39 global organizations, including Google and IBM. Network upgrades go through Hedera Improvement Proposals and are backward compatible by design. In practice, that means no surprise changes that break existing applications.</p><p>That structure matters to enterprises in a way that decentralized governance does not. A company building a compliance workflow or supply chain application needs to know the network will not change in ways that break what they have built.</p><p>The network supports ED25519 and ECDSA secp256k1 key types, OFAC compliance, and front-running resistance at the protocol level. Few public networks can satisfy all three at once, which is why Hedera is one of the few that enterprise legal and compliance teams can actually approve.</p><h2>Use Cases for EVM-Compatible Applications on Hedera</h2><p>The platform’s fixed fees and fast finality make it practical for high-performance DeFi and other applications that would be too expensive or slow on the Ethereum mainnet. As part of the broader EVM space, Hedera contributes to innovation across the crypto ecosystem by enabling seamless development and deployment of decentralized applications (dApps).</p><p>EVM-compatible blockchains like Hedera are crucial for the growth of dApps, as they provide a bridge to Ethereum&#39;s ecosystem. These are the areas where developers are already building.</p><h3>Token Issuance and DeFi</h3><p>ERC-20 tokens deploy on Hedera using familiar EVM tooling. Developers can build smart contracts and dApps on the platform to the same standards as popular EVM compatible blockchains like Binance Smart Chain, Polygon, and Avalanche.</p><p>Projects that need full programmability can use the Smart Contract Service. Meanwhile, those who prioritize speed can use the Token Service to manage tokens without smart contracts. Both approaches are compatible and can be combined.</p><p>SaucerSwap DEX sits on top of both. Swaps settle in under three seconds at fixed fees, and SaucerSwap V2’s concentrated liquidity lets providers deploy capital with up to 4,000 times greater efficiency than standard AMM pools. Lending, stablecoin, and yield protocols have a ready foundation to build from — starting with <a href="https://www.saucerswap.finance/pool" target="_blank" rel="noopener noreferrer">providing liquidity</a> on SaucerSwap.</p><h3>NFTs and Gaming</h3><p>NFT collections and in-game economies work on Hedera because token costs stay fixed regardless of traffic. Hedera transaction speed makes running thousands of asset transfers economically viable.</p><p>The network’s throughput keeps running that logic on-chain, practical at scale. Hedera&#39;s EVM-compatible tech stack supports scalable gaming applications and tokenized assets.</p><p>HIP-850 allows NFT metadata to be updated after minting while tokens stay in a treasury wallet.</p><h3>Supply Chain and Enterprise Applications</h3><p>Smart contracts on the network can automate logistics, compliance checks, and multi-party business workflows. The Consensus Service adds ordered, timestamped message logs that function as auditable records without storing full data on-chain.</p><p>As a result, enterprises get a programmable and verifiable infrastructure in one place. Blockchain technology built for enterprise use can integrate with Hedera to extend interoperability across networks and support diverse business needs.</p><p>Hedera has supported tokenized digital assets, FX settlement infrastructure used by Lloyds Banking Group and Aberdeen Investments, and carbon credit verification through Verra.</p><h3>Cross-Chain Bridges</h3><p>SaucerSwap is expanding beyond Hedera through Axelar and LayerZero, with SAUCE liquidity live on Base. Cross-chain bridges often handle transactions off-chain before final settlement, improving efficiency.</p><p>That infrastructure lets users move assets between Hedera and other EVM-compatible blockchains, enhancing interoperability and providing a bridge to Ethereum&#39;s ecosystem. This is crucial for the growth of decentralized applications (dApps). Projects can settle operations on Hedera for low-cost transactions while keeping a presence on Ethereum for liquidity.</p><h2>Getting Started with EVM on Hedera and SaucerSwap</h2><p>Anyone familiar with the EVM ecosystem will notice that getting started is mostly a configuration change. Here is how to begin in just five steps.</p><ul><li><strong>Set up an account</strong>: Create an account through the Hedera developer portal or connect MetaMask via the JSON-RPC relay (Hashio). Native accounts use the 0.0.x format, but the network maps these to standard 0x addresses automatically.</li><li><strong>Get HBAR</strong>: HBAR covers transaction fees and can be acquired through major exchanges and transferred to your wallet. Unlike ETH gas, the amount you need is predictable because fees are fixed in USD.</li><li><strong>Configure your tools</strong>: Add the platform’s network to Hardhat or Truffle using the standard RPC endpoint. Nothing else in the deployment workflow needs to change. Chain ID for Hedera mainnet is 295, and 296 for testnet.</li><li><strong>Test before going live</strong>: The network’s testnet mirrors the mainnet environment exactly. Testnet HBAR is available through the Hedera faucet at no cost. It is also where you will notice any behavioral differences around account formats and historical data queries.</li><li><strong>Interact with SaucerSwap</strong>: For teams looking at Hedera DEX integration, SaucerSwap is the natural starting point. Once on mainnet, you can trade directly or provide liquidity to earn fees from activity in your chosen pools.</li></ul><p>Hedera&#39;s testnet is also where most teams encounter edge cases that come with moving from Ethereum&#39;s block model to Hashgraph. It handles some things differently from Ethereum, particularly around account formats and how historical data is queried.</p><h2>Challenges and Considerations in the Crypto Space</h2><p>The network&#39;s account model is the first thing to understand when building on the Hedera EVM layer. Addresses exist in both native format (0.0.x) and EVM format (0x…), and while the network maps between them automatically, applications that handle accounts directly need to work with both.</p><p>Hedera’s documentation covers the mapping in detail, and the JSON-RPC relay handles most of the translation automatically. Historical data queries behave differently, too, served through off-chain mirror nodes rather than on-chain state. Mirror node REST APIs are well-documented and straightforward to integrate once you know they exist.</p><p>The ecosystem is younger — community support and documentation around edge cases reflect that. Less common contract patterns will need more research than they would on Ethereum. The Hedera developer portal and Discord are the most reliable starting points, and SaucerSwap’s open-source contracts are a useful reference for how production code actually runs on the network.</p><p>Bridge contracts are a frequent exploit target across DeFi. Any architecture that relies on Ethereum smart contracts to bridge assets between chains should treat security as a core part of the design. Audited bridge code, sound oracle design, and multisig architecture are what make that security possible in practice.</p><h2>Future of EVM Compatibility on Hedera</h2><p>The network’s EVM implementation has been getting closer to full Ethereum equivalence with each update. Hedera is actively working towards being fully EVM compatible. It aims to join the ranks of top blockchains that support enhanced performance features like faster transactions and lower fees.</p><p>EVM Equivalence is a stringent standard aimed at replicating Ethereum’s execution environment precisely. It ensures EVM compatibility with infrastructure tools—a standard that Hedera is approaching with its ongoing updates:</p><ul><li><strong>HIP-1086</strong> raised the callData limit from 6KB to 128KB, so large contracts no longer need multi-step deployment.</li><li><strong>HIP-1340</strong> lets accounts point to smart contract logic and run it in their own context, following Ethereum&#39;s EIP-7702.</li></ul><p>Two upcoming additions introduce capabilities that have no direct equivalent at Ethereum’s base layer:</p><ul><li><strong>HIP-1215</strong> lets contracts schedule their own future execution without relying on external keepers.</li><li><strong>HIP-1195</strong> lets developers attach custom logic to native Hedera transactions.</li></ul><p>That progress extends to cross-chain. More bridging means more token swaps on Hedera — and developers get early access to a growing market at a fraction of Ethereum&#39;s operating cost.</p><h2>Conclusion</h2><p>Hedera offers the Solidity workflow developers already know from EVM-compatible chains, but the network underneath it is built differently. Fees are fixed, finality takes under three seconds, and MEV resistance is built into the protocol.</p><p>SaucerSwap is the clearest demonstration of what DeFi on Hedera looks like in practice. As the leading DEX on the network, it gives traders low-fee token swaps, liquidity providers predictable fee income, and developers a proven deployment environment.</p><p>The infrastructure is live. The next step is yours.</p>

Discover what it means to be EVM compatible on Hedera, how it works, and why SaucerSwap empowers fast, low-cost trading.

EVM Compatibility on Hedera: What You Need to Know

Is Hedera EVM Compatible? Everything You Need to Know

<p>Every trade on a decentralized exchange has a cost: the swap fee. It applies every time tokens change hands inside a liquidity pool, and it directly shapes what you actually receive.</p><p>That cost means something different depending on how you use the protocol. This guide breaks down how DEX trading fees work inside AMMs. It’ll also tell you ways to make smarter trading decisions around them.</p><h2>What Are Swap Fees?</h2><p>A swap charge or fee is a small percentage charged on every token exchange inside a liquidity pool. Unlike swap points in forex, which reflect the difference between spot and forward rates, it is deducted directly from the amount being traded.</p><p>In forex trading, swap rates are determined by the interest rate differential between the two currencies in a currency pair. A forex swap arises from borrowing one currency and lending another, with the bank interest rates of each currency determining the swap fee.</p><p>A swap fee is generally based on the interest rate differential between the two currencies in a pair and determines whether you pay or receive interest for holding a position overnight. For example, if you go long on EUR/USD and the interest rate for EUR is higher than USD, you may earn a swap fee; if the USD rate is higher, you may pay a fee.</p><p>On centralized exchanges, trading fees go straight to the company running the platform. In forex trading, central banks influence the costs of keeping a position open overnight. In DeFi, the risk looks different: impermanent loss, which occurs when the price ratio between two pooled tokens shifts after deposit.</p><p>The protocol typically keeps a small share to fund development and governance. The split is explicit on SaucerSwap: 5/6 of every swap fee goes to liquidity providers, and ⅙ funds SAUCE token buybacks that benefit single-sided stakers and the DAO.</p><h2>AMM Fees Explained</h2><p>Automated market makers replace order books with liquidity pools. The AMM pricing mechanism works by keeping two currencies at a set ratio, determining the exchange rate between them. When a trader swaps one for the other, the price adjusts automatically.</p><p>The swap fee is written into the contract and applied before every trade executes. In a 0.30% pool, a trader swapping 1,000 USDC for HBAR pays the fee first, taken directly from that 1,000 USDC. Only the remainder completes the swap. That fee stays inside the pool, credited to the reserves over time.</p><h2>Why Do Swap Fees Exist?</h2><p>Crypto swap costs exist for a reason. They fund the liquidity providers who make trading possible in the first place. In decentralized trading, this reduces reliance on a direct counterparty, although other risks, such as smart contract and protocol risk, still remain.</p><h3>Incentivizing Liquidity Providers</h3><p>Liquidity providers rewards come almost entirely from swap fees. Without that income, there would be little reason to deposit tokens into a pool and accept the risks that come with it. Higher trading volume generates more charges, which attracts more liquidity and reduces price impact for traders over time.</p><h3>Compensating for Risk</h3><p>Providing liquidity is not risk-free. The main concern is impermanent loss, which occurs when the price ratio between two pooled tokens shifts after deposit. A large enough move can leave a provider with less value than if they had simply held the tokens.</p><p>Swap costs are the trade-off. Higher volatility pools charge more to reflect the greater risk providers take on, similar to how negative swaps penalize certain positions in forex trading.</p><h3>Supporting Protocol Sustainability</h3><p>DeFi protocol fees play a key role in keeping protocols sustainable, without relying on financial institutions to fund their operations. On SaucerSwap, the 1/6 protocol share feeds back into the ecosystem according to its governance structure. More volume means more revenue.</p><h2>Types of Swap Fees in DeFi</h2><p>Not all liquidity pool fees are built the same way. Just as exchanging different currencies carries varying costs in traditional finance, protocols use different fee models depending on the types of assets they support.</p><p>The swap value can differ depending on the interest rates of the assets involved and the calculation methods used by the protocol. Interest rates vary across currency pairs, and swap rates differ based on the traded pair or asset class.</p><h3>Fixed Swap Rates</h3><p>A fixed swap fee is a set percentage charged at a predetermined rate. It applies to every trade, regardless of market conditions. SaucerSwap V1 uses 0.30% across all pairs. Traders always know what they will pay before executing, and fee earnings for liquidity providers scale directly with volume.</p><h3>Dynamic Swap Rates</h3><p>A dynamic swap fee works similarly to a floating rate, as it adjusts based on real-time conditions. During high volatility, a pool might charge more to compensate liquidity providers for the added risk, then lower fees when markets calm to encourage more trading. Some protocols implement this through programmable hooks that calculate the appropriate rate at the time of each swap.</p><h3>Tiered Fee Structures</h3><p>Tiered fee structures let liquidity providers choose their preferred risk level. SaucerSwap V2 offers four tiers: 0.05%, 0.15%, 0.30%, and 1.00%. Stablecoin pairs, which carry low volatility and minimal impermanent loss risk, typically sit in the 0.05% tier. Highly volatile tokens land in the 1.00% tier, where higher costs reflect the greater exposure providers take on.</p><h2>How Does a Swap Work and How Does It Affect Traders?</h2><p>Every swap fee reduces what you receive from a trade. This is a direct cost, and for frequent traders, it adds up fast.</p><h3>Trading Costs</h3><p>Swap costs compound across multi-hop routes, which is one reason DEX trading fees can add up faster than traders expect. A trade moving through two pools pays fees at each step, so two pools charging 0.30% already adds up to roughly 0.60% before price impact enters the picture.</p><p>The simplest fix is choosing lower-fee options. On SaucerSwap V2, a stablecoin swap at the 0.05% tier costs six times less than the same trade through a 0.30% tier. But the fee rate alone is not the full picture. Note that a large trade in a thin market creates slippage that can easily outweigh the fee. Both the rate and the depth matter.</p><h2>How Do Swap Fees Affect Liquidity Providers?</h2><p>For liquidity providers, a swap fee is the primary income source from a pool position. Earnings depend on three things: the fee rate, the pool&#39;s trading volume, and how capital is deployed.</p><h3>Passive Income Generation</h3><p>Yield from liquidity pools accumulates with every trade. Each swap generates fees that go directly to active liquidity providers, split in proportion to their share. That’s because every trade requires two parties: the trader and the pool acting as counterparty. A provider in a USDC/HBAR pair holds an account denominated in both assets — the base token and the second currency of the position. It compounds naturally over time.</p><h3>Balancing Risk and Reward</h3><p>A fixed-rate tier offers more predictable fee income, while higher-volatility tiers introduce greater uncertainty alongside greater potential returns. Before you decide which pool to enter, weigh the fee tier against the volatility of the assets involved.</p><p>The Fees APR formula lets you calculate fee income relative to capital deployed on an annualized basis. It is calculated as: (24h Volume multiplied by (Fee multiplied by 5/6)) divided by total liquidity in the balanced range, multiplied by 365.</p><p>Concentrated liquidity adds another layer of control. Pick a price range, and your position only earns fees while the price stays within it. Tighter ranges are more powerful on a per-unit basis, but if the price moves outside that range, earnings stop completely until it comes back.</p><h3>Offset for Impermanent Loss</h3><p>If a position does enough volume, fee income can cover the damage from price divergence between paired tokens. High-volume tiers like 0.30% or 1.00% can still generate substantial returns even when impermanent loss is present. Tracking fee APR alongside that exposure helps providers assess whether a position is actually profitable.</p><h2>How to Minimize Swap Rates on a Trading Platform</h2><p>Reducing crypto swap costs is straightforward once you understand where fees come from and how they stack. Small differences in fee tiers can save you real money over time. Check the fee tier before entering a position, and always compare it against the depth to avoid paying lower fees but higher slippage.</p><h3>Choose the Right Pool</h3><p>Multiple fee tiers exist for the same pairs on SaucerSwap V2, so selecting a lower-fee tier when liquidity is sufficient reduces your base cost without changing anything else about the trade. Always check depth alongside the fee rate:</p><ul><li>A lower fee tier with thin liquidity can cost more in slippage than a higher fee tier with deep liquidity.</li><li>A pool with slightly higher fees but strong liquidity often results in a better effective price.</li></ul><h3>Trade During Low Volatility</h3><p>Some protocols apply higher fees during volatile periods, so trading during calmer conditions can reduce overall costs. On Hedera, network fees are fixed and low, making the pool swap fee the main variable cost. Avoiding high-volatility windows also reduces price impact, further increasing savings.</p><h3>Use Efficient Trading Strategies</h3><p>A single large swap can move the price significantly. Breaking it into smaller trades over time solves this. Known as a TWAP approach, it spreads execution across multiple smaller swaps throughout the trading day, keeping the exchange rate closer to the market rate.</p><h3>Compare Across Platforms</h3><p>Swap fees vary across protocols and across pools on the same protocol. Comparing available routes before executing can surface meaningful savings. When you <a href="https://www.saucerswap.finance/trade" target="_blank" rel="noopener noreferrer">swap tokens on SaucerSwap</a>, the interface does the comparison for you. It factors in both fees and price impact to find the best net output.</p><h2>The Role of Swap Fees in DeFi Growth</h2><p>Swap rates are what make decentralized trading sustainable. Without them, DeFi liquidity pools dry up, and trading becomes expensive and unreliable. Beyond that, they also:</p><ul><li>Compensate providers for the risks they take</li><li>Fund the protocols that maintain the infrastructure</li></ul><p>Furthermore, fees create a growth cycle:</p><ul><li>Higher volume generates more fees</li><li>More fees attract more liquidity providers</li><li>More liquidity brings in more volume</li></ul><p>SaucerSwap&#39;s growth to over $5 billion in all-time volume and 15 million trades shows how this plays out on Hedera.</p><h2>The Future of Swap Fees Based on Real World Examples</h2><p>Instead of fixed swap rates, protocols can adjust in real time based on volatility or imbalance. That means better protection as a provider when markets move fast, and less cost as a trader when conditions are stable.</p><p>Capital deployment is changing, too. Concentrated liquidity is already live on SaucerSwap V2, and it lets you pick a price range and put your capital to work within it. So, you earn more fees from the same amount of money.</p><p>Then there is the cross-chain. SaucerSwap already bridges through Axelar and LayerZero. As that grows, fee structures will need to cover bridging costs on top of swap rates.</p><h2>Conclusion</h2><p>The swap fee funds liquidity providers, supports protocol development, and makes decentralized trading economically viable. Traders who understand crypto trading costs make better decisions at every step.</p><p>SaucerSwap&#39;s tiered fee model, clear LP and protocol split, and concentrated liquidity in V2 are powerful but complex instruments — they give both traders and providers the tools to make informed trading decisions. Understanding token swap fees directly shapes your results, whether you are trading or providing liquidity.</p>

Learn what a swap fee is in DeFi, how it works in AMMs, and how it impacts traders and liquidity providers. Optimize your crypto trading costs.

Swap Fees in DeFi: How They Work and Affect You

Understanding Swap Fee in DeFi: How They Work and Affect You

<p>Today, we are excited to launch the SaucerSwap Widget. A plug-and-play swap interface that embeds the full power of SaucerSwap directly into any application on Hedera. </p><p></p><p>Whether you’re building an NFT marketplace, a web3 game, a DAO governance portal, a launchpad, or a DeFi dashboard, you no longer need to redirect your users to an external DEX to acquire tokens. With the SaucerSwap Widget, users can swap assets in-flow without ever leaving your site..</p><p><strong>Try it out in the Widget Studio:</strong> <a href="https://widget.saucerswap.finance" target="_blank" rel="noopener noreferrer">widget.saucerswap.finance </a></p><p> <strong>Read the integration guide:</strong> <a href="https://docs.saucerswap.finance/widget" target="_blank" rel="noopener noreferrer">docs.saucerswap.finance/widget</a></p><p class="block-img"><img src="https://images.prismic.io/saucerswap/9R3a7Ly1sLNMH5UG_Capturadepantalla2026-10-29ala-s-19.36.48.png?auto=format,compress" /></p><h3>Why We Built the Widget</h3><p>Friction is the biggest conversion killer in Web3. </p><p>Historically, if a user landed on your dApp and needed a specific token, whether it&#39;s HBAR, SAUCE, an ecosystem utility token, or an in-game currency. They had to navigate away to a third-party DEX, connect their wallet again, execute the swap, navigate back to your dApp, and reconnect. Every jump introduced churn.</p><p>The SaucerSwap Widget helps eliminates that friction. It packages the entire SaucerSwap trading experience into a lightweight, fully responsive, and customizable component that drops into your codebase in minutes.</p><p></p><h3>What’s Under the Hood?</h3><p>The widget isn’t just a simple UI wrapper; it’s powered by the exact same infrastructure that drives SaucerSwap:</p><ul><li><strong>Smart Order Routing (SOR):</strong> Automatically routes trades across SaucerSwap V1 (AMM pools) and SaucerSwap V2 (Concentrated Liquidity CLMM) to achieve optimal execution and lowest slippage.</li><li><strong>Tokenized US Equities &amp; ETFs:</strong> Natively supports trading tokenized US stocks and ETFs (like TSLA, NVDA, AAPL, SPY) via our Sodax integration.</li><li><strong>Automated Hedera UX:</strong> Handles the complexities of the Hedera Token Service (HTS) under the hood. The widget inspects account state via mirror nodes, automatically bundling token associations and Permit2 approvals so users never run into unexpected transaction failures.</li><li><strong>Universal Wallet Support:</strong> Works out-of-the-box with HashPack, MetaMask (Hedera JSON-RPC EVM), Kabila, and mobile wallets via WalletConnect / Reown.</li></ul><h4>Start Building Today</h4><p>The SaucerSwap Widget is available to all and can be integrated within minutes. </p><ul><li><strong>Interactive Studio &amp; Theme Builder:</strong> <a href="https://widget.saucerswap.finance" target="_blank" rel="noopener noreferrer">widget.saucerswap.finance</a></li><li><strong>Developer Documentation:</strong> <a href="https://docs.saucerswap.finance/widget" target="_blank" rel="noopener noreferrer">docs.saucerswap.finance/widget</a></li><li><strong>npm Package:</strong> <a href="https://www.npmjs.com/package/@saucerswaplabs/widget" target="_blank" rel="noopener noreferrer">@saucerswaplabs/widget</a></li></ul><p>If you&#39;re integrating the widget or need developer assistance, come join our community on <a href="https://discord.com/invite/PvgKSTTMbf" target="_blank" rel="noopener noreferrer">Discord</a> or tag us on X <a href="https://x.com/SaucerSwapLabs" target="_blank" rel="noopener noreferrer">@SaucerSwapLabs</a>. We&#39;d love to see what you build!</p>

Seamlessly embed SaucerSwap directly into your dApp or website

Introducing SaucerSwap Widget

<h3><strong>One SaucerSwap</strong></h3><p>Since launch, SaucerSwap has grown from a constant-product automated market maker into a broader execution and liquidity stack spanning V1, V2, V3, staking, governance, cross-chain bridging, analytics, and developer interfaces.</p><p>Today, we are launching a rebuilt SaucerSwap web app. The familiar core remains, but the experience around it has been reworked: Swap now compares the strongest eligible V1/V2 AMM quote with V3; Explore turns protocol data into queryable intelligence; Dashboard and Leaderboard add a public-account layer; and the frontend is substantially lighter.</p><p>Across the rest of the application, live information and actions are brought forward more consistently. Pool now leads with the liquidity catalogue and creation path. Stake adds on-chain xSAUCE history, verification, and clearer reward context around the existing staking flow. Governance presents active proposals and enactment votes more densely, while Bridge and other utilities are easier to understand and find.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/5RzRHu_aaxonLH5r_image1.png?auto=format,compress" /></p><p>This is not a rejection of the SaucerSwap workflow users already know. Rather, Swap keeps its chart-and-trade composition, while Trade remains the V3 order-book workspace. The goal is to make the protocol easier to navigate as one system without flattening the differences between its products.</p><p>The web app arrives today, alongside the broader protocol update. Phase 1 of the ratified tokenomics proposal was activated on September 8, 2026, including a 50% reduction in MasterChef SAUCE emissions. V3 recalibration is planned for early next week, while the recently rebuilt documentation and integration surfaces give developers and agents clearer paths into SaucerSwap data, APIs, contracts, and machine-readable protocol context.</p><h3><strong>A Unified Quote-Selection Layer</strong></h3><p>The most consequential change sits beneath Swap. A user enters the tokens and amount once, and SaucerSwap evaluates AMM and order-book liquidity behind the scenes.</p><p>The Smart Order Router, or SOR, is the off-chain quoting layer. It scans eligible V1 and V2 pools for the tokens and amount entered, then calculates the strongest AMM quote under the current routing rules. That route may use a direct pool, move through intermediate assets, or split across eligible AMM liquidity when doing so improves the output.</p><p>Previously, an AMM swap could hop through up to three pools, but the route remained entirely within either V1 or V2. The new SOR evaluates eligible liquidity across both protocol versions and can combine split and multi-hop routing within the AMM branch.</p><p>The resulting AMM quote is then compared with a V3 market-order quote. If V3 offers the better eligible result under the routing rules at quote time, the trade executes through V3. Otherwise, SaucerSwap executes the SOR-selected AMM route. Split and multi-hop execution apply only within the AMM branch; the final transaction does not split between V3 and AMM liquidity.</p><p>Users therefore no longer need to compare Swap and Trade separately to determine which venue offers the stronger quote. The application presents the selected route, minimum received, and any applicable interface fee before execution.</p><p>This is a broader quote-selection process, not a guarantee that one venue or route will always win. The result depends on current liquidity, market depth, fees, route eligibility, and the state of the market when the quote is generated.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/oaVP7Wy8qxOH18rX_image2.png?auto=format,compress" /></p><h3><strong>A Matched Routing Comparison</strong></h3><p>A matched pre-release comparison of 25,000 BONZO → DOSA exact-input quotes illustrates the practical effect of the rebuilt routing layer.</p><p>The previous application quoted the entire trade through a single V1 route: BONZO → JEET → HBAR → DOSA. That three-hop path quoted 1,112,336.88 DOSA, equivalent to 44.4935 DOSA per BONZO.</p><p>The rebuilt Smart Order Router searched eligible liquidity across both V1 and V2 and allocated the quoted input between two paths. It routed 96% through BONZO/HBAR on V2 and HBAR/DOSA on V1, while the remaining 4% moved through BONZO/JEET and JEET/DOSA on V1. For this pair, the selected result remained entirely within AMM liquidity.</p><p>The combined route quoted 1,328,240 DOSA, or 53.1296 DOSA per BONZO. That is an improvement of 215,903.13 DOSA, representing 19.41% more output than the route selected by the previous application—approximately $33.36 in additional value at the displayed rate.</p><p>The difference comes from route construction. The previous application quoted the full order through one three-hop V1 path. The rebuilt SOR used the more efficient BONZO/HBAR V2 pool for most of the trade, combined it with HBAR/DOSA liquidity on V1, and allocated the remaining order to a second V1 path through JEET.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/1sXZglcQYbNjbMVf_image3.png?auto=format,compress" /></p><p>This is where broader routing becomes most consequential. In thinner, fragmented HTS markets, the route between two assets can matter as much as the liquidity in any individual pool. By searching across protocol versions and splitting execution between eligible paths, the rebuilt application can avoid inefficient intermediate legs and preserve substantially more value for the user.</p><h3><strong>Explore Becomes Queryable Protocol Intelligence</strong></h3><p>Explore expands from a surface focused primarily on token discovery into a broader protocol-intelligence workspace. Token search and discovery remain, but they now sit alongside Signals, Ask, and Pinned.</p><p>Signals brings protocol charts and generated observations together across liquidity, volume, token activity, holders, and staking. Protocol-level charts can open into Ask for further analysis, while signal cards direct users toward the relevant data or action.</p><p>Explore Ask turns a supported natural-language question into a structured protocol result. Depending on the question, the response can be a value, chart, or table, accompanied by an editable query and a source receipt showing the underlying data source. Useful analyses can be pinned and revisited in the current browser.</p><p>Global search complements this workflow. It handles navigation and product help and can send supported analytical questions into Explore Ask, while Ask remains the dedicated workspace for inspecting, editing, and verifying the result.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/jCyeAQ-NwGyltGAQ_image4.png?auto=format,compress" /></p><h3><strong>Better On-Chain Visibility</strong></h3><p>The same emphasis on visibility extends to Dashboard. Users can connect to manage their own account or enter a Hedera account or EVM address to inspect it read-only. Public portfolio URLs make those views directly accessible and shareable.</p><p>A new Leaderboard surfaces Top Stakers and Top Holders by current balance, alongside a 24-hour Top Traders view based on observed AMM router swaps. Accounts link into read-only portfolios, adding a useful public-account layer without implying ownership or transaction authority.</p><p>Other supporting surfaces have been tightened rather than reinvented. Pool leads with liquidity actions. Stake adds on-chain xSAUCE rate history, verification links, consolidated metrics, V3 fee-discount context, and recent SAUCE inflows to the staking pool around the existing stake and unstake flow. Governance removes the oversized introductory treatment in favor of live proposal state and chronology. Bridge presents its Squid/Axelar route, fees, and delivery expectations more clearly. WHBAR is a new indexed wrap-and-unwrap utility, while the existing Signature Verification tool is now easier to discover through improved navigation and indexing.</p><h3><strong>A Substantially Lighter Application</strong></h3><p>The visual overhaul is backed by a substantially leaner frontend. In our August 2 pre-release comparison, 100 controlled cold-load runs covered five representative routes, production and staging, desktop and throttled-mobile scenarios, and five runs per matched case. The redesigned build transferred 29.4% to 92.6% fewer bytes across the ten median comparisons. In a separate capture, uncompressed root HTML fell 63.0%, from 404,824 bytes to 149,670 bytes.</p><p>Pool showed the largest network reduction. In the desktop median, transferred data fell from 11.11 MB to 0.82 MB, while network responses fell from 2,377 to 54. The traces also show substantially less global request fan-out across the application.</p><p>The refactor also establishes a stronger baseline for accessibility and metadata. The shared page structure includes main landmarks and a keyboard skip link, with more consistent labels for controls. Route-specific titles, descriptions, and canonical metadata are also applied more consistently across the application.</p><h3><strong>Documentation and Integration, Rebuilt</strong></h3><p>The documentation overhaul was released ahead of this web app and now complements it as the reference layer for the same protocol experience. It contains refreshed protocol and tokenomics material, stronger integration guidance, a generated REST reference, and dedicated coverage of the V3 Order Book API.</p><p>For coding tools and agents, the documentation exposes llms.txt, llms-full.txt, per-page Markdown, reusable integration rules, and a hosted MCP server that searches canonical documentation. The MCP is a documentation interface, not a trading endpoint; transaction-authorized activity remains separate and uses the appropriate API or direct integration flow.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/0KJSXB4w9ueGOl2J_image5.png?auto=format,compress" /></p><h3><strong>SAUCE Tokenomics, Realigned</strong></h3><p>The broader rollout includes Phase 1 of the ratified <a href="https://gov.saucerswap.finance/t/hbar-usd-perpetuals-sauce-emission-reduction-and-unified-brewsaucer/396" target="_blank" rel="noopener noreferrer">HBAR/USD Perpetuals, SAUCE Emission Reduction, and Unified BrewSaucer proposal</a>. This phase halves MasterChef’s emission rate, reducing annual gross SAUCE issuance from approximately 73.3 million to 36.7 million. The maximum supply remains 1 billion SAUCE, with the MasterChef rewards runway estimated to extend by roughly 14 months.</p><p>Unified BrewSaucer brings eligible protocol revenue under a common SAUCE buyback and distribution model, after each venue’s required fee allocations. Purchased SAUCE is distributed 40% to xSAUCE, 30% to Development, 10% to burn, and 20% to protocol-owned liquidity and incentives. A separate staking contract uses a MasterChef-style deposit-and-earn model. Its rewards are funded through the BrewSaucer loop, recycling protocol revenue rather than creating additional net inflation for that component.</p><p>A portion of newly minted SAUCE that previously went to the staking pool is also redirected to burn—roughly 1 million SAUCE per year at the reduced emission rate. This is an additional burn of newly minted SAUCE, on top of the revenue-funded BrewSaucer buyback-and-burn stream.</p><p>Phase 2 activates when HBAR/USD perpetuals launch, separately from the redesigned web app. Perpetuals are actively in development for a Q4 2026 release. The planned market starts with 2× leverage, WHBAR/USDC-backed liquidity, and xSAUCE-based position-fee discounts. Its eligible protocol revenue and GM liquidity rewards join the model when the audited perpetuals infrastructure goes live.</p><p>V3 Recalibration Follows the Web App</p><p>The V3 recalibration is planned for early next week. It addresses a different layer of the system: calibrated market economics, an upgraded Reactor contract, and a delegated-inventory model for HTS order books, aimed at improving how V3 markets are configured and sustained.</p><p>Together, the web app, tokenomics changes, and V3 recalibration improve how users access liquidity, how incentives are distributed, and how order-book markets are sustained.</p><p>The new SaucerSwap keeps the familiar core intact while making the protocol easier to navigate, query, and execute against - for users, developers, and agents.</p>

A rebuilt web app, one quote-selection layer across V1, V2, and V3, and a more direct way to trade, explore, and manage DeFi on Hedera.

Introducing the New SaucerSwap

<p>Impermanent loss, or divergence loss, is part of the mechanics of automated market makers (AMMs) on decentralized exchanges. It happens when your position gets rebalanced as prices change, which can negatively affect your net returns.</p><p>Although this loss isn’t something you can avoid entirely, it’s an aspect to account for. Understanding how impermanent loss actually accumulates and, most importantly, how to manage risks when providing liquidity can help you make smarter decisions and stay in control of your positions.</p><h2>What Is Impermanent Loss?</h2><p>This is the difference between how much your assets are worth in DeFi liquidity pools and how much they would be worth if you didn’t deposit, but just held them. Impermanent loss occurs as a result of the price discrepancy of the tokens you’ve deposited. In AMMs, <a href="https://www.saucerswap.finance/pool" target="_blank" rel="noopener noreferrer">liquidity pools</a> are constantly rebalanced to align the internal token’s prices with the real-world market value.</p><p>When one asset increases in value, the liquidity pool’s constant product formula rebalances the position by selling the rising asset to traders and, in turn, acquiring more of the asset that hasn’t increased as much. Consequently, you end up with more of the asset that performed worse (the one that either decreased or remained flat) and less of the asset that appreciated, which can lead to unexpected losses.</p><p>As long as your position is open and the token prices return to their original pool price ratio, this loss remains unrealized and eventually disappears. But if you exit the position before prices revert to their original ratio, the unrealized loss becomes permanent.</p><p>When holding assets in a private wallet, you fully benefit from the price appreciation of each individual token. But in a liquidity pool, this upside is reduced, which creates an opportunity cost — you give up part of the profit you could make from price increases in exchange for earning swap fees from trades.</p><p>The main question you should ask during liquidity provision is whether the AMM trading fees are sufficient to offset the risk. If the answer is yes, then you’re still in profit despite the loss. If the answer is no, passive holding is a more capital-efficient strategy for you.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajLblY1P9HI4UpOs_1-impermanent-loss.png?auto=format,compress" alt="What Is Impermanent Loss" /></p><h2>Why Impermanent Loss Happens in AMMs</h2><p>When you’re adding liquidity, you deposit two tokens of initially the same value, for instance, $100 each. The pool relies on an internal algorithm that determines the price of these tokens based on the ratio of assets currently held in the pool. If this balance shifts due to trading activity, the tokens&#39; price adjusts accordingly.</p><p>Now, let’s say that one of the tokens appreciates in value in the outside market. Since it’s still cheaper in the pool for a short time, traders notice the price discrepancy and initiate an arbitrage trade, buying the token from the pool and paying with the other token. As a result, there’s now less of the rising token and more of the lower-value one. With each trade, the formula updates the price, gradually bringing it into line with the market.</p><p>This process is continuous. As prices adjust, the liquidity pool rebalances your position by exchanging your appreciating assets for the underperforming token to maintain the correct ratio. This means that, over time, your position shifts, and this is exactly how divergence loss happens.</p><h2>A Simple Example</h2><p>Here’s an example with figures to calculate impermanent loss when it occurs. Suppose you deposit into a liquidity pool where:</p><ul><li>1 Asset A = $1</li><li>1 Asset B = $1</li></ul><p>To keep the pool balanced at a 50/50 ratio by value, you deposit:</p><ul><li>100 Assets A</li><li>100 Assets B</li></ul><p>Your total deposit value is $200, split evenly between the two assets. Now, let&#39;s consider a situation where Asset A doubles in value:</p><ul><li>Asset A = $2</li><li>Asset B stays at $1</li></ul><p>If you had just held your assets, your position would be:</p><ul><li>100 Assets A = $200</li><li>100 Assets B = $100</li></ul><p>Total = $300</p><p>But, as we established, things work differently in DeFi liquidity pools. When the value of Asset A increases, arbitrage traders buy Asset A from the pool. This changes the balance of the pool, and you have fewer Assets A and more Assets B. After the pool rebalances, your share might look like:</p><ul><li>70 Assets A</li><li>141 Assets B</li></ul><p>Now, let’s calculate the value:</p><ul><li>70 Assets A × $2 = $140</li><li>141 Assets B × $1 = $141</li></ul><p>Total = $281. The $19 difference is your temporary loss. Although your total value increased from $200 to $281, compared to simply storing your assets in a wallet, your position is $19 lower.</p><h2>Key Factors That Increase AMM Impermanent Loss</h2><p>The extent of the loss can be impacted by a number of factors. Here are the main ones:</p><ul><li><strong>Price divergence</strong>. The greatest liquidity provider risks don’t stem from how far a price moves, but from how the two assets move apart. When both tokens move up or down simultaneously, the ratio in the AMM pool remains unchanged. However, when assets diverge — one outperforms the other, or they move in opposite directions — the pool will have to aggressively sell the outperforming asset to buy the underperforming one. The wider the gap, the greater the loss relative to simply holding the token.</li><li><strong>Time in the pool</strong>. This is another driver of divergent loss. As the two assets in the pool diverge, losses continue to grow. For this reason, the longer a position is left open, the more likely the two assets are to diverge further, which increases potential losses. At the same time, the longer the position remains active and supported by trading volume, the more you’ll accumulate fees, which may lessen or even exceed the impact of loss.</li><li><strong>AMM and pool design</strong>. Standard crypto liquidity pools (like SaucerSwap V1) distribute your assets over the entire price curve (zero to infinity), so you don’t need to actively manage your position. In contrast, concentrated liquidity (SaucerSwap V2) allows you to specify individual price ranges for your assets. Although this approach may be more efficient from a capital perspective, it generally requires more active management and can lead to greater loss as the price moves within or beyond your chosen range.</li></ul><h2>How to Minimize AMM Impermanent Loss</h2><p>It isn&#39;t possible to eliminate loss, as it’s inherent to AMMs. But there are ways to manage and reduce it. Here are a few strategies to consider.</p><h3>1. Choose Less Volatile, Highly Correlated Pairs</h3><p>As we’ve seen, pairs of assets that are likely to move in similar ways tend to have less divergence, which helps avoid impermanent loss. The tradeoff, however, is that stable pairs, being lower-risk, attract more liquidity and usually generate lower fees, so the overall yield tends to be more modest.</p><h3>2. Avoid Extremely Volatile or Illiquid Tokens</h3><p>With a high level of price volatility, there can be rapid pool changes. This often leaves you with less of the outperforming asset and more of the one that has lost value.</p><p>Illiquid tokens can be risky as well. In these types of liquidity pools, even small trades can result in significant and disproportionate price changes, which leads to frequent and uneven rebalancing. But if you focus on established assets with deep liquidity, you can reduce the frequency of aggressive rebalancing and maintain a more stable liquidity position.</p><h3>3. Consider Stablecoin and “Blue-Chip” Pools</h3><p>Pools that combine stablecoins with large, well-established crypto assets often strike a good balance between liquidity provider risks and returns. This is because stablecoins anchor a part of the position, while blue chips typically have more stable price behavior than smaller tokens. This creates a more predictable outcome, which can result in lower losses than volatile pairs, while offering more attractive yields than pools consisting solely of stablecoins.</p><h3>4. Use Concentrated or Ranged Liquidity Carefully</h3><p>Concentrated liquidity means your capital is only used within a chosen price range. This can increase the fees you earn because your capital is used more efficiently within this range.</p><p>This strategy, however, does come with some liquidity pool risks. If the market price suddenly moves outside the range you’ve established, your position will become inactive, and your overall liquidity will be trapped in a less valuable token. This means you won’t be able to earn fees and may incur greater losses. To mitigate impermanent loss risk, it’s important to actively monitor and adjust your range to stay aligned with the market.</p><h3>5. Diversify Across Pools</h3><p>Each pool behaves differently — some pools are more stable and offer lower returns, while others are more volatile but offer higher fee-earning opportunities. Thus, instead of putting all of your funds into a single pool and relying on a single position, you can reduce the risk of impermanent loss by distributing them over multiple pairs. If one pool underperforms or incurs unexpectedly large losses, steady returns from your other positions can help cushion the overall impact on your portfolio.</p><h3>6. Account for Fees and Incentives</h3><p>Divergence loss should always be viewed in context — it needs to be weighed against what you earn. Your earnings come from trading fees and, in some cases, liquidity provider rewards. Although a position may be negatively impacted by price divergence, you could still profit if your earnings are large enough.</p><p>It’s best to have a complete understanding of the situation. Before joining a pool, assess whether the anticipated fees and rewards will compensate for the potential price divergence. This is also the core of DeFi yield farming — balancing risk and reward to ensure your positions remain profitable.</p><h3>7. Shorten Your Time Horizon in Highly Volatile Markets</h3><p>In markets with high volatility, prices can diverge faster than fees can accumulate. In such cases, consider shortening your time horizon to reduce exposure to fast rebalancing. Furthermore, try not to open any new positions before large market events or during “high-impact” news cycles, as volatility can become highly unpredictable.</p><h3>8. Use Tools and Analytics</h3><p>Another core way to manage liquidity pool risks is to rely on data. Before entering a pool, you can use an impermanent loss calculator to estimate potential loss and determine whether it’s worth the trade. In addition, historical data can help determine whether a trading pair is stable or prone to swings.</p><h2>When Is AMM Impermanent Loss Worth It?</h2><p>The bottom line is that divergence loss is a standard aspect of participating in decentralized finance. It’s worth it when the trading fees collected plus additional rewards exceed the cost of the price change.</p><p>For example, in stablecoin pairs, price movement is limited, so loss remains low, and it’s likely the fees will compensate for it. More active pools, such as HBAR paired with a major asset, often have higher trading volume and therefore generate more fees to cover losses. Even in pools with highly volatile assets, liquidity providers can opt for short-term positions to capitalize on high trading volume and earn fees before significant price shifts occur.</p>

Impermanent loss explained: how it works in AMMs, why it happens, and the best strategies liquidity providers can use to minimize it.

Impermanent Loss: What It Is and How to Minimize It

Impermanent Loss: What It Is and How to Minimize It?

<h3>Summary</h3><p>Hashport have <a href="https://hashport-network.medium.com/the-final-chapter-hashport-to-wind-down-operations-on-may-31-2026-12-00-utc-c2e0aa335c46" target="_blank" rel="noopener noreferrer">announced</a> their bridge will shut down on May 31, 2026 at 12:00 UTC. To recover the original asset, you will need to redeem via Hashport before that date. As the cutoff approaches, markets can become volatile. Depegs, pool imbalance, and slippage are all possible. Plan ahead and avoid waiting until the last day.</p><h3>Affected assets</h3><p>Hashport-wrapped tokens on Hedera typically appear with the suffix [hts]. For example, USDC[hts], USDT[hts], WETH[hts], and WBTC[hts]. A full Hashport token list is available here, <a href="https://www.hashport.network/token-list/" target="_blank" rel="noopener noreferrer">https://www.hashport.network/token-list/</a>.</p><p>If you hold any of these tokens or provide liquidity in pools that contain them, this guide applies to you.</p><h3>If you hold Hashport bridged tokens</h3><p>You need to bridge your assets back to the native chain via Hashport before May 31, 2026 at 12:00 UTC. Once your assets are redeemed through the bridge, you are no longer exposed to the shutdown.</p><p>Bridge here: <a href="https://app.hashport.network/" target="_blank" rel="noopener noreferrer">Hashport Bridge</a>.</p><p>Do not leave it until the last second. Bridge operations can become congested as the deadline nears, and processing times may vary.</p><h3>If you are an LP in a pool containing Hashport assets</h3><p>LP positions carry additional risk as the shutdown approaches. As users exit Hashport assets by selling into pools, the pool can become heavily imbalanced toward the Hashport side. Impermanent loss can become effectively permanent if the Hashport asset depegs and does not recover.</p><h4>What you can do</h4><p>Consider reducing your exposure ahead of the cutoff date. Removing liquidity early helps you avoid being left holding the sunset side of the pair. Once you have removed liquidity, redeem via Hashport back to the original asset before the deadline.</p><h2>Step-by-step: redeem / bridge out via Hashport</h2><h4>Before you start</h4><ul><li>Only use official Hashport website <a href="https://www.hashport.network/" target="_blank" rel="noopener noreferrer">https://www.hashport.network/</a>.</li><li>Beware of fake sites and unsolicited DMs.</li><li>Confirm the exact token you hold (symbol and token ID) on Hashport’s token list (<a href="https://www.hashport.network/token-list/" target="_blank" rel="noopener noreferrer">https://www.hashport.network/token-list/</a>) to avoid confusing similarly named assets. Be aware that fees, limits, and processing times may vary.</li></ul><h4>Steps</h4><ol><li>Go to the official Hashport bridge page, <a href="https://app.hashport.network/" target="_blank" rel="noopener noreferrer">https://app.hashport.network/</a>.</li><li>Connect both wallets, your Hedera wallet and the wallet on the asset’s native chain e.g. Ethereum.</li><li>Select the Hashport-wrapped asset you hold on Hedera e.g. USDC[hts].</li><li>Choose the destination chain and asset. For USDC[hts] this would be USDC on Ethereum.</li><li>Review the fees, limits, and estimated processing time.</li><li>Confirm the transaction(s) in your wallet.</li><li>Verify completion. Check that the Hedera-side transaction succeeded and that your destination chain balance has updated.</li></ol><h3>If your bridging gets stuck</h3><p>Sometimes issues occur during bridging. Dropped connections, network issues, or other unforeseen problems can leave your transaction in an incomplete state where your Hedera assets become &quot;stuck&quot;. If this happens, visit <a href="https://app.hashport.network/redeem" target="_blank" rel="noopener noreferrer">https://app.hashport.network/redeem</a>, or click the ‘Redeem’ tab on Hashport, to manually push the transaction along.</p><h3>Using SaucerSwap safely during the wind-down</h3><p><strong>Swapping</strong></p><p>When buying or selling Hashport bridged assets check that the price of the asset hasn’t significantly depegged from the native asset, and that there is sufficient liquidity for the trade. Swapping assets with low liquidity can cause volatile price movements and high price impact, meaning the USD value of what you receive can be significantly less than the USD value of what you swapped in.</p><p>Liquidity pools containing Hashport tokens carry particular risk during the wind-down. As redemption pressure builds, Hashport pools can imbalance and Hashport bridged token prices can depeg from the underlying asset. Swap quotes may not reflect the native value, so bridging back via Hashport remains the reliable way to recover the underlying asset.</p><p><strong>Providing liquidity</strong></p><p>As the cutoff approaches, Hashport-containing pools should be treated as elevated risk. Consider gradually rotating your liquidity toward non-Hashport assets over time rather than waiting until the deadline.</p><h3>FAQ</h3><h5>Will SaucerSwap automatically convert my Hashport assets?</h5><p>No. You control your own assets. If you want to eliminate shutdown risk, you need to take action before the cutoff.</p><h5>Can I still swap Hashport assets after May 31?</h5><p>Trading may remain technically possible on V1 &amp; V2 as the liquidity pools will still exist, but redemption and bridge-out will no longer be available. Token prices could significantly depeg from the native asset and liquidity will likely be scarce.</p><h5>What if I miss the May 31 deadline?</h5><p>The tokens will continue to exist on Hedera, however you will be unable to redeem or bridge out via Hashport, leaving you holding an asset with limited exit options.<br /><br /><br /></p>

Hashport have announced their bridge will shut down on May 31, 2026 at 12:00 UTC. To recover the original asset, you need to redeem via Hashport before that date.

Hashport's bridge shuts down on May 31, 2026 at 12:00 UTC. Here's what SaucerSwap users need to do with their Hashport-wrapped tokens before the cutoff.

Hashport sunsets May 31: what SaucerSwap users need to do

Hashport is sunsetting May 31: what SaucerSwap users need to know

<p>If you&#39;ve ever added a token to your wallet or used a DeFi platform like SaucerSwap, you&#39;ve already interacted with contract addresses. It’s a unique identifier for a smart contract deployed on a distributed network. Knowing how it works and how to verify it is essential to avoid some of the most common mistakes in the crypto world, such as loss of funds, which can happen if a faulty address is stated at any point during a transaction.</p><p>In this article, we explain how these addresses function across different networks, including Hedera; how to check them before you use them; what warning signs might suggest a suspicious contract; and much more.</p><h2>What Is a Crypto Contract Address?</h2><p>A crypto contract address is a unique identifier for a smart contract deployed on a blockchain or another kind of distributed ledger network. The smart contract itself is code stored on the chain after it&#39;s deployed.</p><h3>Contract Address Meaning in Simple Terms</h3><p>To a beginner, contract addresses may look no different from wallet addresses. Networks compatible with Ethereum Virtual Machine (EVM) display contract addresses in a format identical to regular wallet addresses: 42 characters long, beginning with 0x. An Ethereum contract address, for example, looks identical in format to a regular Ethereum wallet address.</p><p>Even though wallet and crypto contract addresses may follow the same format, they refer to different things. A contract address refers to code that has been deployed on the network (you can think of it as a front door to a blockchain program), while a wallet address points to an account managed by a private key.</p><p>The risk is that if you paste a unique contract address where a receiving wallet address is expected, the transaction may fail, or, what’s worse, go through and send assets to a contract that can’t easily return them, as it may not have a built-in function to send them back. So, it&#39;s always better to verify an address on an explorer before using it.</p><h3>Contract Address vs. Wallet Address</h3><p>Before we go further, let’s compare what stands behind smart contracts and wallet addresses:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajQa_Y1P9HI4Usxh_1-crypto-contract-addresses-explained.png?auto=format,compress" alt="Contract Address vs Wallet Address" /></p><h3>Token Address vs. Contract Address</h3><p>In some cases, people use the terms “contract address” and “token address” interchangeably. But that is not correct.</p><p>Many tokens on Ethereum and other EVM-compatible networks follow the ERC-20 standard. A token built on this standard is a smart contract deployed on the network. So when people refer to a token address, they typically mean an address of the smart contract that manages that token — the one that tracks balances, handles transfers, and defines properties like the token name, symbol, and total supply.</p><p>However, the exceptions are ETH on Ethereum and HBAR on Hedera, which aren’t tokens in the usual sense. They&#39;re the base currencies of their respective networks, built into the protocol itself rather than deployed as separate contracts. So, neither “token address” nor “contract address” is the common label for them.</p><h2>How Contract Addresses Work On-Chain</h2><p>Let’s establish how an address is created and deployed, what details are visible when you check it via an explorer, and whether it has a private key.</p><h3>What Happens When a Smart Contract is Deployed?</h3><p>Here’s how the deployment process occurs:</p><ul><li>A developer writes the code, compiles it, and submits it to the network.</li><li>The network processes the transaction, and if successful, the smart contract is deployed and receives its own unique contract address.</li></ul><p>It remains associated with this address. Interactions with it are recorded on-chain, and once recorded, they’re generally not reversible.</p><h3>What Lives at the Address?</h3><p>When you look up an address on a network explorer like Etherscan or HashScan, you can usually see the following:</p><ul><li><strong>The code of the contract</strong>. If a developer has confirmed the source code of a smart contract deployed on the network, you can read what it does.</li><li><strong>The contract’s functions</strong>. These are the actions it can perform when called, such as transferring tokens, approving spending, or swapping assets.</li><li><strong>State and balances</strong>. A contract may hold tokens or track user balances internally.</li><li><strong>Events</strong>. This is a log of past transactions and interactions with it.</li><li><strong>Contract information</strong>. Token name, symbol, total supply, and similar metadata, if it&#39;s a token contract.</li></ul><p>This is one of the strengths of public distributed networks. You don&#39;t have to rely on a project&#39;s claims about its token, as you’re able to verify its reliability personally on an explorer.</p><h3>Can a Contract Address Have a Private Key?</h3><p>No. A typical smart contract doesn&#39;t have a private key. It’s not managed by any individual in the same way a wallet is. As we specified earlier, smart contract functionality is built to execute automatically according to predefined rules.</p><h2>Why Contract Addresses Matter for Tokens and DeFi</h2><p>When you begin using DeFi products, such as exchanging on a DEX or moving assets, crypto contract addresses become a regular part of the process. In this section, we explain how wallets and DeFi protocols actually use them.</p><h3>How Wallets Use Token Addresses</h3><p>When your wallet displays a token, it usually reads the token details directly from its contract on the network. And its address serves as the token contract&#39;s identifier.</p><p>The information it reads includes:</p><ul><li>Name. For example, &quot;USD Coin&quot;</li><li>Symbol. For example, &quot;USDC&quot;</li><li>Decimals — how many decimal places the token uses, commonly 6 or 18</li><li>Total supply — the total number of tokens that exist according to the contract</li></ul><h3>How DeFi Protocols Use Contract Addresses</h3><p>Contract addresses are also what your wallet interacts with when you swap, stake, or provide liquidity. Each DeFi action routes through one or more specific contracts at specific addresses.</p><p>Take a swap as an example. First, you approve the DEX contract to access a set amount of your tokens. Your wallet then calls the swap function on the router contract, which in turn interacts with the relevant liquidity pool contract. The swap executes according to the pool&#39;s logic, and the output token is credited to your wallet.</p><h2>Contract Address Examples Across Networks</h2><p>Contract address formats may differ depending on the network. Below, we look at how an Ethereum contract address is structured, how Hedera differs, and more.</p><h3>Ethereum Contract Address Example</h3><p>On Ethereum, contract addresses follow the EVM format: 0x followed by 40 hexadecimal characters, for a total of 42 characters. For example, the USDC contract address on the Ethereum mainnet is 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48 — a standard ERC-20 token deployed as a smart contract on the network.</p><h3>USDC Contract Address Example</h3><p>USDC runs on multiple blockchains, and on each one, its tokens are controlled by a separate smart contract. This means the contract address changes by network.</p><p>Circle&#39;s official documentation lists the USDC mainnet contract address on Ethereum as 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48 and on Hedera as 0.0.456858. The difference is immediately visible — Ethereum uses the standard EVM hex format, while Hedera has its own address structure entirely.</p><h3>Binance Smart Chain, Polygon, Base, and Other Networks</h3><p>Binance Smart Chain, Polygon, and Base are all EVM-compatible networks, so they use the same 0x as the Ethereum contract address format. That said, the same token can be deployed separately on each network — and each deployment gets its own contract address.</p><p>USDC is a clear example. Circle publishes the official USDC contract address for every network it is deployed on in one place, directly in its <a href="https://developers.circle.com/stablecoins/usdc-contract-addresses" target="_blank" rel="noopener noreferrer">documentation</a>.</p><h3>Hedera: EVM address and Native IDs</h3><p>If you&#39;re coming to SaucerSwap from Ethereum or another EVM network, most of what we’ve described so far still applies on Hedera. It supports EVM addresses as well as native Hedera IDs.</p><p>The deployment on Hedera can be referenced in two ways: by its EVM-style address (0x...) or by its Contract ID, which follows a format like 0.0.XXXXXX. Both point to the same deployment.</p><p>Tokens on Hedera also have a Token ID in that same 0.0.XXXXXX format. You can verify the Token ID (0.0.731861) and the EVM address (0x00000000000000000000000000000000000b2ad5) of SAUCE, the native token of SaucerSwap, in the <a href="https://docs.saucerswap.finance/tokenomics/overview" target="_blank" rel="noopener noreferrer">SAUCE token information</a> documentation.</p><h2>How to Find a Verified Address</h2><p>Whether you&#39;re looking up an EVM address or a Hedera Token ID, the starting point is the same: before any interaction, always work with verified contract addresses, such as those from an official source.</p><h3>1. Start with Official Sources</h3><p>The safest place to take an address is the project&#39;s official documentation or verified social media accounts, while the following sources should be avoided:</p><ul><li>Addresses shared in Discord or Telegram by strangers</li><li>Screenshots of addresses, since images can be edited</li><li>Direct messages from accounts claiming to be support teams.</li></ul><h3>2. Check a Blockchain Explorer</h3><p>Network explorers let you search for an address and see what it belongs to. Depending on the network, the relevant explorer may be:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/ajQbLI1P9HI4Usxs_2-crypto-contract-addresses-explained.png?auto=format,compress" alt="Check a Blockchain Explorer" /></p><h3>3. Cross-Check Token Listing Sites and Wallet Interfaces</h3><p>CoinGecko and CoinMarketCap list addresses for tokens across multiple networks and can serve as a secondary source. The issuer&#39;s official documentation, however, should remain a priority.</p><h3>4. Verify the Network Before Copying</h3><p>Before you copy any address, confirm it belongs to the network you&#39;re actually using. As we mentioned, the same token often has different addresses across networks, so if you copy an address from the wrong network, it will point to a different contract.</p><h2>Security Checklist Before You Use a Contract Address</h2><p>Here are the core measures to take to ensure you&#39;re working with verified contract addresses:</p><ol><li>Head to official project pages manually by typing the address in your browser or opening a saved bookmark.</li><li>Confirm the address exists in the official project documentation.</li><li>Inspect a contract on a network explorer.</li><li>Check which network your wallet is connected to, whether you use HashPack, MetaMask, <a href="https://www.saucerswap.finance/saucerswap-wallet" target="_blank" rel="noopener noreferrer">SaucerSwap Wallet</a>, or another wallet.</li><li>Use trusted DeFi platforms.</li><li>Consider a small test transaction first if you&#39;re moving a large amount to confirm the process works as expected before you commit the full sum.</li></ol><h3>Red Flags of a Fake or Risky Token Address</h3><p>Some crypto contract addresses you’ll encounter might not necessarily lead to a safe project. Here are the indicators to consider a contract as questionable:</p><ul><li>The site promoting a contract looks like a legitimate project, but the URL has a slight variation</li><li>The name of the token imitates a familiar one, with just a slight difference, for example, not USDC but USCD</li><li>The token logo resembles a well-known token, but the contract details don&#39;t match</li><li>No official source lists this address. You found it in a comment or a screenshot</li><li>The token has very low liquidity or appears on very few platforms</li><li>The deployment occurred recently, and there’s no verifiable project history yet.</li></ul><p>To avoid risks, before sending tokens or approving a contract:</p><ul><li>Send a small test transaction before moving large amounts</li><li>Confirm you&#39;re on the correct network</li><li>Review the spender address and allowance before approving</li><li>Only interact through the official dApp — verify the URL</li><li>Revoke permissions you no longer need via Revoke.cash</li></ul><h2>How SaucerSwap Users Should Verify Token and Contract Details</h2><p>SaucerSwap is a decentralized exchange and liquidity hub built on Hedera. Since it uses both native identifiers and EVM-compatible address formats, there are a few Hedera-specific aspects to keep in mind when checking an address and other details:</p><ul><li><strong>Address formats</strong>. Alongside EVM-style 0x addresses, Hedera tokens and smart contracts can also be referenced with native Hedera identifiers, such as a Token ID or Contract ID in the 0.0.x format.</li><li><strong>Verification tools</strong>. HashScan is Hedera’s network explorer, and it’s a useful place to check Token IDs, Contract IDs, EVM addresses, transaction history, and related details.</li><li><strong>Bridged tokens</strong>. A bridged token has its own contract address on Hedera, separate from its address on the original network. Confirm which version you&#39;re working with before you proceed.</li></ul><h3>When Using SaucerSwap on Hedera</h3><p>Hedera tokens use a different address format than EVM networks — a token ID like 0.0.456858 rather than a 0x address. Before swapping on SaucerSwap, verify the token ID or EVM address against the project&#39;s official page or documentation.</p><p>Also be aware of the difference between native Hedera tokens and bridged assets. A bridged version of a token is not the same contract as the native one, and the two will have different addresses.</p><h2>Final Thoughts</h2><p>Working with crypto contract addresses carries some risks. Some mistakes are easy to make accidentally: since the contract address format looks identical to wallet addresses, it&#39;s easy to mix them up and use the wrong one.</p><p>Copying an address from the wrong network is another common mistake, since the same token has a different address on each network, and the format alone may not make this mistake obvious. There are also addresses that are set up and spread to deceive.</p><p>That’s why it’s critical to verify addresses from an official source, confirm the network, and, generally, rely on trusted platforms, such as SaucerSwap. If you’re considering trading on Hedera, check the <a href="https://docs.saucerswap.finance/get-started/hedera-guide" target="_blank" rel="noopener noreferrer">SaucerSwap Hedera guide</a> to get familiar with the network.</p>

Learn what crypto contract addresses are, how smart contracts use them, how to find verified token addresses, and how to avoid wrong-address mistakes.

What Is a Contract Address in Crypto? Beginner Guide

Crypto Contract Addresses Explained: How They Work

<p>Most people who try DeFi for the first time never make it to their first trade. Before they can do anything, they need to set up a wallet, write down a seed phrase, and buy native tokens just to cover gas costs. By that point, most people have already given up. It is frustrating, and traditional account models are to blame.</p><p>So, what is account abstraction? It is how Hedera approaches those problems at the protocol level. For traders and liquidity providers on platforms like SaucerSwap, that can change how fees work and how they manage their positions day to day.</p><h2>What Is Account Abstraction?</h2><p>Account abstraction is the ability to separate cryptographic keys from the account to which they are tied. On most blockchain networks, your wallet is linked to your private key and cannot be separated. This feature changes that. Smart contract accounts run on code rather than a private key. Authorization rules become much more customizable as a result.</p><h2>Traditional Blockchain Account Models</h2><p>Most blockchain accounts fall into two categories: those that are controlled by private keys and others by code. These are the core Hedera account models, and both come with their own set of limits.</p><h3>Externally Owned Accounts (EOAs)</h3><p>Externally Owned Accounts, or EOAs, are the standard option on Ethereum. They are also the most common across Ethereum Virtual Machine (EVM)- compatible networks. It starts with a private key, which produces a public key. Then, it creates a wallet address. The user’s private key entirely defines the address, so if you lose it, the account is gone. Proper key management is crucial to avoid losing access for good.</p><p>Every transaction must be signed with that same key, and fees always come out of the network&#39;s native token. For basic use, this works well enough. But there is no built-in way to use session keys, split approvals across multiple parties, or have someone else cover your fees.</p><h3>Contract Accounts</h3><p>Smart contract accounts work differently from EOAs. Instead of a private key, they are controlled by smart contract code, allowing them to run custom logic automatically. A contract account can batch multiple transactions into a single transaction, enforce spending limits, or trigger actions when certain conditions are met.</p><p>However, on Ethereum, contract accounts cannot initiate transactions on their own. They can only respond when an EOA or another contract calls them first. That dependency is one of the core problems that account abstraction sets out to fix.</p><h2>Protocol Level Account Abstraction: How Does It Work?</h2><p>Protocol-level abstraction means the network itself supports these capabilities. They do not need to be bolted on afterward. For true protocol-level support, four properties need to be present from the start:</p><ul><li>Users can update their own cryptographic keys.</li><li>Authorization can be assigned to another address or a smart account contract.</li><li>Multi-signature setups are supported, with authorization from key signatures, smart contract logic, or both.</li><li>The account that signs a transaction and the one that is used to pay transaction fees can be completely separate.</li></ul><p>Ethereum does not support any of these four properties natively. EIP-4337 addresses that through a parallel layer that includes separate transaction objects, a dedicated mempool, and bundler contracts.</p><p>Hedera approached it differently from the start. Its default account model has been live since 2019, with Hedera EVM compatibility added in 2022. All four properties are part of the protocol by default.</p><h3>Custom Transaction Validation</h3><p>Hedera allows setting custom rules for how they authorize transactions, and this works natively at the protocol level. An account can require a smart contract&#39;s approval, a set of keys, or specific conditions.</p><p>HIP-1340 adds another layer to this through EOA Code Delegation, which follows the same idea as Ethereum&#39;s EIP-7702. With it, users can link their wallets to smart contract code. When the EVM calls that profile, the contract&#39;s logic runs inside the account&#39;s own context. So, EOAs can take on programmable account behavior without a full migration.</p><h3>Gas Fees and Transaction Fee Flexibility</h3><p>Gas fee abstraction is one of the more useful things Hedera&#39;s account model makes possible. Because the signing account and the fee-paying wallet can be separate at the protocol level, a third party can cover transaction costs on a user&#39;s behalf. That means users interact with DeFi without needing to hold HBAR just to get started. They also no longer need to manage private keys for every transaction.</p><p>Hedera also keeps fees predictable through a fixed fee model. Instead of requiring HBAR to cover gas fees, costs are priced in USD and automatically converted to HBAR at transaction time. There are no auctions and no congestion-driven spikes. For liquidity providers who rebalance frequently, knowing the transaction cost in advance matters.</p><h3>Interaction with Smart Account Contracts</h3><p>Running on a Hyperledger Besu EVM, the Hedera Smart Contract Service offers full Ethereum compatibility. HTS tokens are accessible through system contracts inside the EVM, where they function like standard ERC-20 tokens.</p><p>Profiles can also embed ContractID keys into their key structure, letting a smart contract act on the account&#39;s behalf. That creates a direct, programmable link between user wallets and DeFi protocols, like SaucerSwap.</p><h2>Benefits of Account Abstraction on Hedera</h2><p>This Hedera feature offers practical benefits for every type of user. Traders, liquidity providers, developers, and other users interact with the network differently. The advantages show up in many ways for each group.</p><h3>Streamlined User Onboarding</h3><p>Meta-transactions let someone else submit and pay for a transaction on a user&#39;s behalf. On Hedera, that capability is built into the protocol itself. That, combined with fixed fees and fast settlement times, makes the experience feel much more like a regular app. Users still keep full custody of their digital assets and never have to pay transaction fees themselves.</p><h3>Advanced DeFi Features</h3><p>Traders on the <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">leading DEX on Hedera</a> no longer have to do everything by hand. Programmable accounts can run trades automatically when a price condition is met, keep liquidity positions in check, and group several actions into a single transaction. That flexibility makes <a href="https://www.saucerswap.finance/trade" target="_blank" rel="noopener noreferrer">token swaps on Hedera</a> more efficient and less time-consuming.</p><h3>Enhanced Smart Contract Functionality</h3><p>Hedera supports scheduled transactions at the protocol level. HIP-1215 took that further by letting smart contracts schedule their own future actions without external triggers. When combined with account abstraction, this makes things like time-locked operations and self-managing liquidity pools achievable.</p><h3>Security and Risk Management</h3><p>Hedera supports multi-signature accounts by default. You can set a profile to require two out of three signers to approve a transaction, and one of those signers can be a smart contract that applies its own rules. Requiring multiple signers to approve a transaction makes it much harder for a single compromised key to lead to a security breach.</p><h2>Use Cases for Account Abstraction on Hedera</h2><p>The feature opens up use cases that were not practical before. Across DeFi, enterprise workflows, and everyday profile management, the impact is concrete and measurable.</p><h3>Meta Transactions and Fee Sponsorship</h3><p>Fee sponsorship is a native part of Hedera&#39;s protocol, meaning apps can pay fees on behalf of their users directly through it. A DeFi protocol can onboard new liquidity providers without making them buy HBAR upfront. For enterprises, this means they can absorb all user-facing fees and give their mainstream users a clean experience from day one.</p><h3>Programmable Wallets</h3><p>With programmable wallets on Hedera, you can set rules that run on their own at the account level. Because those rules sit inside the key structure, no third party holds custody or controls them. Some examples of what you can configure:</p><ul><li>A daily spending limit that enhances security</li><li>Approved transfer destinations</li><li>Recurring payments</li><li>Automatic fee routing</li></ul><p>Teams and DAOs can also layer on multi-signature requirements. That means funds only move when enough members approve.</p><h3>DeFi Applications</h3><p>Programmable authorization, fee sponsorship, and native scheduling lay a solid foundation for DeFi on Hedera. Swaps can trigger automatically based on custom rules when price conditions are met. Liquidity positions can rebalance without manual steps.</p><p>Approving, swapping, and staking can all happen in one batch transaction, which keeps costs and slippage down. SaucerSwap has processed over $5 billion in volume and 15 million trades. For active users, that combination means better execution and less time spent managing positions by hand.</p><h3>Enterprise and Compliance Solutions</h3><p>A corporate treasury, for example, can require both a legal and a financial key before any large transfer goes through. Time-locked release schedules for tokenized assets are just as straightforward to set up. Hedera&#39;s account model already supports conditional and hierarchical approvals natively, so none of this requires custom smart contract infrastructure.</p><h2>Comparing Account Abstraction Across Networks</h2><p>On Ethereum, the base protocol enforces the EOA model. Account abstraction has to be layered on top of standards like EIP-4337 (ERC 4337), which introduces UserOperations, bundlers, paymasters, and a parallel transaction pipeline. These solve real problems, but they add complexity and rely on infrastructure outside the core protocol.</p><p>Hedera&#39;s wallet model was built from scratch in 2019 to support protocol-level abstraction natively. EVM compatibility came on top of that in 2022, so developers get familiar tools while the account model keeps all its native capabilities. The practical differences come down to:</p><ul><li><strong>Fees</strong>: Hedera uses fixed, USD-denominated fees, so there are no gas auctions or unpredictable spikes. Fee sponsorship also does not require paymaster contracts.</li><li><strong>Speed</strong>: Finality on Hedera arrives in under five seconds. Ethereum block times are longer.</li><li><strong>Multisig</strong>: Smart contract wallets on Hedera allow contracts to act as signers in a multi-signature setup. Ethereum&#39;s Safe deployment does not support that natively.</li><li><strong>Scheduling</strong>: Protocol-native scheduled transactions are a default feature on Hedera. Ethereum depends on keeper networks or external services like Chainlink Automation.</li></ul><p>Hedera testnet deployment gives developers a clean environment to test before going to mainnet. Key delegation and multi-sig flows can all be verified safely first.</p><h2>Future Implications of Account Abstraction</h2><p>On the cross-chain side, SaucerSwap already has SAUCE liquidity on Base through Axelar and LayerZero. Programmable accounts will make it even easier to authorize and manage cross-chain operations without switching between tools or networks.</p><p>Autonomous DeFi is also becoming more practical. HIP-1215 allows smart contracts to schedule their own actions, and account-level delegation lets those contracts operate without manual input. That combination makes self-rebalancing liquidity pools, keeper-free yield strategies, and automatic reward payouts all achievable.</p><p>The benefits are already there for enterprises: Fixed fees, native multi-signature support, and conditional transactions come with the network by default. So, companies that need governed workflows do not have to build those tools from scratch. Finally, on the user experience side, decentralized account recovery mechanisms and meta-transactions are gradually making DeFi accessible to a much wider audience.</p><h2>Conclusion</h2><p>Account abstraction makes self-custodial crypto wallets more flexible, easier to use, and more secure than traditional wallet setups. Plus, it also changes who is responsible for paying gas fees, since a third party can cover those costs on a user&#39;s behalf.</p><p>Hedera&#39;s account model was built before EVM compatibility was added, and it already tackles the four core properties of protocol-level abstraction: key updating, authorization delegation, native multisig accounts, and third-party fee payment. None of these were added later. They are part of the network from the ground up.</p><p>For traders, liquidity providers, developers, and enterprises, account abstraction removes the main obstacles to efficient, low-cost DeFi on Hedera. SaucerSwap has already seen over $5 billion in volume flow through the protocol. The foundation is solid, and what gets built on top of it is up to the people building.</p>

Learn what account abstraction is, how it works at on Hedera, and how it enhances security, flexibility, and DeFi with SaucerSwap.

Account Abstraction at the Protocol Level: What It Means for Hedera

<p>SaucerSwap V2 is scheduled to launch on the date of this publication: Friday, November 17th at 21:30 UTC / 16:30 ET. This upgrade introduces a concentrated liquidity market maker (CLMM) protocol, an overhauled web-app, MetaMask support, an updated tokenomics model, and the Liquidity-Aligned Reward Initiative (LARI).</p><ul><li>V2 liquidity provision opens at 21:30 UTC</li><li>Phase I of the updated tokenomics model is enacted between 21:30 and 23:30 UTC</li><li>Epoch 1 of LARI commences at 23:30 UTC</li><li>Swapping in V2 pools is enabled at 23:30 UTC</li></ul><h2>Concentrated Liquidity</h2><p>The key innovation in SaucerSwap V2 is concentrated liquidity. Unlike in V1, where liquidity is uniformly distributed across all possible prices (0, ∞), concentrated liquidity allows liquidity providers (LPs) to allocate capital within specified price ranges. For example, LPs can focus their capital around the peg of a stablecoin pair like USDC/USDT, leading to more efficient capital use and increased fee earnings.</p><p>Each liquidity position is uniquely represented by a non-fungible token (NFT). The flexibility of setting multiple positions means LPs can adapt to market conditions more effectively, concentrating their liquidity where it’s most likely to be utilized, and thus maximizing fee earning potential.</p><p>Key advantages include:</p><ul><li>LPs have the capacity to provide liquidity with <em>up to 4,000x capital efficiency</em> in comparison to SaucerSwap V1, thus receiving elevated fee earnings on their capital.</li><li>Capital efficiency allows for trades to be executed with greatly reduced price impact in comparison to both centralized exchanges and stablecoin-focused AMMs.</li><li>LPs have the opportunity to increase their exposure to desired assets and mitigate their downside risk.</li><li>LPs have the ability to trade one asset for another by depositing liquidity into a price range entirely above or below the current spot price, emulating a fee-earning limit order that executes along a smooth curve.</li></ul><p>A more comprehensive list of unique advantages can be found in the SaucerSwap <a href="https://docs.saucerswap.finance/#unique-advantages" target="_blank" rel="noopener noreferrer">documentation</a>.</p><p>V2 offers a multi-tiered fee structure, allowing LPs to be appropriately compensated for taking on varying degrees of risk.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAPV3NYClf9oMXO_image-2-.webp?auto=format,compress" /></p><ul><li><strong>0.05% — Highly stable pairs:</strong> These are typically stablecoin pairs where both assets aim to peg their value to an external stable source, like the U.S. dollar.</li><li><strong>0.15% — Moderately stable pairs:</strong> These can be a combination of a stablecoin and a relatively less volatile cryptocurrency. Their price can fluctuate, but not as wildly as more exotic pairs.</li><li><strong>0.30% — Volatile pairs:</strong> Token pairs that have notable price swings within short time frames, but they are relatively well-known or have larger market caps.</li><li><strong>1.00% — Highly volatile pairs:</strong> These pairs might include new or less-known tokens. Their prices can be highly unpredictable, and they often come with higher risk of impermanent loss.</li></ul><p>Finally, traders are charged a fee based on the pool’s fee tier. As with SaucerSwap V1, 5/6 of the collected fee is allocated to LPs, and the remaining 1/6 is directed to the protocol. The protocol’s share is used for SAUCE token buybacks. The repurchased tokens are then distributed among the DAO and as rewards for single-sided staking. Unlike V1, LPs are rewarded directly in the tokens that constitute the pool. For example, if liquidity is provided to a USDC/HBAR pool, rewards are claimed as USDC and HBAR.</p><p>For a deeper understanding of concentrated liquidity, refer to the SaucerSwap <a href="https://docs.saucerswap.finance/protocol/saucerswap-v2" target="_blank" rel="noopener noreferrer">documentation</a>.</p><h2>Revamped Web-App</h2><p>The SaucerSwap <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">web-app</a> has been completely redesigned to integrate both V1 and V2 functionality, along with analytics. The web-app introduces volatility strategies — preset price ranges specific to each fee tier, designed to suit various LP approaches for streamlined liquidity provision. It also introduces the depth chart, which is a graphical representation that displays the liquidity available in a specific pool across different price ranges. For guidance, consult the tutorials available in the SaucerSwap <a href="https://docs.saucerswap.finance/get-started/saucerswap-tutorials" target="_blank" rel="noopener noreferrer">documentation</a> or view them on <a href="https://www.youtube.com/@saucerswap" target="_blank" rel="noopener noreferrer">YouTube</a>.</p><h2>MetaMask Support</h2><p>MetaMask is fully integrated in the SaucerSwap web-app, enabling over 21 million daily active users to easily onboard and participate in Hedera DeFi for the first time ever. Furthermore, the core maintainers have added an HBAR faucet bot in the SaucerSwap <a href="https://discord.com/invite/saucerswap" target="_blank" rel="noopener noreferrer">Discord</a> server to optimize the onboarding flow. More details can be found in the SaucerSwap <a href="https://docs.saucerswap.finance/get-started/hedera-guide/wallet-creation#metamask" target="_blank" rel="noopener noreferrer">documentation</a>.</p><h2>Updated Tokenomics Model</h2><p>The issuance rate of new SAUCE tokens will decrease by 60% across a six-week period after the launch of SaucerSwap V2. This adjustment extends the SAUCE release schedule from 3 to 6 years, starting from August 2022. This updated tokenomics model is enabled by heightened capital efficiency of the CLMM, which is expected to boost trading volume and, consequently, fee generation for LPs. As a result, LPs will be less reliant on inflation-driven yields.</p><p>The SAUCE token’s inflation rate reduction and its reallocation in the updated tokenomics model are structured as follows:</p><p><strong>Current:</strong></p><ul><li>Total mint rate: 317.10 SAUCE / min</li><li>Emitted to yield farmers (V1 incentives): 288.27 SAUCE / min</li><li>Emitted to devcut: 28.83 SAUCE / min</li><li>Emitted to DAO + LARI (V2 incentives): 0.00 SAUCE / min</li></ul><p><strong>Phase I (0–3 weeks):</strong></p><ul><li>20% reduction in inflation compared to current level</li><li>Total mint rate: 253.68 SAUCE / min</li><li>Emitted to yield farmers: 175.13 SAUCE / min</li><li>Emitted to devcut: 23.06 SAUCE / min</li><li>Emitted to DAO + LARI: 55.49 SAUCE / min</li></ul><p><strong>Phase II (3–6 weeks):</strong></p><ul><li>40% reduction in inflation compared to current level</li><li>Total mint rate: 190.26 SAUCE / min</li><li>Emitted to yield farmers: 117.47 SAUCE / min</li><li>Emitted to devcut: 17.30 SAUCE / min</li><li>Emitted to DAO + LARI: 55.49 SAUCE / min</li></ul><p><strong>Phase III (6 weeks and onwards):</strong></p><ul><li>60% reduction in inflation compared to current level</li><li>Total mint rate: 126.84 SAUCE / min</li><li>Emitted to yield farmers: 59.82 SAUCE / min</li><li>Emitted to devcut: 11.53 SAUCE / min</li><li>Emitted to DAO + LARI: 55.49 SAUCE / min</li></ul><p>This updated tokenomics model is more sustainable, ensuring the longevity of the SaucerSwap protocol as Hedera continues to gain adoption. For more information, please see the tokenomics section of the SaucerSwap <a href="https://docs.saucerswap.finance/tokenomics/overview" target="_blank" rel="noopener noreferrer">documentation</a>.</p><h2>Liquidity-Aligned Reward Initiative (LARI)</h2><p>While SaucerSwap V2 has the potential to generate higher real yields for LPs, token incentives remain vital for bootstrapping liquidity, broadening the distribution of the SAUCE token, and reinforcing protocol governance.</p><p>The Liquidity-Aligned Reward Initiative (LARI) offers LPs token incentives for efficient liquidity contributions. This system addresses certain limitations of the SaucerSwap V1 yield farm. Notably, the obligatory staking of LP tokens, which transfers LP custody, is not optimal. Moreover, it is inefficient to reward LPs without accounting for their relative performance. Every reward token, such as SAUCE or HBAR, should not only incentivize liquidity, but also ensure its optimal use, with rewards reflecting this objective.</p><p>LARI addresses these design shortcomings. LPs do not have to stake their liquidity position NFTs to begin earning token incentives. Once an LP provides liquidity to a V2 pool, LARI is activated for their position. Furthermore, rewards are automatically distributed at the end of each 2-week reward period, or ‘epoch,’ greatly simplifying the UX and optimizing for gas efficiency.</p><p>Unlike the SaucerSwap V1 yield farm, which only supports SAUCE and HBAR rewards, LARI can be configured to emit any number of HTS tokens for each pool. This enables projects to tailor campaigns for their liquidity pools, rewarding LPs with their protocol token.</p><p>As a recap, the system functions by recording on-chain events and calculating rewards based on the duration a position remains within the range of the active tick. Rewards accumulate only while the position’s liquidity is in-range. At the conclusion of each 2-week epoch, participants automatically receive their rewards through an airdrop. A more detailed explanation can be found in the SaucerSwap <a href="https://docs.saucerswap.finance/protocol/saucerswap-v2#liquidity-aligned-reward-initiative-lari" target="_blank" rel="noopener noreferrer">documentation</a>.</p><p>The entire ‘DAO + LARI’ allocation of emissions (55.49 SAUCE / min) will go towards LARI for the first four epochs (8 weeks). For subsequent epochs, half the allocation will go towards LARI, while the other half is retained by the DAO for future use.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAPxXNYClf9oMXu_image-3-.webp?auto=format,compress" /></p><h2>V2 Pools and LARI Weights</h2><p>The initial set of V2 pools and their LARI weights for Epoch 1 (Nov 17th 23:30 UTC — Dec 1st 23:30 UTC) are as follows:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAP-XNYClf9oMX6_image-4-.webp?auto=format,compress" /></p><p>The initial selection of V2 pools, and their associated LARI weights, has been carefully chosen to reduce liquidity fragmentation and enhance trading volume. This approach also ensures an appropriate pairing of tokens with their respective fee tiers and aligns incentives efficiently. As a reminder, the introduction of additional V2 pools will be subject to votes by the DAO.</p><h2>V1 Farm</h2><p>During phase I of the updated tokenomics, farm rewards for certain V1 pools will end. Specifically, the pools affected are USDC[hts]/USDC, USDC[hts]/USDT[hts], and USDC[hts]/DAI[hts], as the majority of stablecoin liquidity is expected to migrate to V2. The revised farm weights, which will be implemented on November 17th between 21:30 and 23:30 UTC, can be found in the SaucerSwap <a href="https://docs.saucerswap.finance/protocol/saucerswap-v1/farm-weights" target="_blank" rel="noopener noreferrer">documentation</a>.</p><h2>Conclusion</h2><p>SaucerSwap V2 is scheduled for launch on the date of this publication, November 17th at 21:30 UTC / 16:30 ET, introducing a suite of enhanced features including a CLMM protocol and the Liquidity-Aligned Reward Initiative (LARI). Swapping in V2 pools will commence at 23:30 UTC, a strategic two-hour delay post-launch to stabilize markets during the initial bootstrapping period. Simultaneously, LARI will activate, enabling in-range liquidity providers to start accruing rewards immediately, to be distributed at the end of the 2-week epoch. Finally, the liquidity provider reward rate, or <em>Fees APR</em>, will be displayed after 24 hours of data is collected, ensuring accuracy and reliability in the metrics displayed on the front-end.</p>

SaucerSwap V2 is scheduled to launch on the date of this publication: Friday, November 17th at 21:30 UTC / 16:30 ET.

Launch details for SaucerSwap V2, including concentrated liquidity, upgraded architecture, incentive design, and protocol enhancements.

SaucerSwap V2 Launch Details

<p>In the last AMA, the SaucerSwap community inquired about HBAR liquidity and how it could be further incentivized to reduce slippage and increase native staking rewards to xSAUCE holders. Community members also asked whether the protocol would direct emissions away from HBARX pools and to SAUCE pools.</p><p>Hashburglar’s response is paraphrased as follows:</p><pre>I’ll reiterate that our top priority remains to bootstrap liquidity in high-demand pools, with the primary metric by which this demand is gauged being trade volume. We are committed to attracting and retaining HBARX liquidity on our DEX. However, it will be limited to select token pairs like HBAR / HBARX and USDC / HBARX. There is much more HBAR liquidity on the network, so it’s more practical to use this token as a base. One must also consider the benefit of an increased HBAR balance to xSAUCE holders due to PoS reward harvesting. We will adjust the farm weights to incentivize new and existing SAUCE, xSAUCE, and HBAR pairs in the coming days and weeks.</pre><p>Therefore, we are incorporating feedback from our community with the following actions:</p><h2>Increased incentives to SAUCE pairs</h2><p>After further consideration, we have decided to achieve these common objectives by increasing the weight of emissions to the SAUCE / USDC, SAUCE / HBAR, and xSAUCE / HBAR farms, with SAUCE / USDC getting a significant boost.</p><p></p><h2>New LCX farm</h2><p>Furthermore, we have created an LCX[hts] / HBAR farm, which presents a unique opportunity of being one of a handful of on-chain, decentralized markets for this asset. <a href="https://www.lcx.com/" target="_blank" rel="noopener noreferrer">LCX</a> is the platform token of a regulatory-compliant exchange of the same name based in Liechtenstein. There is a large subset of HBAR holders who share a common interest in the LCX token, so it makes sense to bridge it to Hedera via <a href="https://app.hashport.network/" target="_blank" rel="noopener noreferrer">hashport</a> (hence the [hts] subscript).</p><p></p><h2>Reduced emissions to HBARX pairs</h2><p>As part of our initiative to partially move incentives away from HBARX and towards HBAR pairs, we have deprecated the SAUCE / HBARX farm. Liquidity providers in this pool will continue to receive LP rewards from swap fees. Farmers, however, will stop receiving rewards and can find the SAUCE / HBARX farm in the “inactive” tab on the farm page.</p><p>In addition to incentivizing SAUCE pairs, the freed up emissions are better directed at new, high-demand pairs like LCX[hts] / HBAR, rather than an arguably redundant pair like SAUCE / HBARX. This follows from the response given in the last AMA. Also following from the AMA, an increased balance of HBAR in the WHBAR contract will amplify native staking rewards, which are distributed to xSAUCE holders in the Infinity Pool (current APR ~ 15%).</p><p></p><h2>Adjusted community farms to reflect demand</h2><p>Finally, we have ended the liquidity mining campaigns for three community farms: SAUCE / LIL, SAUCE / QUACK, and SAUCE / WHALE. While we enjoyed bootstrapping liquidity for these projects, we now think rewards from swap fees will act as a sufficient incentive to continue LPing. For example, the <em>LP reward APR</em> of SAUCE / WHALE is currently a respectable 12.85%. In an effort to adjust for demand, we have reallocated these emissions to SAUCE / LUCKY, whose liquidity has risen to an impressive $350k.</p><p>Beyond this, we have made several minor farm adjustments to account for market demand.</p><p></p><h2>Overview</h2><p>A summary of changes to SaucerSwap farms is as follows:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUALn3NYClf9oMUw_image-7-.png?auto=format,compress" /></p><p>Full overview of farm weights: <a href="https://docs.saucerswap.finance/features/farm/weights" target="_blank" rel="noopener noreferrer">https://docs.saucerswap.finance/features/farm/weights</a></p><p>Please note that the single-sided staking APR is not included in the farm total APR displayed on the farm page. To determine the actual farm total APR, add ½ the single-sided staking APR to the current farm total APR.</p><p><em>Ex: farm total APR( SAUCE / xSAUCE ) = 12.64% + ½ (15.06%) = 20.17%</em></p><p></p><h2>Conclusion</h2><p>These adjustments to our farm weights further incentivize HBAR and SAUCE pairs, such that the liquidity of those tokens can deepen, and single-sided staking rewards can increase. Furthermore, we are proud to welcome the LCX community to our DEX so they can receive staking rewards on SaucerSwap. If you have any questions or thoughts on the above, join the conversation on <a href="https://discord.gg/saucerswap" target="_blank" rel="noopener noreferrer">Discord.</a></p>

In the last AMA, the SaucerSwap community inquired about HBAR liquidity and how it could be further incentivized to reduce slippage and increase native staking rewards to xSAUCE holders. 

Announcement of the LCX listing alongside updates to SaucerSwap’s farm strategy, incentive structure, and liquidity alignment.

LCX Announcement and Revamped Farm Strategy | February

<h2>Introduction</h2><p>V3 is the most ambitious product SaucerSwap Labs has built.</p><p>For three years, we&#39;ve been a liquidity layer: infrastructure that enables trading. V3 makes us a trading platform. A full central limit order book on Hedera&#39;s L1, launching Q2 2026, with its own interface, fee structure, and economic model.</p><p>Hedera has always had more capacity than DeFi has demanded from it. 10,000+ TPS, deterministic ordering, finality in seconds. AMMs don&#39;t need that kind of throughput. Order books do.</p><p>AMMs and order books serve fundamentally different needs. AMMs are permissionless and well-suited for retail traders and liquidity providers. Order books are the instrument of choice for institutions, professional market makers, and anyone who needs precise price control and the ability to deploy serious capital without moving the market. Until now, DeFi on Hedera has only had the former. V3 adds the latter.</p><p>V3 introduces real utility for SAUCE at the protocol level. xSAUCE holders receive trading fee discounts on V3, linking governance participation directly to platform economics.</p><p>Hyperliquid and dYdX proved the institutional appetite for on-chain order books. V3 competes at that level on Hedera&#39;s L1 — no L2s, no custom chains.</p><h2><strong>The Trading Experience</strong></h2><p>The layout is instantly familiar to anyone who&#39;s traded on a centralized exchange.</p><p>TradingView Advanced Charts power the left panel: full OHLCV candles, multiple timeframes from 1-minute to weekly, volume bars, and real-time streaming updates. The order book ladder sits to the right with bids, asks, cumulative totals, spread, and depth updating via WebSocket. Below the chart is order management: open orders, order history, filled positions, and wallet balances.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aaHZ6sFoBIGEg8Eh_v3-ui.png?auto=format,compress" alt="Initial sneak peek at SaucerSwap V3 Trade page" /></p><p>Launch order types: market and limit, with post-only for makers and configurable time-in-force. Iceberg, stop-loss, take-profit, DCA, and more are planned for subsequent releases.</p><p>Onboarding takes one minute: connect your wallet and approve the tokens you want to trade. Approvals are per-token (not per-market), so once you&#39;ve approved a token, it works across every market that uses it. After that, placing an order is a single off-chain wallet signature. No fees, no waiting for a transaction. You&#39;re signing an intent. Your funds don&#39;t move unless your order actually executes. Cancellations are instant and free.</p><p>You get complete order history with filtering, sorting, and search. Click into any order and see individual fill breakdowns: exactly what price you got on each partial fill, slippage, everything. Every fill settles on-chain and is independently verifiable. We&#39;re building a signature verification page so anyone can confirm a specific order was signed by a given Hedera account. Order signatures can also be verified independently using the signer&#39;s public key. No trust in our systems required.</p><p>The interface is fully responsive and mobile-optimized, with dedicated Trade and Chart views on any screen size.</p><p>At launch, we&#39;re starting with curated markets. The highest-volume pairs on Hedera: HBAR-USDC, WETH-USDC, WBTC-USDC, SAUCE-USDC, plus select ecosystem tokens. Order books require continuously maintained depth near the current price. For long-tail tokens, V1/V2 remain the better fit.</p><p></p><h2><strong>Technical Architecture</strong></h2><h3>Hybrid Matching and Settlement</h3><p>Orders are matched off-chain through a purpose-built matching engine with millisecond execution. Settlement occurs directly on Hedera&#39;s L1 in a single atomic transaction. No intermediary steps, no bridges, no rollups. Price and quantity parameters execute exactly as specified or fail completely. No fee incurred.</p><p>Sub-second order placement, near-instant cancellations, real-time book updates via WebSockets. Most order book DEXs need L2s or appchains to hit acceptable performance. V3 runs on Hedera&#39;s L1 and achieves better results.</p><h3><strong>Intent-Based Settlement</strong></h3><p>V3 uses an intent-based order model. Users sign a structured order off-chain that specifies exact parameters: token pair, order type, execution price, and amount. This signed intent is the authorization. A settlement contract on Hedera&#39;s L1 executes matched orders atomically.</p><p>Users approve tokens once and sign orders as needed. No per-trade gas fees, no token wrapping, no repeated approvals.</p><h3><strong>Unified Liquidity</strong></h3><p>V3 doesn&#39;t replace V1 and V2. It uses them.</p><p>When the order book cannot fully fill a trade, V3 taps into V1 and V2 liquidity pools as a backstop, routing to the deepest available liquidity across all versions.</p><p>Backstop fills only trigger when they improve execution for the trader. Slippage checks, price divergence detection, and minimum pool liquidity requirements prevent bad fills. Launches with curated markets where backstop fills are most valuable, expanding over time.</p><h3><strong>Governance and Security</strong></h3><p>Markets are configurable through governance: maker/taker fees, tick sizes, minimum order sizes. At launch, market listings are curated and permissioned. Over time, the DAO takes over new market creation and parameter adjustment.</p><p>Security details, audit scope, and the settlement layer&#39;s trust model will be published ahead of launch.</p><h3><strong>Professional-Grade API</strong></h3><p>V3 ships with REST and WebSocket APIs for professional traders and market makers. Batch operations, tiered API access, and higher throughput for market makers with meaningful volume.</p><p></p><h2><strong>Tokenomics</strong></h2><h3><strong>Where SaucerSwap is Today</strong></h3><p>V3 changes how the protocol generates and distributes value. Here&#39;s the current baseline and what shifts.</p><ul><li>V1: ~$230M volume / $15M TVL over the last 12 months. </li><li>V2: ~$3B volume / $26M TVL, representing ~93% of protocol volume. </li><li>Total since August 2022: just over $6B.</li></ul><p>The growth curve matters more than the total: $3B of that volume arrived in the last 12 months. Half of all lifetime activity in one year. That&#39;s consistent with what we&#39;ve been optimizing on the incentives side, most recently in <a href="https://www.saucerswap.finance/governance/elections/5817" target="_blank" rel="noopener noreferrer">Proposal 5817</a>, which shifted rewards toward a fee-primary, health-adjusted allocation framework with concentration controls.</p><h3><strong>V3 Changes the Economic Engine</strong></h3><p>Order books monetize differently than AMMs: instead of a single swap fee, fees are split between takers (who remove liquidity by crossing the spread) and makers (who provide liquidity by posting resting orders). The maker/taker schedule is configurable per market and is ultimately governed by the DAO. SaucerSwap Labs will publish an RFC ahead of launch with a recommended fee and incentive framework, followed by a feedback period before any proposal goes on-chain. The goal: improve execution quality, not subsidize wash volume.</p><h3><strong>Maker/Taker Fees and Rebates</strong></h3><p>At launch, the fee posture we’re working toward is a taker fee in the 5–15 bps range (with a proposed default near 8 bps) and 0 bps maker. That alone is often sufficient in mature markets, but V3 also introduces a controlled lever AMMs don’t have: negative maker fees (maker rebates) on select markets where depth is thin and spreads need tightening. A maker rebate means LPs are paid when their resting orders are filled. These rebates are funded directly from taker fees, not token emissions. The remainder accrues to the protocol as net fees. Incentives are tied to real trading activity and measurable quoting quality, taperable by governance as markets stabilize.</p><h3><strong>xSAUCE as Protocol-Level Utility</strong></h3><p>This is where SAUCE becomes protocol-level utility, not just governance and fee capture. </p><p>On V3, xSAUCE acts as a fee modifier. Stake SAUCE into xSAUCE and receive tiered multipliers on the market&#39;s baseline fee schedule. </p><p>Positive taker fee → staking reduces it. </p><p>Positive maker fee → staking reduces it. </p><p>Negative maker fee → staking increases the rebate. </p><p>This reduces effective trading costs without rewriting headline fees, and it encourages sticky behavior. Serious traders commit capital to SAUCE because it directly improves their unit economics.</p><h3><strong>Buybacks and Fee Routing</strong></h3><p>V3 plugs into the existing fee-to-buyback loop already live on V1 and V2, but with a more fee-productive venue and a clearer set of governance levers. The core accounting is simple: net protocol fees = taker fees collected − maker rebates paid (maker fees add to net; maker rebates reduce it). Net fees route into the BrewSaucer contract and convert to SAUCE through buybacks. Bought-back SAUCE is distributed across configurable buckets: staking rewards, the POL + Incentive Reserve, development funding, and a burn allocation. The burn will be included in the upcoming RFC as part of the initial governance package. The Reserve funds LP incentives today and can extend to V3 incentives over time.</p><p>The burn is a long-term supply-discipline signal: funded from a defined share of retained reserves, trading reserve optionality for permanent supply reduction while keeping core incentive pathways intact. Trading activity generates fees, fees drive buybacks, SAUCE flows back into the ecosystem. No reliance on one-way emissions.</p><h3><strong>Emissions Replacement and the Path to Fee-Driven Sustainment</strong></h3><p>The longer-run trajectory: a gradual shift from emissions dependency to fee-driven sustainment. We modeled this conservatively — V1/V2 volumes grown at 42% YoY from a 2025 baseline, V3 launching May 2026, V3 adoption modeled as a ramp in share of total protocol volume — to estimate how much MasterChef emissions can be offset by recycled fees.</p><p>In the baseline case, V3 reaches roughly 50% of period volume by H2 2027 (about $2.24B of $4.48B), which corresponds to roughly $3.74B of V3 volume in calendar 2027 (about 45.5% of ~$8.22B total protocol volume).</p><p>Under default assumptions (representative fee discount for staked SAUCE, safety-capped rebate program), the model estimates buybacks cover ~31.7% of MasterChef emissions in 2026 (partial-year V3) and ~94.7% in 2027 (full-year V3 plus higher volumes). These are model outputs, not guarantees. Realized replacement depends on sustained volume, market mix, and governance-selected fee parameters. But the direction is clear: by 2027, the system is modeled to be near emissions-neutral. Usage becomes the base layer.</p><h3><strong>Phase 2: Competitive Maker Incentives</strong></h3><p>Phase 1 introduces the core levers: market-level maker/taker pricing, optional maker rebates, xSAUCE fee modifiers. Phase 2 adds volume-weighted maker rebate tiers, keyed to a maker&#39;s sustained share of volume within a given market over a rolling 14-day window.</p><p>The goal: reward continuous contribution to depth and spread quality, concentrate incentives on priority markets, create competitive pressure among professional makers. Without permanently raising taker fees.</p><h2><strong>The Institutional Case</strong></h2><p>Institutional capital has never found a natural home in AMM-based DeFi. Institutions have spent decades in order book environments. They understand the execution models, risk management frameworks, and compliance interfaces. AMMs require a fundamentally different paradigm, and their structural limitations (impermanent loss, slippage on size, fragmented liquidity) don&#39;t clear institutional risk committees.</p><p>Order books are the native interface for institutional trading. V3 gives Hedera one. With compliance integrations and custody partnerships, that&#39;s a real path to institutional volume on-chain.</p><h3><strong>Perpetuals</strong></h3><p>V3&#39;s matching engine, order management infrastructure, APIs, and market maker relationships are the direct foundation for perpetuals. We&#39;re not building perps as a separate product. They&#39;re the next phase of the same system. More on this soon.</p><h3><strong>What&#39;s Next</strong></h3><p>V3 launches Q2 2026. </p><p>Fee and tokenomics RFC, market listings, and integration details to follow.</p>

A full central limit order book on Hedera's L1, with its own interface, fee structure, and economic model.

Introducing SaucerSwap V3

<p>SaucerSwap Labs, Stader Hedera, and HeadStarter — the leading DeFi protocols natively built on Hedera — reiterate their commitment to the network through the formation of a symbiotic alliance. The central premise of the Hashgraph DeFi Alliance, or HDA, is to collaborate in areas that will offer support to both existing Hedera crypto projects and cross-chain projects seeking to migrate to the ecosystem.</p><p>The HDA will provide a cohesive and holistic approach, helping to streamline the efforts of project development on Hedera. This accelerates growth of the ecosystem such that Hedera’s objective of establishing itself as a leading L1 distributed ledger is realised. As a first step in symbolising this commitment, the HDA will launch its own website, enabling the onboarding of new members, and coordinating workgroups while featuring existing and new members.</p><p>Stader is a multi-product platform which offers options for different customer segments to participate in staking. Users can further participate in different DeFi protocols by leveraging liquid tokens for borrowing or providing liquidity. HeadStarter is an IDO Launchpad &amp; Accelerator of the Hedera Ecosystem. Both of these platforms serve as accessible onboarding ramps for users and projects alike. SaucerSwap is a DEX that offers a full suite of DeFi services and serves as a logical endpoint for liquidity from both Stader and HeadStarter. Users can compound their returns by providing liquidity in the form of HBARX (Stader’s liquid token), while projects who choose to IDO on HeadStarter can thereafter create a liquid market for their token by means of Community Pools and subsequent yield farms. Hence each founding member is intertwined, having made important contributions in building the foundation upon which Hedera DeFi will flourish.</p><p>The HDA will further propel this symbiosis by ensuring a sustainable trajectory for the ecosystem. The ongoing focus of seeking and helping the highest quality projects will remain a focus of the Alliance. While our combined expertise will unlock numerous avenues, our primary goal is to safeguard the trust our communities have bestowed upon us.</p><p>The pledge below articulates the overarching purpose of the HDA. These tenets underpin the vital areas unanimously believed to be required for the success of DeFi on Hedera.</p><ol><li>Define standards for the building of Hedera-based DeFi dApps and protocols</li><li>Develop and design tooling resources for development on Hedera</li><li>Release open-source material to accelerate compounded innovation</li><li>Compile research about DeFi on Hedera and formulate strategic SDK feature prioritisation</li><li>Enable knowledge-sharing and development of new entrants for a harmonised discourse for building on Hedera</li><li>Collaborate on joint media outreach efforts which highlight Alliance achievements and projects</li><li>Nurture social media outreach for the Alliance in spreading educational content for growing market penetration of Hedera projects into wider audiences and driving new users and developers to Hedera</li><li>Establish a calendar circuit of events for Hedera First hackathons, educational conferences, associated PR coverage, and other Alliance driven activities</li><li>Work in collaboration to foster a long-lasting culture of inclusivity, fairness, and transparency</li><li>Explore interoperability with other decentralised networks</li><li>Structure a path towards enabling Alliance growth and ensuring members’ needs are met</li></ol><p>In this hypercompetitive industry, cooperation within the Hedera ecosystem is more important than ever. The HDA will foster this, creating value for each project member and delivering more than the sum of its parts to the Hedera community in every way possible.</p>

An overview of the Hashgraph DeFi Alliance, its founding members, objectives, and role in advancing Hedera-based DeFi.

Introducing the Hashgraph DeFi Alliance

<p><strong>TL;DR — Put succinctly, when single-sided staking goes live, you must withdraw liquidity from pairs containing HBAR and then provide that liquidity to the same pair to continue receiving farming rewards. Our website will do all the work routing that liquidity properly to our upgraded pools.</strong></p><p>Below, we will elucidate the mechanisms of this transition, how easy it will be for you as a liquidity provider, and in what ways it will deliver the SaucerSwap protocol into a new era marked by increased user incentives via real yield.</p><h2>Single-Sided Staking Recap</h2><p><a href="https://medium.com/@SaucerSwap/an-introduction-to-single-sided-staking-on-saucerswap-ad92cd816362" target="_blank" rel="noopener noreferrer">An Introduction to Single-Sided Staking on SaucerSwap</a> outlines how SAUCE can be staked in the Infinity Pool in exchange for a receipt token called xSAUCE. There is no risk of <a href="https://docs.saucerswap.finance/tokenomics/risks#impermanent-loss" target="_blank" rel="noopener noreferrer">impermanent loss</a> with this type of liquidity provisioning since only one asset is involved.</p><p>The ratio of SAUCE / xSAUCE increases due to SAUCE buybacks from three distinct sources: swap fees from all pools, farm emissions, and HBAR native staking rewards. Here, users may redeem their xSAUCE for SAUCE at a higher exchange rate than when they deposited. In this regard, the mechanism functions similarly to <a href="https://hedera.staderlabs.com/lt/hedera" target="_blank" rel="noopener noreferrer">Stader</a> liquid staking, i.e., HBAR / HBARX.</p><p>xSAUCE is an essential component of the SaucerSwap ecosystem, as it will connect users with HTS projects via <a href="https://docs.saucerswap.finance/features/community-pools" target="_blank" rel="noopener noreferrer">Community Pools</a>.</p><h2>WHBAR and Native Staking Explained</h2><p>HBAR is not an HTS token — analogous to ETH vs. ERC-20 — so it must be wrapped to interact with the SaucerSwap contracts. This is achieved via a smart contract that stores incoming HBAR and mints wrapped HBAR. These <a href="https://hashscan.io/mainnet/contract/0.0.1062663" target="_blank" rel="noopener noreferrer">WHBAR</a> tokens are used to provide liquidity in SaucerSwap’s decentralized exchange. When liquidity is withdrawn, WHBAR tokens are sent back to the smart contract and burned, and an equal amount of HBAR is returned to the user.</p><p>With the introduction of native staking, the HBAR in this smart contract can be dynamically staked to a permissioned node to generate real yield for users. Since Hedera does not impose <a href="https://hedera.com/blog/why-is-there-no-slashing-in-hederas-proof-of-stake" target="_blank" rel="noopener noreferrer">slashing or lockup periods</a>, SaucerSwap users can withdraw liquidity instantaneously. The current amount of HBAR deposited in SaucerSwap’s WHBAR contract is over 130Gℏ (eq. to $7.8MM @ $0.06 per HBAR), which can generate significant yield for both xSAUCE holders and the DAO Treasury.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_wgnNYClf9oMCB_0_ayj2YHf9KdZf_V8m.png?auto=format,compress" /></p><p>The native staking mechanics of the WHBAR contract are described in the above figure. Here, the WHBAR contract is deployed, setting the stakedAccountId to a simple smart contract. This StakeToSetter contract has an admin key to select a node for staking and allows its beneficiary to withdraw the accrued rewards. The WHBAR contract will not have an admin key and will therefore be completely decentralized.</p><p>Once daily, at a random time, an allocation of HBAR native staking rewards is pulled from an intermediary payment splitter contract. This HBAR is swapped for SAUCE in the BrewSaucer contract before being sent to the Infinity Pool. Since the ratio of SAUCE to xSAUCE in the pool increases, so does the relative value of xSAUCE.</p><h2>What this means for you as a Liquidity Provider</h2><p><em>Note: no immediate action is required; however, the information below outlines future steps you will need to take.</em></p><p>For SaucerSwap to take advantage of native staking rewards, a new WHBAR contract must be deployed. This deployment will cause minimal interruptions; however, it will require some user action.</p><p>All liquidity pools containing the existing WHBAR token will be deprecated, i.e., no longer used to route swaps; instead, upgraded pools containing the new WHBAR token will be used. Users will be able to withdraw liquidity from the deprecated pools at any time; however, they will no longer have the ability to provide liquidity to these deprecated pools through SaucerSwap’s website. Instead, the site will automatically direct all deposits to the upgraded pools.</p><p>The SaucerSwap team will create upgraded pools for all supported pairs (i.e., those with farms) to ensure a smooth user experience. The one-time fee associated with creating other pools will be lowered to $10 for one week following the migration, after which it will be set back to $50.</p><p>Therefore, we encourage all liquidity providers to do the following once directed by the SaucerSwap team:</p><ol><li>Identify if you are providing liquidity in a pool containing WHBAR — all existing pairs containing HBAR fall in this category (e.g., HBAR-SAUCE, HBAR-USDC, etc.).</li><li>If you have LP tokens containing WHBAR, unstake those LP tokens on the <a href="https://www.saucerswap.finance/farm" target="_blank" rel="noopener noreferrer">farm page</a> if applicable — these deprecated farms will be found in the “inactive” tab.</li><li>Withdraw your liquidity for pairs containing WHBAR in the “My Pools” tab on the <a href="https://www.saucerswap.finance/liquidity/pools" target="_blank" rel="noopener noreferrer">liquidity page</a>.</li><li>Provide liquidity to the same pair — for example, if you withdraw HBAR-SAUCE LP tokens, provide liquidity back to the HBAR-SAUCE pool. Our site will automatically route your liquidity to the upgraded pools.</li><li>If applicable, stake those LP tokens in the new farm to receive HBAR and SAUCE emissions.</li><li>Be mindful of the <a href="https://docs.saucerswap.finance/features/farm#apr" target="_blank" rel="noopener noreferrer">inverse relationship</a> between APR and liquidity — those who stake first will receive a higher yield.</li></ol><p><strong>Note: If you have any questions about the above process, please reach out in the <a href="https://discord.com/invite/saucerswap" target="_blank" rel="noopener noreferrer">SaucerSwap Discord</a> and a team member will assist you.</strong></p><p>Once the new WHBAR contract is deployed, farm emissions to supported pools containing the current WHBAR will be set to zero. Afterwards, these farms will appear in the inactive tab of the farm page, as seen in the figure below.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_wqXNYClf9oMCE_image-1-.webp?auto=format,compress" /></p><p>A new farm will be created for each existing farm containing HBAR. The same token pairs will be incentivized (with the same farm weight). The only difference here is the use of the new WHBAR.</p><h2>Summary</h2><p>A new WHBAR contract will be deployed, coinciding with the release of single-sided staking in November. When this occurs, users are encouraged to withdraw liquidity from existing pools containing WHBAR and deposit it in upgraded pools to continue earning swap fees. If a deprecated pool has a corresponding yield farm, a new farm with an identical weight will be created for the upgraded pool. Our team will provide frequent updates as we approach this migration date, representing an exciting milestone for the SaucerSwap protocol.</p>

This article will explain the logistics of implementing HBAR native staking on the SaucerSwap protocol, which requires some user action to continue earning a percentage of swap fees and, where applicable, farm emissions. HBAR native staking rewards are now live on the Hedera mainnet, which opens the door for SAUCE staking — slated for November 2022.

Details on the WHBAR migration process, including timelines, required user actions, and changes related to native staking integration.

SaucerSwap WHBAR Migration Announcement

<p>The launch of SaucerSwap v2 is fast approaching, pending the release of a final audit report by <a href="https://omniscia.io/" target="_blank" rel="noopener noreferrer">Omniscia</a> and some remaining work on the front-end. In the meantime, the SaucerSwap core maintainers are excited to introduce the <em>Liquidity-Aligned Reward Initiative (LARI)</em>, a novel feature of SaucerSwap v2 that will be available at launch.</p><p>SaucerSwap v2, a concentrated liquidity market maker (CLMM), affords liquidity providers (LPs) the potential for higher real yields through increased capital efficiency. However, token incentives are still crucial for bootstrapping liquidity, ensuring a broad distribution of <a href="https://docs.saucerswap.finance/tokenomics/sauce-token" target="_blank" rel="noopener noreferrer">SAUCE</a>, and strengthening protocol governance.</p><p>LARI provides users with token incentives for their active and efficient liquidity contributions. This system represents an advancement from traditional yield farming, addressing certain limitations of SaucerSwap v1’s <a href="https://docs.saucerswap.finance/features/farm" target="_blank" rel="noopener noreferrer">Masterchef</a> contract. Notably, the obligatory staking of LP tokens, which transfers LP custody, is not optimal. Moreover, it is inefficient to reward LPs without accounting for their performance. Every reward token, such as SAUCE or HBAR, should not only incentivize liquidity but also ensure its optimal use, with rewards reflecting this objective.</p><p>LARI addresses these design shortcomings. As with swap fees, LPs no longer have to stake their assets to begin earning token incentives. Once an LP provides liquidity to a v2 pool, LARI is activated for their position. Furthermore, rewards are automatically distributed at the end of each two-week reward period, or ‘epoch’, greatly simplifying the UX and optimizing for gas efficiency. Unlike the SaucerSwap v1 implementation of Masterchef, which only supports SAUCE and HBAR rewards, <em>LARI can be configured to emit HBAR and any number of HTS tokens for each pool.</em> This enables projects to tailor campaigns for their liquidity pools, rewarding LPs with their protocol token.</p><h2>How it works:</h2><ul><li><strong>Initialization:</strong> Before the epoch begins, each liquidity pool is assigned a weight of token emissions. For example, the HBAR/USDC pool may receive 15% of the total SAUCE rewards over this 14-day period.</li><li><strong>Monitoring:</strong> During the epoch, the v2 pair contracts are continuously listened to for liquidity mint and burn events; these events are captured and stored. By epoch-end, each LP’s number of ‘liquidity hours’, representing liquidity in the active ticks (corresponding to token price), is multiplied by the time passed in hours.</li><li><strong>Reward Calculation:</strong> As the active tick changes, the LP’s liquidity position may fall in and out of range. SaucerSwap’s algorithm for calculating rewards takes into account the position’s time spent within range of the active tick and only accumulates rewards while the position’s liquidity is being used. The final distribution of rewards to LPs per epoch is calculated by:</li></ul><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAOK3NYClf9oMWb_image.gif?auto=format,compress" /></p><ul><li><strong>Distribution:</strong> At the end of each epoch, rewards are automatically sent to the participants via an airdrop. If any issues arise, such as a token not being associated, the distribution specific to an LP is rescheduled for the next epoch.</li></ul><p>This system ensures maximal efficiency by only rewarding active liquidity. This focus not only improves the overall health of liquidity pools but also maximizes the utility and efficiency of each token distributed as a reward.</p><p></p><h2>Example:</h2><p>Alice and Bob both decide to provide liquidity to the USDC[hts]/USDT[hts] pool on SaucerSwap v2. This pool has a 0.05% fee and a tick spacing of 10, where every tick represents a 0.01% change in price.</p><p><strong>Alice’s Strategy:</strong> Alice has a relaxed strategy and provides $10k of liquidity over a wide price range of $0.95 to $1.05, or 1,000 ticks.</p><p><strong>Bob’s Strategy:</strong> Bob, on the other hand, has a more focused strategy. He provides $10k of liquidity over a much narrower price range of $0.9995 to $1.0005, or 10 ticks.</p><p>We assume that, throughout the epoch, the price of the pool remains stable and stays entirely within the $0.9995 — $1.0005 range.</p><p>Given his focused strategy and the price staying within his range, Bob accumulates 336,000,000 liquidity hours over the 14-day epoch. Even though Alice and Bob provided the same capital, Alice’s liquidity hours in the active price range tally up to only 33,600, given the distribution of her liquidity.</p><p>Bob’s decision to provide liquidity in a narrow, focused range where he anticipated price activity led him to outperform Alice in terms of rewards by a factor of 10,000. Alice’s broader strategy, although safer in terms of exposure to price movement, did not capitalize as efficiently on the rewards during this particular epoch.</p><p>See the table below for a breakdown:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAQQ3NYClf9oMYJ_1IUIm4DZDrDirbCzSRZuBGw.png?auto=format,compress" /></p><p><em>It’s worth noting that the probability of USDC[hts]/USDT[hts] consistently trading within the $0.9995 — $1.0005 range over a 14-day epoch is low. In a real-world scenario, Bob’s accumulated liquidity hours would likely be less than the theoretical maximum provided in this example.</em></p><h2>Tokenomics:</h2><p>As the community will recall from the <a href="https://medium.com/@SaucerSwap/saucerswap-v2-tokenomics-proposal-b355182545a6" target="_blank" rel="noopener noreferrer">Tokenomics v2 Proposal</a>, there will be a 60% cut to the inflation rate of SAUCE and a reallocation of SAUCE emissions as follows:</p><ul><li>90.91% → 47.16% to v1 farm rewards (<em>decrease</em>)</li><li>9.09% → 9.09% to devcut (<em>no change</em>)</li><li>0% → 43.75% to the DAO treasury (<em>increase</em>)</li></ul><p>The full 43.75% DAO allocation (55.49 SAUCE / min) will go towards LARI for the first four epochs. For subsequent epochs, half the allocation will tentatively go towards LARI, while the other half is retained by the DAO for future use.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAOuHNYClf9oMW4_1_lbHOSipOmUA0FiPOgFjpGg.webp?auto=format,compress" /></p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAOvnNYClf9oMW5_1_8mfoGiUt3tdtOGUfRHlVaQ.webp?auto=format,compress" /></p><p>At the beginning of SaucerSwap v2’s launch, the rewards will be highest. This will boost yields and facilitate a seamless migration of liquidity to the v2 pools. Rewards will then be gradually tapered, stabilizing at approximately 559k SAUCE per epoch by week eight.</p><h2>Summary:</h2><p>SaucerSwap v2 introduces the <em>Liquidity-Aligned Reward Initiative,</em> or LARI. This revamped system not only rectifies the shifted custody concerns for LPs, but also aligns rewards with LP efficiency and broadens the scope by accommodating HBAR and any HTS token as rewards.</p><p>Additionally, LARI integrates well with the updated tokenomics model, especially as the DAO now receives an allocation of SAUCE minted by the Masterchef contract. Directing a portion of this SAUCE to v2 pools via LARI results in a balanced, equitable, and streamlined incentive framework post-inflation adjustment.</p><p>In short, LARI aims to ensure a smooth transition to the CLMM and an enhancement in overall functionality and user experience on <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap</a>.</p>

The launch of SaucerSwap v2 is fast approaching, pending the release of a final audit report by Omniscia and some remaining work on the front-end.

An explanation of the Liquidity-Aligned Reward Initiative, detailing how rewards are structured to incentivize efficient liquidity provision.

SaucerSwap v2: Liquidity-Aligned Reward Initiative (LARI)

<p>Hedera has long delivered the performance and throughput required to support next-generation financial infrastructure at scale, with fast finality, low fees, and energy efficiency setting it apart from competing networks. What it needed was a reliable bridge to bring capital from other chains into the ecosystem. LayerZero now provides that connection.</p><h2>What is LayerZero?</h2><p><a href="https://layerzero.network/" target="_blank" rel="noopener noreferrer">LayerZero</a> is an omnichain interoperability protocol that enables asset transfers and messaging across blockchains. Unlike traditional bridges, which typically lock assets in a custodial smart contract and rely on a centralized set of validators to confirm transactions, LayerZero uses decentralized verification to pass messages between chains directly. This removes the single point of failure that has made traditional bridges a frequent target for exploits. For users, this means you can move assets from Ethereum directly to Hedera without going through a centralized exchange or trusting a third party to custody your funds in the process.</p><h2>What it means for SaucerSwap</h2><p>LayerZero integration brings ERC-20 assets onto Hedera that can be traded directly on SaucerSwap. Pools like HBAR/WETH, HBAR/WBTC, USDC/WETH, and USDC/WBTC are all LayerZero-bridged pools.</p><p>For traders, this means access to major assets like ETH and BTC within a Hedera-native DEX environment, with Hedera&#39;s transaction speeds and low fees. For liquidity providers, these pools offer exposure to high-volume assets while earning fees on a chain where costs are a fraction of what they&#39;d be on Ethereum and is immune to front-running.</p><h2>Volume and liquidity impact</h2><p>LayerZero bridge pools consistently rank among the highest TVL pools on SaucerSwap V2, with $6.38M across WETH and WBTC LayerZero bridge pools. Their trading activity has been equally impressive, with the two tokens combining for over $100M in volume in under six months, split between $77.34M from WETH and $23.12M from WBTC. The latest incentives realignment acknowledged this by increasing LARI weights to LayerZero pools via a fee-weighted methodology, recognizing that bridged assets attract meaningful trading activity that benefits liquidity providers and xSAUCE holders via fee-capture, buybacks, and redistribution. The <a href="https://gov.saucerswap.finance/t/saucerswap-incentives-realignment-and-hbar-rewards-simplification/322" target="_blank" rel="noopener noreferrer">updated LARI weights</a> reflect this:</p><ul><li>HBAR/WETH: 7.74% (0.15% fee tier)</li><li>HBAR/WBTC: 6.20% (0.30% fee tier)</li><li>USDC/WBTC: 3.24% (0.15% fee tier)</li><li>USDC/WETH: 2.11% (0.15% fee tier)</li></ul><p>In the past month alone, WETH and WBTC LayerZero pools generated $26.71M in trade volume, representing 15.2% of total SaucerSwap protocol volume.</p><p>Cross-chain capital doesn&#39;t sit idle. It gets routed through SaucerSwap, generating fees and driving volume that purely native liquidity alone cannot. LayerZero pools generated $47.3K in swap fees this past month, with 1/6 directed to SAUCE buyback and the remaining 5/6 distributed to liquidity providers.</p><p>This matters for the broader Hedera ecosystem too. Every dollar bridged in from Ethereum or other networks represents net capital inflow to Hedera&#39;s DeFi layer. That capital deepens liquidity, tightens spreads, and makes Hedera a more competitive trading environment for everyone.</p><h2>The bigger picture</h2><p>Cross-chain interoperability is one of the defining infrastructure challenges in DeFi. Chains that remain isolated struggle to attract capital from users and institutions already deployed on larger networks. LayerZero removes that friction for Hedera, creating a pathway for ETH and BTC holders to access Hedera&#39;s ecosystem without fully exiting their existing positions.</p><p>LayerZero is already one of the most widely deployed interoperability protocols in the space, and its ambitions have grown well beyond bridging. LayerZero recently launched <a href="https://www.theblock.co/post/389295/citadel-and-ark-invest-back-layerzero-as-it-launches-blockchain-partners-with-google-cloud-and-dtcc?utm_source=rss&amp;utm_medium=rss" target="_blank" rel="noopener noreferrer">Zero</a>, a new Layer 1 blockchain backed by Citadel Securities, ARK Invest, DTCC, Google Cloud, and Intercontinental Exchange, positioning itself as core infrastructure for institutional finance. As LayerZero&#39;s institutional footprint expands, so does the range of assets and liquidity it can route into Hedera&#39;s ecosystem, and SaucerSwap is already positioned to grow with it.</p>

LayerZero's omnichain interoperability protocol now bridges ERC-20 assets directly onto Hedera, enabling decentralized, trustless cross-chain transfers that have already driven over $100M in trading volume through SaucerSwap in under six months — with $6.38M in TVL across WETH and WBTC bridge pools alone.

Learn how LayerZero's omnichain interoperability protocol bridges ETH and BTC onto Hedera, enabling trustless cross-chain transfers and driving over $100M in trading volume through SaucerSwap's LayerZero pools.

LayerZero on SaucerSwap: Bringing Cross-Chain Capital to Hedera

<p>The initial grant was structured as follows:</p><ul><li>10M HBAR over the first two months</li><li>6M HBAR over the second two months if TVL &gt; $5M</li><li>4M HBAR over the final two months if TVL &gt; $15M</li></ul><p>To achieve this continued yield, 20% of HBAR native staking rewards have been redirected from daocut to the farm contract. Assuming the current WHBAR balance of ~140 million and a 6.5% proof-of-stake APR, this amounts to 1.82 million HBAR per year distributed as liquidity mining incentives to farmers. The rewards sent to mothership.sol remain unchanged, therefore this will have zero negative impact on the single-sided staking APR.</p><p>The contribution of HBAR to the farm base APR will continue to be outweighed by SAUCE, however these incentives will increase as a function of TVL (WHBAR balance) and price. Since proof-of-stake rewards are derived from Hedera network fees, HBAR emitted to SaucerSwap farmers is considered real yield (i.e., not inflation-driven or subsidized via a grant), so is both sustainable and predictable.</p><p>The tokenomics will be reassessed once the DAO is phased in, at which point it may make sense to reallocate a portion of these HBAR native staking rewards to daocut. For now, the DAO treasury will continue receiving SAUCE from protocol buybacks and as specified in the <a href="https://docs.saucerswap.finance/tokenomics/emission-schedule" target="_blank" rel="noopener noreferrer">release schedule</a>. Furthermore, the SaucerSwap team will continue exploring ways to enhance yields, such as through a concentrated liquidity market maker (CLMM) protocol, which is currently under development.</p>

SaucerSwap, as part of its real yield initiative, will be extending its HBAR emission runway indefinitely. This means that the farm contract will continue to emit both SAUCE and HBAR, despite the initial HBAR Foundation grant coming to an end. It’s important to note that SaucerSwap has received the entire 20 million HBAR from the Foundation as all TVL milestones were achieved per the terms of the grant.

Announcement extending HBAR mining incentives on SaucerSwap, detailing updated timelines, reward parameters, and liquidity goals.

Extension of HBAR Mining Incentives on SaucerSwap

<h2><strong>Introduction</strong></h2><p>As DeFi continues to democratize financial systems, SaucerSwap leads the way with its on-chain governance system, powered by the Hedera Consensus Service (HCS). This system is embodied by the SaucerSwap DAO, which plays a pivotal role in managing key aspects of the protocol, particularly the alignment of incentives through reward allocation across both V1 and V2. While the protocol itself operates autonomously via immutable smart contracts, the DAO empowers the community to influence its adaptation to an ever-changing market.</p><p>With the launch scheduled for Monday, August 5th, at 18:00 UTC, this article explores the governance process within SaucerSwap, detailing how the community’s collective decision-making shapes the protocol’s development and future direction.</p><h2>Token-Weighted Voting</h2><p>At the heart of the SaucerSwap DAO is the power of its community, represented through the holdings of SAUCE and xSAUCE tokens. Voting power is determined by a user’s balance of these tokens, with xSAUCE converted to its SAUCE equivalent. The formula for calculating voting power is:</p><pre>Voting Power = SAUCE bal + (xSAUCE bal × conversion rate)</pre><p>Vote counting and results will be updated every minute, with the final tally taken at the exact end of the voting period to ensure an accurate reflection of voting power throughout the governance process. This method ensures that the voting power accurately represents the most current token holdings for each proposal.</p><h2><strong>Governance Process</strong></h2><p>The governance process consists of three distinct phases: Request for Comment (RFC), Proposal, and Election. Each phase is designed to facilitate efficient, transparent, and meaningful community engagement.</p><h3><strong>1. Request for Comment (RFC) Phase</strong></h3><ul><li><strong>Purpose:</strong> Gather initial feedback and refine proposals.</li><li><strong>Duration:</strong> Minimum of 3 days.</li><li><strong>Requirements:</strong> No minimum voting power required.</li><li><strong>Platform:</strong> Discussions occur on the SaucerSwap Governance Forum at <a href="https://gov.saucerswap.finance/" target="_blank" rel="noopener noreferrer">gov.saucerswap.finance</a>.</li></ul><p>The RFC phase is an open forum where community members can present and discuss proposed changes. It’s a brainstorming stage with no minimum voting power requirement, allowing for diverse input and proposal refinement.</p><h3><strong>2. Proposal Phase</strong></h3><ul><li><strong>Purpose:</strong> Formalize and submit proposals for voting.</li><li><strong>Duration:</strong> 2 days.</li><li><strong>Requirements:</strong> Minimum of 100k units of voting power to submit a proposal.</li><li><strong>Quorum:</strong> 10M voting power and majority to proceed with Election.</li><li><strong>Platform:</strong> HCS-based voting conducted via the <a href="https://www.saucerswap.finance/governance" target="_blank" rel="noopener noreferrer">SaucerSwap Interface</a>.</li></ul><p>After gathering feedback, a refined proposal is submitted for voting. To move forward, the proposal must reach a quorum of 10M units of voting power and a majority vote. Additionally, it requires a minimum of 100k units of voting power from the proposer.</p><h3><strong>3. Election Phase</strong></h3><ul><li><strong>Purpose:</strong> Final community vote on proposals.</li><li><strong>Duration:</strong> 2 days.</li><li><strong>Requirements:</strong> 40M voting power quorum and majority for enactment.</li><li><strong>Platform:</strong> HCS-based voting conducted via the <a href="https://www.saucerswap.finance/governance" target="_blank" rel="noopener noreferrer">SaucerSwap Interface</a>.</li></ul><p>The final phase is automatically triggered if Proposal voting criteria is met. It involves another vote via HCS for enactment. An Election must achieve a quorum of 40M units of voting power and a majority vote to be enacted.</p><h2><strong>Technical Implementation</strong></h2><p>The HCS facilitates voting for SaucerSwap proposals and elections through a designated HCS Topic ID. Users connect their wallets to saucerswap.finance/governance to sign and submit voting messages in JSON format to HCS. Upon receiving a vote, SaucerSwap uses the Hedera mirror node to access the voter’s historical balances of SAUCE and xSAUCE at a specific UNIX timestamp. Users can vote multiple times, but only their final vote is counted. This system avoids smart contract risks while inheriting the speed and efficiency of the HCS.</p><h2><strong>Governance Scope</strong></h2><p>The governance scope includes:</p><ul><li><strong>Default Token Listings:</strong> The default list includes larger and established projects, such as high-value bridged assets and prominent Hedera projects. To be added, projects must pass due diligence, a DAO vote, and meet liquidity requirements.</li><li><strong>V1 Farm Creation and Amendment:</strong> The DAO oversees the creation of new yield farms and the adjustment of emissions for existing farms. Projects must meet liquidity and trading volume criteria and pass a community vote to qualify for dual token emissions in SAUCE and HBAR.</li><li><strong>V2 Pool Creation:</strong> Initially permissioned to prevent liquidity fragmentation, new pools in SaucerSwap V2 are curated and governed by the DAO.</li><li><strong>V2 LARI Campaign Creation and Amendment:</strong> The Liquidity-Aligned Reward Initiative (LARI) allows liquidity providers to earn additional incentives. Proposals for creating or amending LARI campaigns are submitted to SaucerSwap Labs and require DAO approval.</li><li><strong>Tokenomics Changes:</strong> Any significant changes to SAUCE tokenomics proposed by core maintainers must be approved by the DAO.</li></ul><p>Matters outside this scope, such as treasury management and meta-governance, are managed by the SaucerSwap core maintainers for the time being.</p><h2><strong>Conclusion</strong></h2><p>The SaucerSwap DAO empowers its community to participate in the protocol’s governance, ensuring that decisions are made collectively and transparently. From token listings to liquidity pool management, the DAO’s influence shapes the protocol’s future, reflecting the values and priorities of its members. As SaucerSwap continues to evolve, its DAO remains a cornerstone of its decentralized and community-driven ethos.</p>

As DeFi continues to democratize financial systems, SaucerSwap leads the way with its on-chain governance system, powered by the Hedera Consensus Service (HCS).

Introduction to SaucerSwap’s on-chain governance model, covering proposal mechanics, voting design, and community participation.

SaucerSwap | Introducing On-Chain Governance

<p>Currently, there are two types of tokens tradeable on SaucerSwap: whitelisted tokens that appear in the default menus and analytics, and all other HTS tokens, which are imported into token menus in a fully permissionless manner. There are some pain points associated with this current method of verification. For example, projects must complete a Sentinel report, fill out a token listing request form, wait for the community to vote on their token, and finally, meet a liquidity requirement. This is not a good fit for all projects, and as such, three new classes of tokens are being introduced:</p><h2><strong>1. Default</strong></h2><p>Characteristics:</p><ul><li>Appears in default menusi. No disclaimer</li><li>Appears in analyticsi. No disclaimer</li><li>Listing announcement from SaucerSwap on Twitter</li><li>Eligible for listing on data aggregators (CoinGecko, CMC)</li><li>Price APIi. Token price displays in HashPack and other applications</li></ul><p>Criteria:</p><ul><li><a href="https://sentinel.headstarter.org/" target="_blank" rel="noopener noreferrer">HeadStarter Sentinel report</a></li><li>SaucerSwap request form</li><li>Passing community vote (&gt;50%)</li><li>Minimum $10k token liquidity</li></ul><h2><strong>2. Extended</strong></h2><p>Characteristics:</p><ul><li>Appears in default menusi. User prompted with “Caution” disclaimer</li><li>Appears in analyticsi. User prompted with “Caution” disclaimer</li><li>Eligible for listing on data aggregators (CoinGecko, CMC)</li><li>Price APIi. Token price displays in HashPack and other applications</li></ul><p>Criteria:</p><ul><li>SaucerSwap request formi. Listing ETA is 48 hours</li></ul><h2><strong>3. Experimental</strong></h2><p>Characteristics:</p><ul><li>Does not appear in default menusi. Tokens must be imported by ID (e.g., 0.0.123456)ii. User prompted with “Warning” disclaimer</li><li>Does not appear in analytics</li><li>Price APIi. Token price displays in HashPack and other applications</li></ul><p>Criteria:</p><ul><li>No criteria; any HTS token can be imported, used to create a liquidity pool, and traded.</li></ul><p>In addition to this amended token listing procedure, projects can apply for yield farms after their token has been added to either the default or extended list. There will be a limit to how many farms a given token can receive, with this number generally being capped at two. A project can submit a new request form if it has one or more farms and wishes to incentivize an additional token pair. Once the SaucerSwap team has received a form, the decision will be brought to a community vote in the same manner as token listings. Note that the token must have a reasonable amount of liquidity and sustained trading volume for it to be considered for a farm. This is to ensure there is organic demand for the token without additional incentives. Liquidity and volume will be assessed on a case-by-case basis. All yield farms will receive dual token emissions (SAUCE and HBAR). Farm weights and initial listings will vary per project and will be governed via DAO-based token-weighted voting once it is phased in.</p><p>For collaboration, token listing, and farm inquiries, please complete the following request form:</p><p>Link to form: <a href="https://z30ev00547x.typeform.com/to/YBGqwGup" target="_blank" rel="noopener noreferrer">https://z30ev00547x.typeform.com/to/YBGqwGup</a></p><h2><strong>Summary</strong></h2><p>The addition of SaucerSwap’s Extended List removes the need for a Sentinel report, liquidity requirement, or community vote. As such, getting a token listed on SaucerSwap will have significantly less friction and be much quicker. This allows for a more permissionless nature of our DEX while embracing the previously established, more stringent process for tokens in our Default List. Please note that because of the single-sided staking rollout, we have a backlog of requests, which will be processed in the order they were received.</p>

SaucerSwap is amending its token listing procedure after receiving valuable feedback from the community. Furthermore, projects will have a seamless way to apply for yield farms and other collaborations.

An overview of SaucerSwap’s updated token listing standards and classification framework, including revised criteria and compliance considerations.

SaucerSwap Amended Token Listing and Classification

<p>SaucerSwap is a fork of Uniswap v2 — an on-chain system of smart contracts on the Ethereum blockchain — that leverages the Hedera Smart Contract Service (HSCS) to include Solidity smart contract integration with the Hedera Token Service (HTS). These smart contracts implement an automated market maker (AMM) protocol based on the constant product formula &quot;XY=K&quot;.</p><p>Here, liquidity is derived from pooled reserves, x and y of any two HTS tokens, such that the product of the reserves, k, remains constant while traders swap in the pool. Compared to other DEXes, swapping tokens on SaucerSwap is safer and affords an overall better user experience. This is in part due to the fast finality, low fees, and unprecedented speed of the Hedera network. Furthermore, given that Hedera has no mempool, there is no risk of being frontrun. As of June 14th 2022, the total miner extractable value (<a href="https://www.youtube.com/watch?v=Wd0at2Pu6xY" target="_blank" rel="noopener noreferrer">MEV</a>) on Ethereum is <a href="https://explore.flashbots.net/" target="_blank" rel="noopener noreferrer">$652,952,888</a>, with Uniswap accounting for the highest percentage of transactions.</p><p>SaucerSwap differs from Uniswap v2 in many fundamental ways. For example, the Ethereum network uses the ERC20 and ERC721 standards for token operations, meaning tokens are themselves contracts. On Hedera, however, token operations are performed on HTS. This is made possible by recent HSCS upgrades allowing smart contracts to use HTS through EVM precompiles. It must be stated that, while it was always possible to create a DEX on Hedera using the ERC20 standard, the network can now fully support tokens created by and controlled through HTS, representing the novelty of SaucerSwap. This is a significant differentiating factor, as SaucerSwap is positioned to take advantage of the network’s consistent and predictable fee structures for token operations.</p><p>Like any DEX, users are the ones providing liquidity. They do so by providing equal value parts of two HTS tokens to a pool in exchange for LP tokens, representing their share of the pool. Furthermore, with the advent of HIP-329 — which introduced the CREATE2 opcode to the Hedera mainnet — anyone can create a liquidity pool. The incentive for liquidity provision arises in part from the 0.30% swap fee. 5/6 of these fees are aggregated and redistributed back to all liquidity providers on a pro-rata basis based on the amount of LP tokens they hold.</p><p>A further incentive to provide liquidity lies in a staple of most DEXs, which is yield farming. SaucerSwap is no exception and gives users the ability to stake their LP tokens in crop circles. Each crop circle on the protocol corresponds to a liquidity pool (e.g., HBARX/DOV) and receives a weight of SAUCE emissions from the farm smart contract. It follows that users are still collecting fees whenever someone swaps between the pair they have provided, in addition to receiving farming rewards<em>. </em>It is worth noting that both crop circle and single-stake pools (explained later on) will have an additional feature, that being game-theory incentivized staking. For the sake of brevity, a link to GTIS can be found <a href="https://docs.saucerswap.finance/features/crop-circles/game-theory-incentivized-staking" target="_blank" rel="noopener noreferrer">here</a>. Back on topic, the rate of emissions is constant and 800M SAUCE will be released over a 3-year period. This release schedule is different from many protocols, who instead opt for a linear decay model where the rate of emissions decreases over time. They do this to compete in saturated markets, as it affords them the ability to offer higher APRs in their infancy, and in turn, bootstrap liquidity. The downside to this is that it lacks longevity, as yields dry up much more rapidly.</p><p>SaucerSwap will offer a full-suite of DeFi services and aims to be a one-stop-shop on Hedera. Shortly after launch, a bridge integration, single-sided staking, community pools, and a DAO-based governance model will be implemented.</p><p>In terms of a bridge, SaucerSwap will integrate a third-party cross-chain router protocol on its site. This bridge will be similar in nature to Multichain, which allows almost all blockchains to inter-operate. As it relates to the DEX, users will be able to seamlessly bridge to and from Hedera, with SaucerSwap serving as the endpoint for this cross-chain liquidity. The inflow of new tokens (e.g., DAI, USDT, BTC, ETH) will undoubtedly have a profound effect on the network and its TVL.</p><p>Single-sided staking requires only one type of token. By staking SAUCE in the Infinity Pool, a user immediately receives SAUCEr tokens as receipt of the liquidity they provided. The Infinity Pool then automatically compounds via SAUCE buybacks. Similar to Stader, the ratio of SAUCE to SAUCEr is always increasing, thus SAUCEr is perpetually increasing in value relative to SAUCE. It is also worth noting that there is no risk of impermanent loss within single-stake pools.</p><p>This leads us to Community Pools, which are complementary to single-sided staking. Once a thoroughly vetted project has completed their IDO on HeadStarter’s launchpad, they will have the option to be fast-tracked onto SaucerSwap with a Community Pool, and subsequent supported pool with a corresponding yield farm. The community will then vote on a core proposal as per the DAO-based governance (explained later on). If this proposal reaches a passing vote by quorum, the HTS project will be listed on the platform and subsequently emit their token to a single-stake pool, aka Community Pool. Users who have staked SAUCE for SAUCEr can then stake SAUCEr in these Community Pools to receive both SAUCE and the HTS token in question for multiple streams of income (sum of APRs). After the HTS token emission runs out, the pool will become inactive, however, a liquidity pool with corresponding crop circle will follow.</p><p>Next, we will discuss SaucerSwap’s unique approach to governance. A decentralized governance model will be gradually phased in, with the team initially controlling the protocol such that core features can be implemented. Once this is completed, governance will transition to a DAO. To ensure true decentralized governance, SaucerSwap will leverage an HCS-based ballot and token-weighted voting architecture. An example of this is <a href="https://github.com/the-creators-galaxy/creators-galaxy-improvement-proposals/blob/master/CGIP/cgip-4.md" target="_blank" rel="noopener noreferrer">CGIP-4</a>. SaucerSwap’s governance model is inspired by Hedera’s path to decentralization; namely, how their nodes are operated by governing council members but will grow to include permissioned community nodes, then anonymous nodes. Similar to how Hedera will open node operation to more entities and individuals as performance, security, stability, and incentives of the network mature; SaucerSwap’s DAO-based governance model will become more decentralized as core features are added to the protocol.</p><p>At this stage of SaucerSwap’s life cycle, the DAO is phased in, and as such, the community will steer the direction of the protocol. Possible future implementations include gamification (e.g., lotteries and prediction markets) akin to PancakeSwap, a lending protocol enabling non-custodial leveraged trading on the DEX, social functionalities leveraging Hedera’s microtransaction capabilities, <a href="https://coinmarketcap.com/alexandria/glossary/liquidity-bootstrapping-pool-lbp" target="_blank" rel="noopener noreferrer">liquidity bootstrapping pools</a> offering the ability to launch tokens with low capital requirements, and more. Given Hedera’s outstanding advantages above other L1s, the prospects for DeFi on the network are bright, and SaucerSwap intends to lead the new wave of innovation as the pioneering DEX on Hedera.</p>

An overview of SaucerSwap’s role as a decentralized exchange on Hedera, highlighting protocol design and ecosystem positioning.

SaucerSwap: The Pioneering DEX on Hedera

<p>On Monday, June 3rd, SaucerSwap will launch the Spring Incentives Campaign in collaboration with <a href="https://www.hbarfoundation.org/" target="_blank" rel="noopener noreferrer">The HBAR Foundation</a>. This campaign, running for approximately three months with opportunity to extend, aims to boost liquidity, increase Hedera network participation, and reward the SaucerSwap community. The campaign will distribute a total of 23,125,000 HBAR through various initiatives, including liquidity rewards, network fee rebates, and a Discord faucet initiative. These efforts are designed to improve the health and efficiency of our protocol while supporting the ecosystem’s long-term growth and sustainability.</p><ul><li><strong>21,000,000 HBAR</strong> for liquidity rewards</li><li><strong>1,875,000 HBAR</strong> for network fee rebates</li><li><strong>250,000 HBAR</strong> for a faucet initiative</li></ul><h2>Liquidity Rewards</h2><h5>Farm</h5><p>A third of the liquidity rewards portion of the grant, 7,000,000 HBAR, is designated for yield farm rewards in V1 pools. Starting June 3rd, 1,073,971 HBAR will be distributed over the first two weeks, across 28 pools including new additions like HBAR/BSL and HBAR/DAVINCI. Each farm will receive dual token rewards in SAUCE and HBAR based on the weighting schema detailed in Table 1.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_3VnNYClf9oMHB_image-3-.png?auto=format,compress" /></p><p>Table 1. Initial allocations of SAUCE and HBAR to V1 yield farms. DAO and LARI weights were added following enactment of the Tokenomics V2 proposal.</p><p>The focus will initially be on supporting pools containing Hedera-native and hashport-bridged tokens, with the potential to extend incentives to other native projects and bridges in the future. The total HBAR emission rate and individual farm weights will be re-evaluated after two weeks. If the boosted incentives achieve the anticipated TVL increase while assuming APRs equilibrate at their current levels, a 40% TVL increase for V1 is projected.</p><h5>Liquidity-Aligned Reward Initiative (LARI)</h5><p>Two-thirds of the liquidity rewards portion of the grant, 14,000,000 HBAR, will fund LARI rewards in V2 pools. Commencing June 3rd, 2,333,333 HBAR will be distributed in the first two weeks (Epoch 15). To grow the DAO’s strategic reserve and reduce inflation, the rate of SAUCE emissions to LARI will be reduced by a factor of one-third during the campaign. Despite this reduction in SAUCE emissions, APRs will increase across the board due to the added HBAR incentives, assuming constant TVL.</p><p>The campaign will initially support 28 pools, including new ones like HBAR/KARATE 0.30% and HBAR/PACK 0.30%. Each V2 pool will receive dual token rewards in SAUCE and/or HBAR as per the weighting schema in Table 2.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_3yHNYClf9oMHN_image-4-.png?auto=format,compress" /></p><p>Table 2. Epoch 15 (June 3rd — 17th) allocations of SAUCE and HBAR to V2 pools via LARI. Note that project-specific token incentives (e.g., DOVU, PACK) are omitted from this graphic.</p><p>Active liquidity partner campaigns will continue, offering additional incentives in project tokens. Similar to V1, the focus will initially be on Hedera-native and hashport-bridged token pools, with opportunities to expand to other native projects and bridges. The total HBAR emission rate and individual LARI weights will be reassessed after Epoch 15. Assuming the incentives drive a substantial TVL increase that equilibrates at current APRs, a projected 324% TVL increase for V2 would follow.</p><p></p><h2>Network Fee Rebates</h2><p>To incentivize trading on SaucerSwap, a network fee rebate system has been introduced. For both V1 and V2 router contracts, transaction fees incurred by accounts during swap interactions are recorded. Each month, 90% of these fees are rebated to the accounts via an airdrop, boosting trading activity and not requiring any user action on claims.</p><p>Note: Rebates are in HBAR and will be sent from account 0.0.4138717.</p><h2>Faucet Initiative</h2><p>The SaucerSwap Discord server features a faucet bot dispensing small amounts of HBAR. To access this:</p><ol><li>Open Discord and navigate to the SaucerSwap server.</li><li>Follow the Wickbot prompts to verify your Discord account.</li><li>After verification, navigate to the faucet bot channel and enter !sparechange &lt;YOUR_ACCOUNT_ID&gt;, using your Hedera account ID or EVM address from MetaMask.</li><li>Your account will receive a one-time allotment of $0.275 worth of HBAR, intended to cover network fees for initial transactions.</li></ol><p>For more detailed instructions, see the <a href="https://www.youtube.com/watch?v=4ws6TZSpou4" target="_blank" rel="noopener noreferrer">Tutorial</a>.</p><h2>Other Remarks</h2><p>SaucerSwap has recently integrated <a href="https://www.moonpay.com/" target="_blank" rel="noopener noreferrer">Moonpay</a>, a leading crypto-to-fiat gateway, enabling direct crypto purchases from bank accounts. Currently, Moonpay has waived its fees, allowing users to buy HBAR and Hedera-native USDC easily and cost-effectively.</p><p><a href="https://www.staderlabs.com/hedera/stake/" target="_blank" rel="noopener noreferrer">Stader</a>, another project involved in The HBAR Foundation’s Spring Incentives Campaign, is offering 4.63% APR on HBAR liquid staking via their yield-bearing HBARX token. This is significantly higher than the native staking rate of 0.282% (as of the date of publication). HBARX can be paired with HBAR or other HTS assets and supplied in SaucerSwap to compound yield.</p><h2>Summary</h2><p>The 2024 Spring Incentives Campaign represents a significant collaboration between SaucerSwap and The HBAR Foundation, allocating 23,125,000 HBAR to various initiatives. With 21,000,000 HBAR for liquidity rewards, 1,875,000 HBAR for network fee rebates, and 250,000 HBAR for a Discord faucet initiative, the campaign aims to drive substantial growth in TVL and trading activity. Key initiatives include yield farming, the Liquidity-Aligned Reward Initiative, and a network fee rebate system, all designed to support the long-term sustainability and growth of the SaucerSwap ecosystem.</p>

SaucerSwap x The HBAR Foundation 2024 Spring Incentives Campaign

SaucerSwap x The HBAR Foundation | 2024 Spring Incentives Campaign

<h2><strong>Introduction</strong></h2><p>Auto Pools, a feature of SaucerSwap V2 leveraging ICHI’s ‘Yield IQ’ for Active Liquidity Management (ALM), are launching in March 2024. This feature simplifies concentrated liquidity provision by allowing users to deposit a single token into an automated vault. These vaults allocate funds across specific price ranges in the underlying liquidity pool to optimize fee earnings and mitigate impermanent loss risk, making the process efficient and user-friendly.</p><p>The term ‘ichi,’ meaning ‘one’ in Japanese, aptly reflects their defining single-asset deposit mechanism, requiring users to provide just one token for liquidity, from which the protocol takes over the management process to keep liquidity concentrated around the active tick.</p><p>Auto Pools are set to integrate with all SaucerSwap V2 pools, with most pools offering two vaults (one for each token in the pool). Despite Auto Pools supporting all V2 pools, users will always have the flexibility to create a manual position in any SaucerSwap V2 pool if they prefer. For instance, the WBTC[hts]/HBAR pool has vaults for both WBTC[hts] and HBAR. The SAUCE/HBAR and SAUCE/USDC pools are exceptions, offering vaults specifically for HBAR and USDC, respectively.</p><h2><strong>Key Features of Auto Pools</strong></h2><p><strong>Single-Token Deposit:</strong> Users can contribute to liquidity pools using just one asset, receiving ERC-20 LP tokens in return. This simplification enhances accessibility and convenience.</p><p><strong>Dynamic Rebalancing:</strong> Auto Pools employ a rebalancing algorithm that adjusts to market conditions through five operational states — Healthy, Over-Inventory, Under-Inventory, High Volatility, and Extreme Volatility — maximizing efficiency and minimizing risk (details below).</p><p><strong>Dual Vaults:</strong> Each V2 pool has two vaults, allowing for a more tailored approach to liquidity management, with a special exception made for SAUCE/HBAR and SAUCE/USDC pairs.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAUP3NYClf9oMbG_image-5-.webp?auto=format,compress" /></p><p><strong>LARI</strong>: Participation in Auto Pools qualifies for LARI rewards, making liquidity providers (LPs) eligible for heightened rewards based on the vault’s liquidity management efficiency, the depositor’s share, deposit duration, and the LARI weight of the underlying pool.</p><h2><strong>Operation and Mechanism of Auto Pools</strong></h2><p>Auto Pools simplify the liquidity provision process in SaucerSwap V2 by allowing LPs to deposit a single asset into a vault. Upon deposit, LPs receive fungible ERC-20 LP tokens, representing their share of the vault. These assets are strategically deployed into SaucerSwap V2 concentrated liquidity pools, with Auto Pools adjusting positions based on market conditions to optimize fee earnings and reduce the risk of impermanent loss.</p><p>LPs earn trading fees from the pools’ activities and can experience potential appreciation of their assets. The protocol ensures flexibility, allowing for the withdrawal of the initial deposit and any accrued earnings at any time.</p><p>Auto Pools apply a 14% management fee on earned fees, distributed to ICHI Protocol and related entities.</p><p>The heart of Auto Pools lies in its dynamic rebalancing strategy, crafted to navigate market movements effectively. The vaults adapt through five operational states — Healthy, Over-Inventory, Under-Inventory, High Volatility, and Extreme Volatility — each tailored to optimize performance and mitigate risk.</p><ul><li><strong>Healthy</strong>: Aimed at maintaining an optimal balance between the deposit and paired tokens to ensure stable returns. Example composition: 20% paired token / 80% deposit token.</li><li><strong>Over-Inventory</strong>: Triggers when excess deposit tokens accumulate, prompting a strategy to sell the deposit token and return to a healthy state. Example composition: 12% paired token / 88% deposit token.</li><li><strong>Under-Inventory</strong>: Triggers when excess paired tokens accumulate, prompting a strategy to sell the paired token and return to a healthy state. Example composition: 25% paired token / 75% deposit token.</li><li><strong>High Volatility</strong>: Differences between fast 5-min and slow 60-min time-weighted average prices (TWAPs), as well as between current price and fast TWAP is used to detect such price movements. The liquidity will be spread out into full range for both tokens. Example composition: 50% paired token / 50% deposit token.</li><li><strong>Extreme Volatility</strong>: In cases of severe market fluctuations, the protocol halts further deposits, requiring manual intervention for rebalancing.</li></ul><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAUvXNYClf9oMba_image-6-.webp?auto=format,compress" /></p><p>For a more in-depth explanation, see the <a href="https://docs.ichi.org/home/yield-iq/algorithm-design" target="_blank" rel="noopener noreferrer">ICHI docs</a>.</p><h2><strong>Conclusion</strong></h2><p>Auto Pools in SaucerSwap V2, developed in collaboration with ICHI, streamline liquidity provision. These vaults utilize a rebalancing algorithm to optimize capital allocation, enabling users to deposit a single token for automated liquidity management. Auto Pools aim to make concentrated liquidity more efficient, user-friendly, and powerful.</p>

Auto Pools, a feature of SaucerSwap V2 leveraging ICHI’s ‘Yield IQ’ for Active Liquidity Management (ALM), are launching in March 2024.

An overview of Auto Pools in SaucerSwap V2, explaining how automated liquidity management improves efficiency and user experience.

SaucerSwap | Enhancing V2 with Auto Pools

<p>The <a href="https://www.saucerswap.finance/bridge" target="_self" rel="noopener noreferrer">SaucerSwap Bridge</a> page brings cross-chain asset transfers directly onto the SaucerSwap interface. Powered by Squid and Axelar, the bridge connects <a href="https://hedera.com/" target="_self" rel="noopener noreferrer">Hedera</a> to 20+ blockchains, giving users a direct path to move cryptoassets onto Hedera and back.</p><h2>Why This Matters</h2><p>Axelar&#39;s integration with Hedera unlocks two specific capabilities worth highlighting. First, it&#39;s permissionless for token issuers: if you&#39;re a project that wants your token to be bridgeable, you can deploy it yourself directly at <a href="https://interchain.axelar.dev/" target="_self" rel="noopener noreferrer">interchain.axelar.dev</a> without going through a gated process. Second, it supports HTS (Hedera Token Service) tokens, meaning native Hedera assets can now move cross-chain. That opens the door for a much wider range of assets to become cross-chain over time.</p><p>Together, these capabilities make SaucerSwap a more open destination for capital across the broader ecosystem. With $46 million in TVL across V1 and V2 pools, easier access to external capital means tighter spreads, better execution, and stronger yields for liquidity providers — all without leaving the app.</p><h2>Powered by Squid and Axelar</h2><p>The bridge is built on two pieces of infrastructure: Squid, which handles routing, and Axelar, which handles security and cross-chain communication.</p><p><a href="https://www.axelar.network/" target="_blank" rel="noopener noreferrer">Axelar</a> is the foundation. It&#39;s a proof-of-stake blockchain with a dedicated validator set that reaches consensus on cross-chain messages, confirming that an asset was locked or burned on the source chain before it&#39;s released on the destination. Axelar isn’t a traditional bridge. It’s a programmable interoperability layer that cross-chain applications and infrastructure build on. Axelar connects leading blockchain ecosystems, has processed billions in cross-chain volume, and has undergone multiple independent security audits. Axelar&#39;s recent integration with Hedera connected the network to this broader ecosystem through a secure, programmable messaging layer.</p><p><a href="https://www.squidrouter.com/" target="_blank" rel="noopener noreferrer">Squid</a> is the routing layer that sits on top of Axelar. It determines the optimal path across liquidity pools and chains, handles the swap logic, and delivers the destination asset in a single transaction. Users do not need to manually swap to an intermediary token or coordinate multiple steps across chains.</p><h2>What this means in practice</h2><p>For traders, assets from other chains can be routed directly into Hedera-native tokens and traded on SaucerSwap in a single interface. Popular starting points include <a href="https://www.base.org/" target="_self" rel="noopener noreferrer">Base</a>, <a href="https://www.optimism.io/" target="_self" rel="noopener noreferrer">Optimism</a>, <a href="https://www.bnbchain.org" target="_self" rel="noopener noreferrer">BNB Chain</a>, and <a href="https://www.avax.network/" target="_self" rel="noopener noreferrer">Avalanche</a>. For liquidity providers, external capital can reach SaucerSwap pools more efficiently, deepening liquidity across the platform. For developers and integrators, Axelar and Squid offer a composable, audited foundation to build on as the Hedera DeFi ecosystem grows.</p><h2>Hedera: Built for What DeFi Needs</h2><p>Hedera&#39;s architecture makes it well-suited as a settlement layer for cross-chain activity. Fees are low and predictable, throughput is high, and transactions reach finality deterministically, meaning there is no probabilistic waiting period as with some other networks. Assets routed through the bridge arrive on a network where execution is reliable and costs are manageable. Hedera&#39;s governance council, a body of global organizations overseeing the network, also provides a layer of institutional accountability that is increasingly relevant as on-chain finance matures.</p><p>SaucerSwap has been building on these strengths since launch. The bridge integration removes the last major barrier for users who hold assets on other chains but want to access what SaucerSwap has to offer.</p><h2>Start Bridging</h2><p>The Bridge page is live. Head to the SaucerSwap app, navigate to Bridge, and bring your assets over from any chain you&#39;re starting from.</p><p>Follow us on <a href="https://x.com/SaucerSwapLabs" target="_self" rel="noopener noreferrer">X</a> and join the SaucerSwap <a href="https://discord.gg/BpZAGpzGfw" target="_self" rel="noopener noreferrer">Discord</a> to stay up to date.</p><p>Bridge now → <a href="https://www.saucerswap.finance/bridge" target="_self" rel="noopener noreferrer">saucerswap.finance/bridge</a></p>

SaucerSwap has launched a native bridge connecting Hedera to 25 blockchains, powered by Squid (routing) and Axelar (cross-chain security). The integration supports permissionless token bridging and HTS tokens, enabling traders, liquidity providers, and developers to move assets onto Hedera's low-fee, high-throughput network directly within the SaucerSwap interface.

SaucerSwap Labs Launches a Dedicated Bridge, Powered by Squid and Axelar

<p>SaucerSwap will be deploying a new router contract and making several changes to its front-end ahead of the Hedera Smart Contract Service (HSCS) security model update on July 11th 2023. Once these changes are in effect, users will be prompted to sign token approvals before swapping or providing liquidity. This will enhance user, dApp, and network security.</p><p><strong>Update</strong>: SaucerSwap has since published an instructional video that covers these front-end changes.</p><p><a href="https://www.youtube.com/watch?v=ahxkvKHni04" target="_blank" rel="noopener noreferrer">https://www.youtube.com/watch?v=ahxkvKHni04</a></p><h2>Background</h2><p>The HSCS combines Hedera’s third-generation native entity functionality with a highly optimized Ethereum Virtual Machine (EVM) called <a href="https://docs.hedera.com/hedera/core-concepts/smart-contracts/hyperledger-besu-evm" target="_blank" rel="noopener noreferrer">Hyperledger Besu EVM</a>. SaucerSwap smart contracts use this Besu EVM for executing transactions, and the resulting changes are stored in the Hedera-optimized Virtual Merkle Tree state. This integration ensures deterministic finality (versus probabilistic finality) of smart contract executions within 2–3 seconds and ensures that state changes are limited to smart contract functionality.</p><p>In HSCS <a href="https://github.com/hashgraph/hedera-services/releases/tag/v0.35.2" target="_blank" rel="noopener noreferrer">version 0.35.2</a> and older, the security model allowed for account key signatures provided at transaction time to authorize actions. This model enabled smart contracts to be delegatecalled to perform operations on behalf of another account, including Hedera Token Service (HTS) operations. The SaucerSwap dApp utilized this feature to sign approvals, also referred to as allowances, on behalf of users. This enhanced the user experience by combining multiple transactions into one atomic operation. However, this model had a vulnerability where unauthorized transactions could be carried out by bad actors. This network-level vulnerability was exploited in March 2023 via a <a href="https://hedera.com/blog/analysis-remediation-of-the-precompile-attack-on-the-hedera-network" target="_blank" rel="noopener noreferrer">precompile attack</a>.</p><p>In the new security model, account key signatures are no longer sufficient for authorizing contract actions. Therefore, users must now explicitly sign approvals before performing actions like swapping or providing liquidity.</p><p>For more information on the new HSCS security model, please visit <a href="https://hedera.com/blog/hedera-smart-contract-service-security-model-update" target="_blank" rel="noopener noreferrer">https://hedera.com/blog/hedera-smart-contract-service-security-model-update</a></p><h2><strong>Upgraded Router</strong></h2><p>SaucerSwap upgraded its UniswapV2 router contract to conform with the new HSCS model boundaries. Given that non-trivial modifications were made, SaucerSwap elected to have <a href="https://omniscia.io/" target="_blank" rel="noopener noreferrer">Omniscia</a> perform a new audit. Omniscia is a leading blockchain security firm, having worked with clients such as Convex Finance, Olympus, <a href="http://Fetch.ai" target="_blank" rel="noopener noreferrer">Fetch.ai</a>, and AllianceBlock. After an initial audit and subsequent remediation, Omniscia asserted that all exhibits have been adequately dealt with and the outputs of the finalized audit report have been properly addressed by the SaucerSwap core maintainers.</p><p>Link to Omniscia audit report: <a href="https://omniscia.io/reports/saucerswap-labs-router-implementation-64660c885d5517001401256c/" target="_blank" rel="noopener noreferrer">https://omniscia.io/reports/saucerswap-labs-router-implementation-64660c885d5517001401256c/</a></p><p></p><h2><strong>Changes to UI/UX</strong></h2><p>Once the new router is deployed to the mainnet, users will notice several UI/UX changes. One significant change is the requirement for users to sign approvals before performing DEX operations. SaucerSwap, in an effort to balance security and usability, offers two options to users: <em>one-time approvals</em> and <em>unlimited approvals</em>.</p><p>In the first option, which is selected by default, users need to sign an approval that matches the quantity of tokens involved in the transaction. This approval is specific to each transaction and must be repeated for future transactions.</p><p>The second option allows users to sign an “unlimited” approval equivalent to the maximum supply of the token. For example, an unlimited approval for the SAUCE token would be for 1 billion tokens. If a user then conducts cumulative transactions totaling 100 million SAUCE tokens, their new allowance would be 1 billion — 100 million = 900 million SAUCE tokens. This form of approval is effectively unlimited, as it accommodates any number of transactions.</p><p>SaucerSwap has introduced a new modal that provides a convenient overview of queued transactions. Let’s consider an example where a user wants to swap 10 USDC for HSUITE. If HSUITE is not yet associated, the modal will display three pending transactions in a queue:</p><ol><li>Grant approval for 10.00 USD Coin</li><li>Associate Token HbarSuite</li><li>Swap USD Coin for HbarSuite</li></ol><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUANCnNYClf9oMV-_1_kuQMvrQB_P8TBqZws-N6ag.webp?auto=format,compress" /></p><p>To complete the swap, the user needs to sign each of these transactions in HashPack. However, if the user has already associated HSUITE and signed an unlimited approval for USDC, only one signature for the swap transaction would be required. In any case, the relevant transactions will be queued in the modal.</p><p>Additionally, users have the flexibility to manage and revoke their allowances at any time in <a href="https://www.hashpack.app/" target="_blank" rel="noopener noreferrer">HashPack</a>.</p><p></p><h2>Conclusion</h2><p>The July 11th 2023 HSCS update has a significant positive impact on user, dApp, and network security. The SaucerSwap core maintainers have promptly responded to these changes by modifying and re-auditing their implementation of the UniswapV2 router. Additionally, several enhancements have been made in the front-end to maintain a top-notch user experience.</p>

SaucerSwap will be deploying a new router contract and making several changes to its front-end ahead of the Hedera Smart Contract Service (HSCS) security model update on July 11th 2023.

Summary of a Hedera network security update and its impact on SaucerSwap, including protocol status and user considerations.

Hedera Network Security Update & SaucerSwap

<p>Having entered the final quarter of 2022, Hedera DeFi has begun a new chapter characterized by protocol advancements that leverage the native services of the network. A highly-anticipated, long-awaited feature for all Hedera users and enthusiasts is HBAR native staking. Herein, we will explain how SaucerSwap will allow users to participate in DeFi without missing out on native staking rewards or worrying about conventional AMM-related risks such as <a href="https://docs.saucerswap.finance/tokenomics/risks" target="_blank" rel="noopener noreferrer">impermanent loss</a>.</p><p>We are of course talking about single-sided staking. In this model, yield is derived from three distinct sources: swap fees across all SaucerSwap liquidity pools, yield farm emissions, and HBAR native staking rewards. This latter reward mechanism involves dynamically staking all HBAR in the <a href="https://docs.saucerswap.finance/resources/saucer-contracts" target="_blank" rel="noopener noreferrer">WHBAR contract</a> to a permissioned node. Moreover, users can compound their earnings by staking xSAUCE (previously referred to as SAUCEr) in <a href="https://docs.saucerswap.finance/features/community-pools" target="_blank" rel="noopener noreferrer">Community Pools</a> to earn HTS tokens from projects incubated by <a href="https://headstarter.org/" target="_blank" rel="noopener noreferrer">HeadStarter</a>.</p><p>Users earn yield by providing liquidity for one type of asset, in contrast to liquidity providing on AMMs, which requires a pair of assets. In the case of SaucerSwap, users stake SAUCE in the Infinity Pool and receive a receipt token called xSAUCE. The ratio of xSAUCE to SAUCE begins at 1 and increases in perpetuity, as the Infinity Pool automatically compounds via SAUCE buybacks and farm emissions.</p><h2>How is yield generated?</h2><p>The 0.05% protocol fee incurred on all token swaps currently accumulates in an account called feeTo via <a href="https://uniswap.org/whitepaper.pdf" target="_blank" rel="noopener noreferrer">Uniswap v2</a> AMM smart contracts. This revenue goes to the DAO treasury at present, but will be reallocated to SAUCE buybacks in Mothership.sol (aka the Infinity Pool) once single-sided staking is implemented. The Brew contract is authorized to withdraw LP tokens from feeTo and burn them to itself, after which point it swaps the underlying assets (token 0 and token 1) for WHBAR and SAUCE using authorized user specified bridges, which are token addresses that facilitate the conversion to SAUCE. Once the bridge swaps are complete, the contract pulls its allocation of HBAR native staking rewards from a payment splitter. These HBAR are wrapped and added to the Brew contract’s WHBAR balance. The final swap to take place is a conversion of WHBAR to SAUCE, resulting in SAUCE being the only token in the Brew contract. This SAUCE, along with &lt;= 10% of SAUCE token emissions from the farm contract, is sent to the Infinity Pool.</p><p>Since the balance of SAUCE in the Infinity Pool is increasing in perpetuity, so too is the ratio of SAUCE to xSAUCE. Conversely, the relative value of xSAUCE to SAUCE is increasing. Consider the following example:</p><ul><li>User A is the first to stake SAUCE in the Infinity Pool. They deposit 10 SAUCE and receive 10 xSAUCE, as the initial ratio is 1:1.</li><li>Next, 10 SAUCE derived from swap fees, HBAR native staking rewards, and farm emissions is sent to the Infinity Pool. Since there is 20 SAUCE in the contract and 10 xSAUCE is the total supply, the ratio is now 1 xSAUCE : 2 SAUCE. User A can redeem their 10 xSAUCE for the 20 SAUCE at any time, based on this ratio.</li><li>Say User A does not redeem their xSAUCE. User B deposits 10 SAUCE in the pool and, since the ratio is 1:2, they get half of their deposit as xSAUCE, which would be 5 xSAUCE. Now the Infinity Pool contains 30 SAUCE and 15 xSAUCE, hence the ratio is maintained.</li><li>The ratio only changes as SAUCE are sent to the Infinity Pool and distributed equally among all xSAUCE holders, because each xSAUCE becomes worth more SAUCE.</li></ul><h2>APR estimate</h2><p>The single-sided staking APR formula is as follows:</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_vc3NYClf9oMBN_0_K68Dhcpg7FdlLOi4.png?auto=format,compress" /></p><p>As of writing, there are ~251M SAUCE in circulation, ~125M (50%) of which is in liquidity pools and ~43M (17%) in protocol- and team-owned wallets. For the purposes of this exercise, assume the remaining ~82M (33%), currently in anonymous wallets, will be staked in the Infinity Pool. The daocut and farm weighting coefficients are set to 0.2 and 0.03, respectively. Finally, the 5-day averaged trading volume is ~$400k and there is ~132M HBAR in the WHBAR contract. The HBAR native staking APR is currently unknown, so a range of single-sided staking estimates will be calculated.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_viXNYClf9oMBR_0_MzJPBvcpL0nOJm7i.png?auto=format,compress" /></p><p><strong>The low-end estimate is 17.60% and the high-end estimate is 37.73%.</strong> For comparison, xBOO and xSUSHI — SpookySwap and SushiSwap single-sided staking — yield 3.58% and 4.98%, respectively. Another interesting takeaway is the potential for SAUCE to become a buyback deflationary token, meaning the protocol could take it out of circulation (into the Infinity Pool) at a faster rate than it is being minted, or more specifically, distributed to users as LP farm rewards. In the above example, 105,846 SAUCE is sent to the Infinity Pool and 415,112 SAUCE is emitted from the farm contract each day. Inflation could therefore be reduced by 25% from day one. This deflationary effect will become more pronounced as HBAR liquidity and trading volume grow.</p><h2>Summary</h2><p>SaucerSwap’s single-sided staking model is unique for its triple reward structure and interplay with Community Pools. Not only does the Infinity Pool allow for impermanent loss-free liquidity provisioning, but it also enables participation in HBAR native staking and Community Pools. In terms of a release date, the SaucerSwap team is targeting Q4. As of right now, the single-sided staking contracts are being audited by Hacken and the front-end is in its final stages of development.</p><p>SaucerSwap links: <a href="https://barracuda.io/saucerswap" target="_blank" rel="noopener noreferrer">https://barracuda.io/saucerswap</a></p>

An introduction to single-sided staking on SaucerSwap, explaining mechanics, rewards structure, and benefits for users and LPs.

An Introduction to Single-Sided Staking on SaucerSwap

<h3>Abstract</h3><p>We replay 7,255,957 historical WHBAR/USDC V2 events against three execution surfaces: the realized V2 concentrated-liquidity AMM (CLMM) baseline, a synthetic V3-style order book, and a hybrid book-plus-V2 backstop that routes residual size to pooled liquidity only when the backstop improves the trader&#39;s result. Both V3-style surfaces reduce average study slippage from 19.97 bps on V2 to about 2.26 bps. Pure book delivers the lowest explicit trader fees but leaves more large orders incomplete. Hybrid preserves essentially the same price quality while improving completion: overall full-fill rate rises from 98.21% to 98.95% relative to pure book, and the $25k+ bucket improves from 42.16% to 65.11%. Exact fee reconstruction shows that explicit trader fees fall from $5.89 million on V2 to $4.62 million on pure book and $4.66 million on hybrid, with further reductions in the modeled tier-2 xSAUCE case. Provider-side results are mixed: rebate-only comparisons understate book-maker economics because the book leg captures $1.82 million of gross spread, yet the aggregate symmetric provider-economics proxy still favors V2 overall, although the pure-book leg leads in the $25k+ bucket. Overall, for a core liquid pair, book-first execution with a conditional pool backstop is the strongest design in the study.</p><p></p><h3>Introduction</h3><p>SaucerSwap V3 is built around a different market structure from V2. V2 is the concentrated-liquidity AMM baseline used in this study. V3 introduces a central limit order book with off-chain matching, atomic settlement on Hedera L1, maker/taker pricing, and the ability to tap V1/V2 pools as backstop liquidity when the book alone cannot satisfy an order at acceptable terms. The practical question is whether that structure improves execution where SaucerSwap is already strongest today: a liquid core market with real historical flow.</p><p>This study addresses that question on WHBAR/USDC. The replay compares three lanes: the realized V2 baseline, a pure synthetic order book, and a hybrid design that first uses the book and then routes residual size to historical V2 when the backstop passes the study&#39;s admissibility rule. The results support a clear but qualified conclusion. Both V3-style lanes materially improve trader price quality relative to V2. The more consequential distinction is between pure book and hybrid. Pure book captures most of the price improvement and delivers the lowest explicit fee surface, but hybrid better balances price quality with completion once larger tickets are taken seriously.</p><h4>1.1. Study contributions</h4><ul><li>It compares pool-only, book-only, and hybrid execution surfaces on 7,255,957 historical WHBAR/USDC V2 events.</li><li>It makes the main trade-off explicit: V3-style design sharply improves price quality, hybrid materially improves completion relative to pure book in the largest-ticket bucket, and spread-capture plus symmetric loss proxies reveal more than rebate-only fee tables can show.</li></ul><h3>Market structure and study design</h3><p>The study evaluates a historical AMM baseline against two V3-style execution surfaces. Table 1 summarizes what each lane represents.hh</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf5wZ1ZCF7ETDR4_image.png?auto=format,compress" /></p><h4>2.1. Replay data, synthetic book, and metrics</h4><p>The replay covers 7,255,957 historical WHBAR/USDC V2 events: 3,770,999 buys and 3,484,958 sells. The synthetic book is a six-level replenishing grid around the study reference price with levels at 2, 4, 8, 16, 32, and 64 bps, weights of 1/1/2/3/5/8, and total grid liquidity of $20,000. The pair choice matters because this is already a liquid core market; the note is not a blanket test for long-tail assets.</p><p>The main execution metrics are average study slippage, full-fill rate, average completion, and remainder. Average study slippage measures deviation from the study reference price in basis points. Full-fill rate is the share of replay units completed in full. Average completion is the average share of requested size that gets filled. Remainder is total unfilled HBAR. The fee layer then reconstructs trader fees, maker rebates, V2 LP accrual, and protocol earnings from filled notional under the locked study fee contract. A further provider layer adds gross spread capture and a next-event adverse-selection haircut to form a more symmetric provider-economics proxy.</p><h3>Primary results</h3><h4>3.1. Headline execution quality</h4><p>Table 2 summarizes the main execution outcomes. V2 provides a 100% completion baseline because the historical replay follows realized pooled execution. Both V3-style surfaces cut average study slippage from 19.97 bps to about 2.26 bps. On price quality alone, pure book and hybrid are effectively tied.</p><p>The difference emerges in completion. Hybrid lifts full-fill rate from 98.21% to 98.95% relative to pure book, raises average completion from 99.98% to 99.99%, and reduces remainder by 178.4 million HBAR, roughly a 41% reduction. The study&#39;s secondary cost framing points the same way: implied study-slippage cost per $1 million filled falls from $2,432 on V2 to $473 on pure book and $497 on hybrid.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf6RJ1ZCF7ETDSB_coreexecutionresults.png?auto=format,compress" /></p><p>External comparison note. Lambdaplex reported 15.47 bps average AMM slippage and 2.82 bps grid-strategy slippage in a <a href="https://x.com/lambdaplex/status/2033560073474113772" target="_blank" rel="noopener noreferrer">similar WHBAR/USDC study</a>. Using the separate AMM pre-trade spot gross slippage parity proxy in our harness, the V2 baseline also lands at 15.47 bps. On that same proxy surface, our V3-style lanes land at 2.26 bps for book-only and 2.26 bps for hybrid. This is a denominator check rather than a fully normalized cross-study benchmark.</p><h4>3.2. Large-order stress case</h4><p>The $25k+ requested-notional bucket is the clearest stress test in the replay because limited near-touch depth in the synthetic book becomes binding at larger clip sizes.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf7K51ZCF7ETDSR_%2425k%2Brequestednotionalbucket.png?auto=format,compress" /></p><p>Pure book still improves on V2 in price terms, but the completion gap is too large to ignore: only 42.16% of these replay units are fully completed and average completion is 52.13%. Hybrid materially closes that gap. Full-fill rate rises to 65.11%, average completion to 79.80%, and remainder falls by roughly 166 million HBAR relative to pure book, while slippage remains well below the 57.84 bps V2 baseline.</p><p>Relative to the earlier hybrid completion dataset, the updated dataset improves the $25k+ bucket from 59.84% to 65.11% full-fill and from 73.94% to 79.80% average completion, while lowering remainder from 290.5 million to 252.4 million HBAR. Average slippage rises modestly from 34.04 to 35.30 bps. The trade-off is straightforward: a small loss on price buys a larger gain in completion.</p><h4>3.3. Explicit trader fees</h4><p>Table 4 reports the study&#39;s exact fee reconstruction on the fee dataset. V2 is the most expensive lane for traders on this surface.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf7cp1ZCF7ETDSU_eactfeereconstruction.png?auto=format,compress" /></p><p>Pure book lowers explicit trader fees by about 21.6% versus V2. Hybrid lowers them by about 20.9%. The small gap between pure book and hybrid comes from residual flow that lands on the V2 backstop and inherits V2 fees.</p><p>Below $10k, pure book and hybrid are effectively identical on fee rate, which suggests the synthetic book already absorbs most of that flow. The difference opens in larger tickets. In the $25k+ bucket, trader fees are 4.94 bps on pure book, 8.00 bps on hybrid, and 15.00 bps on V2. These are effective explicit trader-fee burdens normalized by requested notional, not the raw V3 book fee schedule or a trader fee net of maker rebates. The raw V3 book schedule remains 12.0 bps taker / -0.20 bps maker; the lower bucket figures arise because explicit fees are charged on filled notional while the headline fee rollups are normalized by requested notional, so incomplete pure-book fills and hybrid routing pull the effective bucket average below the raw taker fee. Hybrid therefore remains materially cheaper than V2 while completing more of the hardest flow than pure book. The modeled tier-2 xSAUCE case pushes trader fees lower still, reducing the totals to $4.16 million on pure book and $4.20 million on hybrid.</p><h3>Provider economics</h3><p>Liquidity compensation is expressed differently across V2 and the V3-style lanes. In V2, it appears largely as explicit LP fee accrual. In a book-first market, explicit maker rebate is only one part of the story; filled resting quotes also earn spread capture. Table 5 therefore reports the study&#39;s aggregate symmetric provider-economics proxy rather than a rebate-only comparison.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf7vp1ZCF7ETDSZ_Aggregateprovider-sideproxy.png?auto=format,compress" /></p><p>On this proxy, V2 still has the larger aggregate provider-side surface. At the same time, a rebate-only reading materially understates order-book maker economics. The pure-book leg generates $1.82 million of gross spread capture against only $77,023 of explicit maker rebates.</p><p>The size gradient is especially important. Gross spread capture rises from 2.00 bps in the &lt;$1k bucket to 37.09 bps in the $25k+ bucket. In that $25k+ bucket, the pure-book leg&#39;s net provider-economics proxy reaches 14.93 bps on requested notional versus 9.32 bps for V2. The aggregate provider comparison thus compresses two different monetization regimes into one headline number: V2 monetizes broad passive flow through explicit LP fees, while the order book monetizes more selectively and relies much more on spread capture than on rebates.</p><h3>Interpretation of results</h3><p>The replay&#39;s pattern follows the underlying market designs. An AMM offers continuous pooled liquidity, but every trade walks the curve. A book-first design can quote tighter near the market when there is active resting depth at those prices. That is the structural reason both V3-style lanes deliver much lower average study slippage than V2 on the same historical flow.</p><p>The large-order trade-off follows from the same logic. A finite replenishing book can be very efficient near the touch and still run out of nearby depth on larger clips. Hybrid improves the result because it does not force the book to do all the work. It lets the book handle the flow it can absorb efficiently, then routes residual size to V1/V2 only when the blended execution still benefits the trader and passes the relevant routing checks.</p><p>The fee outcomes are consistent with the locked pair-specific fee contract used in the study. On this pair model, V2 charges 15.0 bps to traders, while the V3 book charges 12.0 bps to takers and pays a 0.20 bps maker rebate by default. In the study’s tier-2 xSAUCE case, the tier is modeled as a 10% modifier to the V3 fee schedule: taker cost falls from 12.0 to 10.8 bps, the negative maker fee becomes more negative from -0.20 to -0.22 bps, and the rebate clamp does not bind. This design helps explain why explicit liquidity-side transfers are much smaller in the V3-style lanes even as broader maker monetization becomes more visible once spread capture is included.</p><h3>Limitations and scope</h3><p><strong>Completion profile.</strong> V2 is the only lane that fully completes the entire replay. Hybrid narrows the gap enough to change the overall ranking, but it does not erase that difference.</p><p><strong>Mechanical fee advantage.</strong> Pure book&#39;s fee advantage in the largest bucket is partly mechanical because it completes less of the hardest flow. Fee comparisons therefore need to be read alongside fill rate and average completion, not in isolation.</p><p><strong>Provider modeling.</strong> The provider comparison remains a proxy. It improves materially on a rebate-only reading, but it still does not model inventory carry, queue position, quote persistence, capital efficiency, or longer-horizon adverse selection in full.</p><p>Dataset mismatch. The latest hybrid execution dataset and the exact fee-reconstruction dataset are not identical. Both surfaces point to the same overall ranking, but the execution and exact fee tables should not be read as if they were generated from one identical dataset.</p><p><strong>Scope.</strong> This is a pair-specific and launch-specific result. It is evidence about a liquid core market, not a blanket conclusion for every asset and liquidity regime SaucerSwap supports.</p><h3>Practical implications</h3><p>For traders, hybrid is the strongest practical interpretation of V3. It preserves the slippage improvement that makes the book attractive in the first place and recovers a meaningful share of the completion that pure book leaves behind on larger tickets.</p><p>For active market makers, the center of gravity shifts from passive AMM exposure to order-book workflows: market and limit orders, post-only behavior, time-in-force controls, signed intents, fast cancellation, and order-history tooling. The study suggests that spread capture, not rebate alone, is the central economic variable.</p><p>For long-tail assets and passive users, V1/2 still have a clear role. The study does not support a &#39;replace everything with the book&#39; interpretation. It supports a targeted one: core markets benefit from book-first execution, while AMMs remain valuable both as standalone venues and as fallback liquidity.</p><p>For the DAO and token holders, the result still matters because V3 changes the fee engine as well as the execution engine. But detailed forward launch-economics projections are outside the scope of this note, which is focused on replayed trader outcomes and the market-structure trade-offs behind them.</p><h3>Conclusion</h3><p>On historical WHBAR/USDC flow, a V3-style execution surface produces materially better price quality than the V2 baseline. Pure book captures most of that gain on price and posts the lowest explicit fee surface, but hybrid is the stronger overall design because it preserves the price improvement while recovering more completion, especially where order size makes book depth the binding constraint.</p><p>The provider-side story is more mixed. Even so, the evidence is strongest on the dimensions most relevant to trader outcomes: execution quality, explicit trader cost, and the value of a conditional pool backstop. On this core market, those factors favor hybrid V3 over the V2 baseline.</p><h3>Appendix. Supplementary tables</h3><p>The appendix compacts the remaining material results. Execution tables use the latest hybrid execution dataset available to the study. Exact fee tables use the exact fee-reconstruction basis.</p><h4>A1. Exact fee split by requested-notional bucket (no_xsauce)</h4><p>The fee divergence between pure book and hybrid is concentrated in larger trades. Below $10k, the two V3-style lanes are essentially indistinguishable on this basis.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf86J1ZCF7ETDSx_Exactfeesplitbyrequested-notionalbucket.png?auto=format,compress" /></p><h4>A2. Aggregate xSAUCE sensitivity (exact fee basis)</h4><p>The tier-2 xSAUCE case changes fee allocation, not the execution path. Fill rate, completion, slippage, and spread capture stay the same on this model.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf9H51ZCF7ETDS6_AggregatexSAUCEsensitivity.png?auto=format,compress" /></p><p>Relative to the default no-xSAUCE schedule, the tier-2 case lowers trader fees by about $462k in both V3-style lanes and increases the maker-side transfer modestly.</p><h4>A3. Gross spread capture and provider stress case</h4><p>Gross spread capture is reported on the book leg only. The provider-economics stress case uses the study&#39;s symmetric loss proxy.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf9_J1ZCF7ETDTZ_Grossspreadcaptureandproviderstresscase.png?auto=format,compress" /></p><p class="block-img"><img src="https://images.prismic.io/saucerswap/adf-HZ1ZCF7ETDTt_Providerstresscaseforthe%2425k%2Bbucket.png?auto=format,compress" /></p><p>Spread capture rises steeply with order size, and in the $25k+ bucket the pure-book leg&#39;s net provider proxy exceeds the V2 figure. That is the clearest evidence in the study against a rebate-only reading of maker economics.</p>

On historical WHBAR/USDC flow, book-first execution with a conditional V2 backstop preserved the price gains of order-book trading while recovering more completion where size mattered most.

A comparative study of pool-only, book-only, and hybrid execution.

SaucerSwap V3 on Historical Flow

SaucerSwap V3 on Historical Flow: Lower Slippage, Stronger Execution

<p>With 2022 coming to a close, we take this opportunity to look back at the achievements and strides SaucerSwap and the Hedera DeFi ecosystem have made, and we outline how this momentum will be carried into the New Year.</p><p>Hedera was comparatively late in entering the world of decentralized finance, having only recently pivoted from a solely enterprise-focused strategy with the launch of a new initiative — the <a href="https://hedera.com/blog/hedera-governing-council-to-allocate-5-billion-in-hbar-to-independent-foundation-and-ecosystem-development-initiatives" target="_blank" rel="noopener noreferrer">HBAR Foundation</a>. This funding mechanism, coupled with the network’s high performance; aBFT-grade security; and low, predictable fees; makes the subsequent influx of new developers and users of little surprise.</p><p>Q1 of 2022 marked the launch of <a href="https://hedera.com/blog/smart-contracts-2-0-live-on-mainnet" target="_blank" rel="noopener noreferrer">Smart Contracts 2.0</a>. Prior to this, smart contract applications were not practically feasible. This upgrade made smart contracts more robust and able to be integrated with the Hedera Token Service. The first protocol to launch following this upgrade was <a href="https://www.hbarfoundation.org/blog-post/stader-labs-to-launch-on-hedera-with-support-from-the-hbar-foundation" target="_blank" rel="noopener noreferrer">Stader Labs</a> — a multi-chain liquid staking protocol (aggregate TVL = $88MM).</p><p>Following Stader’s success, SaucerSwap began developing a constant product AMM protocol, collaborating with the Hedera core team to pioneer a <a href="https://www.saucerswap.finance/whitepaper.pdf" target="_blank" rel="noopener noreferrer">heavily-modified Uniswap v2 fork</a> wherein HSCS upgrades allow smart contracts to use HTS through EVM precompiles. During this time, the SaucerSwap team held a successful funding round and TGE, raising 10MM HBAR. In July of 2022, the HBAR Foundation announced its <a href="https://www.hbarfoundation.org/blog-post/the-hbar-foundation-announces-its-support-of-saucerswap-the-decentralized-exchange-built-on-hedera" target="_blank" rel="noopener noreferrer">support and partnership</a> with SaucerSwap, which was realized as a 20MM HBAR grant distributed to users as liquidity mining incentives. Finally, after undergoing a comprehensive <a href="https://docs.saucerswap.finance/resources/audits" target="_blank" rel="noopener noreferrer">audit</a> (9.7/10) and conducting a public beta on testnet, SaucerSwap launched in early August.</p><p>The launch of SaucerSwap marked the beginning of an interconnected DeFi ecosystem on Hedera. HTS tokens could now be swapped in a permissionless manner without counterparty risk, and users could earn passive income while retaining custody of their assets. As expected, the number of smart contract transactions increased significantly, as shown in the Messari <a href="https://messari.io/report/state-of-hedera-q3-2022" target="_blank" rel="noopener noreferrer">State of Hedera Q3 2022</a> report.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAHPXNYClf9oMOu_image-5-.png?auto=format,compress" /></p><pre>The services with the largest gains were the Account Management / Crypto Service, the Smart Contract Service, and the Token Service. The increases were primarily due to the launch of the first decentralized exchange, SaucerSwap. [SaucerSwap] used the combination of these services to power the entire application.</pre><p>SaucerSwap quickly reached $15MM in TVL within one week of launch, with a significant portion of this attributed to cross-chain assets bridged through <a href="https://hashport-network.medium.com/hashport-turns-one-a-year-in-retrospect-99f3dc2bd676" target="_blank" rel="noopener noreferrer">hashport</a>. Despite the price of HBAR having decreased by ~50% since then, TVL continued rising to a high of $22MM in December. Additionally, SaucerSwap has facilitated nearly half a million unique swaps, amounting to over $80MM in total trade volume — this has generated nearly a quarter million dollars in revenue for liquidity providers and the DAO treasury. SaucerSwap also introduced a <a href="https://docs.saucerswap.finance/features/single-sided-staking" target="_blank" rel="noopener noreferrer">value capture mechanism</a> for SAUCE token holders. All 158MM HBAR in the WHBAR contract are staked to a node, and the accrued rewards are used to buyback SAUCE and distribute it to stakers.</p><h2>2022 Retrospective</h2><p>In 2022, SaucerSwap accomplished these milestones:</p><ul><li>Planck Epoch NFT sale and SAUCE TGE</li><li><a href="https://docs.saucerswap.finance/resources/audits" target="_blank" rel="noopener noreferrer">Audit of all smart contracts by Hacken</a></li><li><a href="https://www.hbarfoundation.org/blog-post/the-hbar-foundation-announces-its-support-of-saucerswap-the-decentralized-exchange-built-on-hedera" target="_blank" rel="noopener noreferrer">HBAR Foundation partnership and grant</a></li><li>Committed to a bi-weekly AMA schedule</li><li>Launch of AMM protocol and yield farms</li><li><a href="https://github.com/saucerswaplabs" target="_blank" rel="noopener noreferrer">Open-sourced core &amp; farm contracts</a></li><li>Integrated price feed for HTS tokens in <a href="https://www.hashpack.app/" target="_blank" rel="noopener noreferrer">HashPack</a></li><li><a href="https://analytics.saucerswap.finance/" target="_blank" rel="noopener noreferrer">Analytics for tokens and pools</a></li><li>Improvements to front- and back-end infrastructure</li><li>Powered in-wallet swaps for HashPack</li><li><a href="https://www.mexc.com/exchange/SAUCE_USDT" target="_blank" rel="noopener noreferrer">CEX listing on MEXC Global</a></li><li>SAUCE bridgeable to Ethereum, Polygon, BNB Chain, and Avalanche</li><li>SAUCE as a method of payment on <a href="https://www.hederasentient.com/" target="_blank" rel="noopener noreferrer">Hedera Sentient</a> marketplace &amp; launchpad</li><li>Strategic partnerships and formation of the HDA</li><li>Implementation of the <a href="https://sentinel.headstarter.org/" target="_blank" rel="noopener noreferrer">Sentinel program</a> with HeadStarter</li><li>Listed on data aggregators (<a href="https://defillama.com/protocol/saucerswap" target="_blank" rel="noopener noreferrer">DefiLlama</a>, <a href="https://www.coingecko.com/en/coins/saucerswap" target="_blank" rel="noopener noreferrer">CoinGecko</a>, <a href="https://coinmarketcap.com/currencies/saucerswap/" target="_blank" rel="noopener noreferrer">CMC</a>, <a href="https://dappradar.com/hedera/defi/saucerswap" target="_blank" rel="noopener noreferrer">DappRadar</a>)</li><li><a href="https://medium.com/@SaucerSwap/saucerswap-whbar-migration-announcement-295e04b01d5e" target="_blank" rel="noopener noreferrer">Migration to WHBAR v2 to leverage native staking</a></li><li><a href="https://medium.com/@SaucerSwap/an-introduction-to-single-sided-staking-on-saucerswap-ad92cd816362" target="_blank" rel="noopener noreferrer">Launch of SAUCE single-sided staking and xSAUCE token</a></li><li>Grew community to +25k members across <a href="https://barracuda.io/saucerswap" target="_blank" rel="noopener noreferrer">socials</a></li><li><a href="https://medium.com/@SaucerSwap/saucerswap-amended-token-listing-and-classification-9c517d876128" target="_blank" rel="noopener noreferrer">Streamlined token listing process and classification system</a></li><li>Expanded the team</li><li>Migration to <a href="https://www.lworks.io/" target="_blank" rel="noopener noreferrer">LedgerWorks</a> Sentinel</li><li><a href="https://www.coingecko.com/en/exchanges/saucerswap-dex" target="_blank" rel="noopener noreferrer">DEX integration on CoinGecko</a></li></ul><h2>2023 Prospective</h2><p>Now that these items have been delivered, the following core goals will inform development in the new year:</p><ul><li>Expand moat within Hedera and cross-chain</li><li>Further transparency and autonomy through a governance process</li><li>Adapt tokenomics to current DeFi narratives</li><li>Increase / diversify revenue streams</li><li>Optimize capital efficiency</li><li>Rework UX to onboard new users</li><li>Provide more insight and functionalities to users</li><li>Maximize cross-chain market exposure</li></ul><p><strong>While it is too early to announce our primary focus for 2023</strong>, we do have the following items on our <a href="https://docs.saucerswap.finance/roadmap#ongoing" target="_blank" rel="noopener noreferrer">roadmap</a>:</p><ul><li>MetaMask integration [Q1]</li><li>Front-end bridge integration [Q1]</li><li>Website redesign, including charts and user-tailored data [Q1]</li><li>Governance</li><li>Community Pools</li><li>Farm v2</li><li>Partnerships / collaborations with cross-chain protocols</li><li>Additional CEX listings</li></ul><p>The SaucerSwap team would like to express our gratitude to everyone who has supported the protocol’s development and growth in 2022. Happy New Year!</p>

With 2022 coming to a close, we take this opportunity to look back at the achievements and strides SaucerSwap and the Hedera DeFi ecosystem have made, and we outline how this momentum will be carried into the New Year.

A recap of SaucerSwap’s 2022 milestones covering product launches, protocol growth, ecosystem progress, and priorities heading into 2023.

2022 Retrospective and a Glance Ahead

<p>Dear SaucerSwap Community,</p><p>As part of our ongoing commitment to transparency and user safety, we want to provide important information about the SaucerSwap WHBAR contract and its intended use.</p><p>The SaucerSwap WHBAR contract was specifically designed and deployed as an internal protocol component for SaucerSwap operations. While it has functioned reliably within our ecosystem since launch, we want to clarify its scope and important limitations for the broader community.</p><h2>Key Points</h2><h3>Within SaucerSwap</h3><p><strong>Fully Functional</strong> — All WHBAR functionality within the SaucerSwap protocol remains secure and operates as intended. Users can continue to swap, provide liquidity, and interact with WHBAR through our interface without any concerns.</p><h3>Ecosystem Context</h3><p>Due to SaucerSwap’s position as a leading DEX on Hedera, our WHBAR contract has become widely adopted across the ecosystem. The contract was originally engineered exclusively for SaucerSwap’s internal mechanisms, where our specific safeguards ensure secure operation.</p><p>We recognize and appreciate the many projects that have successfully integrated with our WHBAR implementation. These projects have often implemented their own protective measures (<a href="https://docs.saucerswap.finance/v/developer/whbar/overview" target="_blank" rel="noopener noreferrer">such as WhbarHelper contracts</a>) to ensure safe interactions. It’s important to note that without these protective measures, direct contract interactions can expose user funds to risk.</p><h3>Understanding the Risk</h3><p>For funds to be at risk, specific conditions must exist simultaneously:</p><ul><li>An account must have an open WHBAR allowance granted outside of an atomic transaction</li><li>The account must be actively holding WHBAR tokens</li><li>No protective mechanisms (like those used by SaucerSwap or <a href="https://docs.saucerswap.finance/v/developer/whbar/overview" target="_blank" rel="noopener noreferrer">WhbarHelper contracts</a>) are in place</li></ul><p>Within SaucerSwap and properly integrated third-party applications, these conditions are prevented through atomic bundling of operations. However, direct contract interactions without such safeguards can create these risk conditions.</p><p>This notice aims to help developers understand the importance of proper safety measures when working with the current implementation as the ecosystem evolves toward standardization.</p><h3>Recent Events</h3><p>We are aware of recent discussions regarding WHBAR contract interactions. Direct usage of the WHBAR contract by accounts which met the aforementioned risk conditions have exposed themselves to loss of funds. While we continue our investigation, we can confirm that the vulnerability described in this notice has existed since a 2023 network update.</p><p>Initial analysis suggests the impact is limited to a small number of accounts that directly interacted with the contract without proper safeguards. We are conducting a thorough review to determine the full scope and will provide updates as appropriate. Throughout this period, SaucerSwap users and properly integrated protocols have remained unaffected due to the protective measures in place.</p><p>For any developers who may have implemented direct contract interactions: our documentation has always specified the correct atomic bundling pattern required for safe usage. We encourage anyone who believes they may have been affected to contact us directly so we can assist in understanding what occurred.</p><h2>Action Required?</h2><h3>SaucerSwap: No Action Required by Users</h3><p>SaucerSwap retail users do not need to take any immediate action. Your funds and positions within SaucerSwap remain secure and unaffected.</p><h3>Bonzo Finance: No Action Required for Retail Users</h3><p>All funds and positions within the Bonzo Finance protocol remain secure and unaffected. Retail user accounts utilizing Bonzo Finance do not need to take any immediate action.</p><h3>Bonzo Finance: Action May Be Required for Liquidation Bot Operators / Developers</h3><p>If your developer accounts or contracts directly manages a balance of wHBAR issued by SaucerSwap’s wHBAR (0.0.1456986) contract, it’s strongly recommended to revoke any open allowances, if they exist. If not already implemented, please review and implement <a href="https://docs.saucerswap.finance/v/developer/whbar/overview" target="_blank" rel="noopener noreferrer">best practices for wHBAR usage</a> throughout your liquidation bot operations. Not following best practices has the potential to result in loss of wHBAR funds.</p><h3>Looking Forward</h3><p>To better align with ecosystem growth and standardization, SaucerSwap is committed to supporting the official Hashgraph ERC20 WHBAR standard. We will keep the community informed as ecosystem standards develop.</p><h2>What This Means</h2><ul><li><strong>Users trading, providing liquidity, or staking on SaucerSwap:</strong> No risk, no action needed</li><li><strong>Projects using WhbarHelper or similar protections:</strong> Currently safe, no action needed</li><li><strong>Direct contract integrations without protections:</strong> Immediate risk — <a href="https://docs.saucerswap.finance/v/developer/whbar/overview" target="_blank" rel="noopener noreferrer">migrate to WhbarHelper implementation immediately or discontinue use</a></li><li><strong>Users interacting with integrated protocols:</strong> Check with those protocols about their safety measures</li><li><strong>New projects:</strong> Do not integrate directly with SaucerSwap WHBAR — use <a href="https://hashscan.io/mainnet/contract/0.0.5808826" target="_blank" rel="noopener noreferrer">WhbarHelper</a> patterns or wait for ecosystem standards</li></ul><h2>For Developers</h2><p>We advise all developers and integration partners to:</p><ul><li><strong>New integrations:</strong> Do not use the SaucerSwap WHBAR contract directly — await the Hashgraph standard or implement <a href="https://docs.saucerswap.finance/v/developer/whbar/overview" target="_blank" rel="noopener noreferrer">WhbarHelper patterns</a> if absolutely necessary</li><li><strong>Existing integrations:</strong> Verify your safeguards are properly implemented or migrate to WhbarHelper immediately — contact our team if you need assistance</li></ul><p>We appreciate the patience and ingenuity of our ecosystem partners who have built on top of our infrastructure, and we remain committed to supporting the ecosystem’s evolution.</p><p>If you have any questions or concerns, please reach out to our team through our official channels.</p><p>Thank you for your continued trust and support.</p><p><strong>The SaucerSwap Labs Team</strong></p>

A security advisory addressing the WHBAR contract, outlining identified risks, mitigation steps, and guidance for affected users.

WHBAR Contract Security Advisory

<p>The Hedera network is fast, fair, secure, and well governed, which provides the trust layer that our ever-growing community relies on.</p><p>- Dr. Leemon Baird, inventor of the hashgraph</p><p></p><p>The use case of DeFi is clear and simple to the vast majority of market participants in the crypto space; namely, on-chain access to services traditionally offered by banks via trustless smart contracts. The general ethos revolves around a sort of libertarian right to self-sovereignty with a focus on egalitarianism. In theory, every individual may access these money markets using the same technology with complete transparency and no special advantage over the protocol. For money markets to be capital-efficient and attractive, they need high liquidity. <em>Go where the money is.</em> For now, this happens to be Ethereum.</p><p>Ignoring the highly fragile systems we have seen collapse in 2022, such as Terra and any number of protocols rebranding perpetual motion machines to a new crop of speculators, DeFi is here to stay. However, does it need to stay on Ethereum? Though protocols such as Aave or MakerDAO are sustainable, fair systems which have proven resilient to market volatility, the platform upon which they are currently housed is not as fair as it may seem.</p><p>DeFi on Ethereum is plagued by three problems: prohibitive costs, low throughput, and a lack of fair ordering (MEV). Take Curve for example; as of writing this, the cost of a token swap is $4.66. While this seems rather high, one should remember that this is relatively low when compared to historical data.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_js3NYClf9oL2S_image-1-.png?auto=format,compress" /></p><p>Fee data and charts referenced from: The Block, On-Chain Metrics, Ethereum, June 2022</p><p>Fees on Ethereum are priced in <em>gwei.</em> Gwei is to Ethereum what <em>sats</em> are to Bitcoin <em>—</em> a fractional representation*.* When the price of ETH rises, so too does the U.S. dollar cost of transacting on the network, as can be seen when comparing the above Figure with the ETH/USD chart.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_oT3NYClf9oL6m_1__IpkPHkvaBmuMB6iliByXg.webp?auto=format,compress" /></p><p>Fee data and charts referenced from: The Block, On-Chain Metrics, Ethereum, June 2022</p><p>Sharp rises in the price of ETH also correlate with demand for blockspace. This creates a negative feedback loop for users and protocols whereby demand effectively destroys itself by making the use of mainnet cost-prohibitive.</p><p>The variable nature of Ethereum’s transaction fees makes it difficult for developers to take costs into account when looking to build what is fundamentally a <em>business</em> on web3. No business owner wants unpredictable, wildly fluctuating expenses. There simply is not enough <a href="https://research.paradigm.xyz/ethereum-blockspace#overview-of-the-blockspace-market" target="_blank" rel="noopener noreferrer">blockspace</a> to run anything remotely similar to modern banking infrastructure. Ethereum runs at a maximum of 30 transactions per second. In comparison, Visa can run up to [65,000 transaction messages per second](<a href="https://www.visa.ca/en_CA/about-visa/visanet.html#:~:text=VisaNet%2520can%2520authorize%2520up%2520to,,%2520yen,%2520centavo%2520or%2520santang.)" target="_blank" rel="noopener noreferrer">https://www.visa.ca/en_CA/about-visa/visanet.html#:~:text=VisaNet%2520can%2520authorize%2520up%2520to,,%2520yen,%2520centavo%2520or%2520santang.)</a>.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_oa3NYClf9oL6p_image-2-.png?auto=format,compress" /></p><p>Fee data and charts referenced from: The Block, On-Chain Metrics, Ethereum, June 2022</p><p>The technical limitations of Ethereum, coupled with its high demand for blockspace, give rise to DeFi’s third problem: miner extractable value. Abbreviated to MEV, miner extractable value consists of a live auction by market participants, each using Gwei to bribe miners to include and validate their transaction before another. This creates an arbitrage opportunity, which, if transactions were ordered fairly, would not have been possible. MEV ‘searchers’ (as they are called) typically profit from this <em>backdoor</em> arbitrage by front running large market orders and pocketing the difference.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_ohXNYClf9oL62_1_p1Fk2S-O-uv3IWv6nPFuqQ.webp?auto=format,compress" /></p><p>Twitter user @bertcmiller shares a post with his following on June 13th with screenshots detailing profits generated by MEV bots taking advantage of an ETH whale market selling into a small (relative to his market order) liquidity pool. @bertcmiller’s post: <a href="https://twitter.com/bertcmiller/status/1536353430717046786/photo/1" target="_blank" rel="noopener noreferrer">https://twitter.com/bertcmiller/status/1536353430717046786/photo/1</a></p><p>Arbitrage is a normal and healthy part of any market; however, this kind of arbitrage sacrifices the fair ordering of transactions.</p><p>When developing SaucerSwap, we knew it had to be future-proof. A protocol which stood up against the rest of the market’s DeFi offerings, while also addressing the core problems users are growing increasingly tired of on Ethereum. The Hedera Hashgraph offers us and our users up to <a href="https://hedera.com/hbar" target="_blank" rel="noopener noreferrer">10,000 transactions per second</a> (throttled), alleviating our throughput concerns. Predictable fees paid in HBAR but denominated in U.S. dollars give us the freedom to explore ideas that would be impossible on other DLTs. Lastly, the concept of MEV does not exists on Hedera, meaning the network is free of bribes and exploitative backdoor arbitrage. The hashgraph always guarantees fair ordering of transactions; giving rise to a secure and fair network upon which next-generation dApps and protocols can be built.</p>

An analysis comparing Hedera and Ethereum for DeFi, examining performance, fees, security tradeoffs, and network design differences.

Hedera DeFi: Overcoming Ethereum

<p>With the advent of DeFi on Hedera, we have seen an overwhelming number of Hedera Token Service (HTS) tokens flood the ecosystem. When put into a broader context, this phenomenon is not uncommon — Ethereum, Binance Smart Chain, Avalanche, etc. all experienced a surge in token creation as they burgeoned into the now behemoth smart contract platforms.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_tznNYClf9oL___0_L8cmhlNsroYbBemZ.png?auto=format,compress" /></p><p>Figure 1. Daily token transactions spiked in late August / early September amid the influx of HTS tokens on the network.</p><p></p><p>However, unlike these L1s, whose standards for fungible tokens implement an API within smart contracts, Hedera defines a new token standard independent of smart contracts. The Hedera Token Service, or HTS, leverages existing network primitives to allow users to define and interact with tokens as native network entities. HTS therefore inherits HBAR’s performance and predictable fee structures. These tokens are mappable to ERC-20 and ERC-721 standards such that interoperability with existing smart contract applications is not compromised. Moreover, HTS extends beyond the limitations of the dominating ERC standard, with features such as built-in configurable compliance and programmability (e.g., custom token fees and scheduled transactions).</p><p>This is all to say that token creation on Hedera is robust and accessible to all. While a low barrier to entry is generally good, it is not without drawbacks. The near-negligible cost of creating (<a href="https://docs.hedera.com/guides/mainnet/fees" target="_blank" rel="noopener noreferrer">$1.00</a>) and minting (<a href="https://docs.hedera.com/guides/mainnet/fees" target="_blank" rel="noopener noreferrer">$0.001</a>) fungible tokens through HTS, coupled with the permissionless nature of SaucerSwap and a tight-knit, easily mobilized community, can exacerbate rug pulls in the absence of checks and balances.</p><h2>Project Sentinel</h2><p>Given the aforementioned challenges, the Hashgraph DeFi Alliance (HDA) concluded that a <strong>formalized process for whitelisting tokens</strong> was needed. <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap</a> has collaborated with IDO launchpad and fellow HDA member, <a href="https://headstarter.org/" target="_blank" rel="noopener noreferrer">HeadStarter</a>, to conceive of Project Sentinel. HeadStarter has created a set of questions that examine various aspects of a project, ranging from business model to tokenomics.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aT_uA3NYClf9oMAG_image.webp?auto=format,compress" /></p><p>Figure 2. A preview of the Project Sentinel questionnaire.</p><p>These questions were designed to be as objective as possible. In addition to responding yes or no, the project must provide supporting evidence for each question. For example, suppose a project responds ‘yes’ to having received an audit — for this to be verifiable, a link to the report must be provided. Upon submission, HeadStarter will generate a report, which will be published on the Project Sentinel <a href="https://sentinel.headstarter.org/" target="_blank" rel="noopener noreferrer">website</a>.</p><h2>SaucerSwap Voting</h2><p>Once a report has been published, the project may complete a token listing form, which SaucerSwap will add to their GitBook once HeadStarter begins processing requests. A poll will then be created in the SaucerSwap <a href="https://discord.com/invite/saucerswap" target="_blank" rel="noopener noreferrer">Discord</a> server. Those who have purchased one or more Planck Epoch Collectibles, either during SaucerSwap’s NFT sale or on a secondary market like <a href="https://zuse.market/" target="_blank" rel="noopener noreferrer">Zuse</a>, will have exclusive access to the voting channel once their account has been <a href="https://docs.saucerswap.finance/getting-started/obtain-hbar#account-linking" target="_blank" rel="noopener noreferrer">linked</a>. They may cast a vote on whether a project should be whitelisted, using Sentinel reports as reference.</p><p>If the project receives a passing vote by &gt;70% supermajority after 24 hours has elapsed:</p><ol><li>The project moves on to the final step in the whitelisting process.</li><li>The project’s team then has 48 hours to create a liquidity pool, in which $1,500 of their token and $1,500 of a common base (e.g., HBAR, SAUCE, USDC) is provided. This is primarily to minimize slippage when swapping in the trading pair.</li><li>If this LP is funded within the specified window of time, SaucerSwap will promptly whitelist the token.</li></ol><p>Whitelisted tokens appear in Saucerswap’s default token menu and <a href="https://analytics.saucerswap.finance/" target="_blank" rel="noopener noreferrer">analytics</a> section. This makes tokens more easily tradable and increases project visibility. It also allows users to analyze the tokens more readily using tools such as liquidity, volume, and price charts.</p><h2>Summary</h2><p>In light of Hedera’s emerging token economy, the HDA has deemed it necessary to introduce a responsible and inclusive method of verifying the legitimacy of projects, with the end goal being to whitelist quality tokens on SaucerSwap. HeadStarter will score a project using a set of criteria, after which point it will be voted on by SaucerSwap Planck Epoch NFT holders. Finally, on the condition that the project receives a passing vote by supermajority and has provided $3,000 of liquidity to the relevant pair, their token will be whitelisted on SaucerSwap.</p><h2>About the HDA</h2><p>The Hashgraph DeFi Alliance allows industry-leading projects to connect, collaborate, and contribute to the emergence of a healthy and sustainable global DeFi ecosystem built on Hedera.</p>

Details on the HeadStarter partnership with SaucerSwap, outlining token whitelisting criteria, listing process, and ecosystem implications.

HeadStarter x SaucerSwap: Token Whitelisting

<h2>Introduction</h2><p>As SaucerSwap solidifies its position as a leader in the decentralized finance space, our commitment to sustainable growth and community-driven governance remains unwavering. Reflecting on the progress made over the past months, this update not only highlights the expansion of the SaucerSwap DAO’s responsibilities but also introduces the upcoming implementation of an interface fee. These pivotal steps are part of a broader strategy to enhance the protocol’s long-term sustainability and governance framework, building on our past successes and setting the stage for future developments.</p><h2>Governance Update</h2><p>The SaucerSwap DAO, recently formed on-chain to govern key aspects of the protocol, has quickly expanded its responsibilities. Originally focused on managing V1 and V2 incentives, the DAO’s scope now includes treasury management, marking an important step in decentralized governance.</p><p>The SaucerSwap DAO now oversees:</p><ul><li><strong>V1 Farm Creation:</strong> Governing the creation of yield farms and adjusting SAUCE and HBAR emissions for existing farms.</li><li><strong>V2 Pool Creation:</strong> Managing V2 pool creation to prevent liquidity fragmentation and handle technical overhead. The DAO sets protocol fees and selects fee tiers.</li><li><strong>V2 LARI Campaigns:</strong> Approving and managing LARI campaigns, including setting campaign durations and token allocations.</li><li><strong>Tokenomics Changes:</strong> Approving significant changes to SAUCE tokenomics proposed by core maintainers.</li><li><strong>Treasury Management:</strong> Governing key treasury activities, including fee switches, HBAR staking rewards, protocol fees, and SAUCE buybacks. The DAO also manages liquidity, farming, and staking activities within SaucerSwap and other protocols.</li></ul><p>Furthermore, the DAO now controls several key accounts and contracts:</p><p><strong>V2 Incentives (Unallocated):</strong> Manages unallocated SAUCE incentives, directing them to the DAO treasury.</p><ul><li><strong>HBAR Staking Rewards:</strong> Adjusts allocations of staking rewards between Masterchef, the DAO treasury, and Brewsaucer.</li><li><strong>V1 and V2 Protocol Fees:</strong> Oversees the distribution of protocol fees for SAUCE buybacks, managing allocations to Mothership, SaucePaymentSplitter, and the DAO treasury.</li><li><strong>V2 Incentives (LARI):</strong> Curates and manages LARI campaigns, including project selection and reward allocation.</li><li><strong>V1 Incentives (Farm):</strong> Adjusts emission weights for V1 farm pools to ensure optimal distribution.</li></ul><p>This expansion of the DAO’s responsibilities ensures alignment between the diverse interests of SaucerSwap’s various community members — token holders, liquidity providers, traders, and others. By giving the community direct control over treasury management, SaucerSwap fosters a balanced and sustainable governance model that drives the protocol forward.</p><h2><strong>Introducing the SaucerSwap Interface Fee: A Step Towards Long-Term Sustainability</strong></h2><p>As SaucerSwap continues to evolve and grow within the DeFi ecosystem, we’re taking a significant step towards ensuring the long-term sustainability of our protocol. Today, we’re announcing the implementation of an interface fee, a strategic move that aligns with industry standards and positions SaucerSwap for continued success and development.</p><h3><strong>The Interface Fee: What You Need to Know</strong></h3><p>Starting on Monday, August 19th, 2024, SaucerSwap will introduce a 0.4% interface fee on certain swap routes. This fee will apply to both v1 and v2 of our protocol and will be implemented specifically for trades executed through the SaucerSwap front-end interface (i.e., <a href="https://saucerswap.finance" target="_blank" rel="noopener noreferrer">https://saucerswap.finance</a>).</p><p>It’s important to note:</p><ul><li>This fee is specific to the saucerswap.finance interface and does not apply to other platforms or aggregators that might interact with SaucerSwap’s smart contracts.</li><li>The fee will only be applied when swapping to the following output tokens: HBAR, HBARX, USDC, USDC[hts], USDT[hts], DAI[hts], WBTC[hts], WETH[hts]</li><li>The fee is calculated based on the output amount. Mechanistically, the router contract receives the full output amount, sends 0.4% (0.004 * amount) to the fee collector, and transfers the remaining 99.6% to the user.</li><li>All stablecoin-to-stablecoin swaps will remain exempt from this interface fee. For this purpose, stablecoins include USDC, USDC[hts], USDT[hts], and DAI[hts].</li><li>This fee is separate from the 0.3% swap fee for trades in SaucerSwap v1 (which applies to all pools) and from the variable fee tier in SaucerSwap v2. Those fees are imposed at the core contracts, while the interface fee is set in the router contract, which is a periphery contract.</li></ul><h3><strong>Driving Sustainability and Development</strong></h3><p>This interface fee represents a crucial step in SaucerSwap’s journey towards self-sufficiency. As we approach the end of SAUCE token vesting in a few years, when the maximum supply will equal the circulating supply, it’s essential that we establish sustainable funding mechanisms for ongoing operations and development.</p><p>The introduction of this fee will:</p><ol><li>Reduce reliance on the SAUCE token for funding development and operations</li><li>Create a direct link between protocol utilization and revenue generation</li><li>Ensure continued development and improvement of the SaucerSwap platform</li></ol><p>The revenue generated will go to SaucerSwap Labs to fund ongoing development and operations. Specifically, this revenue will sustain operations by paying for infrastructure costs, development, marketing, and other expenses incurred by SaucerSwap Labs in the maintenance and development of the SaucerSwap interface.</p><h3><strong>Balancing User Experience with Protocol Health</strong></h3><p>We understand that introducing a fee impacts our users, and this decision was not made lightly. To maintain transparency:</p><ul><li>This fee is specifically for using the SaucerSwap interface on saucerswap.finance.</li><li>It is separate from any existing swap fees or fees charged by other platforms (e.g., HashPack, ETASwap) that might interact with SaucerSwap’s liquidity.</li><li>Users interacting directly with SaucerSwap’s smart contracts through other means will not incur this specific interface fee.</li></ul><p>Because liquidity providers and users of the SaucerSwap protocol rely on a well-maintained interface and a strong development team scaling the protocol, this interface fee directly supports those goals which directly impact users. By ensuring the long-term sustainability of the platform, we can continue to provide a robust, reliable, and innovative DeFi experience for our community.</p><h3><strong>Industry Standard, Proven Success</strong></h3><p>The implementation of an interface fee is not unprecedented in the DeFi space. Uniswap, a leader in the industry, introduced a similar fee structure which has proven to be a successful model for sustainable protocol development.</p><p>Our goal has always been to create a self-sustaining, robust protocol that can thrive independently of token emissions. This interface fee on saucerswap.finance is a critical component in achieving that vision. The revenue generated will go to SaucerSwap Labs to fund ongoing development and operations, ensuring that we can continue to innovate and serve our community for years to come.</p><h2><strong>Looking Ahead</strong></h2><p>Looking ahead, several significant initiatives are set to shape the future of SaucerSwap. These include the continuation of LARI campaigns and THF ‘Spring Incentives’, phases II and III of single-sided staking, a front-end bridge integration, further UI/UX development, LARI 300, and the delegation of voting power to DAO participants. Many of these initiatives are nearing completion and have strategic overlaps.</p><p>For instance, the HBAR granted through the THF Spring Incentives campaign is being leveraged to incentivize bridged liquidity, thereby accelerating Hedera’s adoption within the broader crypto community. Delegative governance will allow proposals to be submitted anonymously, eliminating the proposer’s need to meet the 100k SAUCE threshold for account funding. It also empowers passive users by enabling them to delegate their voting power to a trusted representative.</p><p>Details on LARI 300 are forthcoming, but this initiative is expected to streamline the onboarding process for projects wishing to list on SaucerSwap’s primary front-end while also improving the user experience for traders and liquidity providers managing their assets within the web app. Lastly, phases II and III of single-sided staking will become a central focus once these other initiatives are completed. This extension of the current staking system will streamline the onboarding of new projects to the ecosystem, while giving xSAUCE and Planck Epoch Collectible (PEC) NFTs additional use cases. More details will be provided as this initiative progresses.</p><p>As SaucerSwap continues to evolve, these initiatives underscore the protocol’s commitment to innovation and community-driven growth. By integrating new features and expanding governance capabilities, SaucerSwap is well-positioned to remain at the forefront of decentralized finance, offering a robust and dynamic platform for all participants.</p><h2>Summary of Article</h2><p>These initiatives represent crucial steps in SaucerSwap’s evolution, solidifying our path toward a more sustainable and community-driven protocol. By expanding the DAO’s responsibilities and introducing the interface fee, we are taking practical measures to secure the protocol’s future. As we prepare for the developments ahead, our priority remains clear: to support our community and maintain SaucerSwap’s position as a robust and adaptable player in the DeFi ecosystem.</p>

As SaucerSwap solidifies its position as a leader in the decentralized finance space, our commitment to sustainable growth and community-driven governance remains unwavering.

A development update covering SaucerSwap’s Summer 2024 progress, including protocol upgrades, infrastructure work, and roadmap highlights.

SaucerSwap Summer 2024 | Development Report

<h2>Market Update</h2><p>Hedera has experienced explosive growth in the first month of 2023. Not only has there been an uptick in network tps due to Avery Dennison’s <a href="https://hedera.com/users/atma-io" target="_blank" rel="noopener noreferrer">atma.io</a> use case going live, but we have also seen respectable growth in DeFi metrics, such as TVL and volume. As of Jan 22nd, there is $133M in TVL on Hedera, which includes Stader liquid staking but excludes PoS staking. Of this total, SaucerSwap has a 23% dominance, with $30.6M TVL. This marks a +57.72% monthly growth and +30.09% weekly growth in TVL, attributed mainly to the market rebound. In terms of volume, SaucerSwap has facilitated 530k trades, which amount to nearly $100M. The protocol’s volume is up +81.54% this past week alone as traders capitalize on recent volatility and ample arbitrage opportunities. Finally, SaucerSwap has recently ascended into the top 50 largest dexes by TVL, according to <a href="https://defillama.com/protocols/Dexes" target="_blank" rel="noopener noreferrer">DefiLlama</a>.</p><p class="block-img"><img src="https://images.prismic.io/saucerswap/aUAJpXNYClf9oMSo_image-6-.png?auto=format,compress" /></p><p>SaucerSwap volume has ramped up in 2023. Source: DeFiLlama</p><p></p><h2>Roadmap Update</h2><p>The SaucerSwap team published a <a href="https://medium.com/@SaucerSwap/2022-retrospective-and-a-glance-ahead-f5436332927f" target="_blank" rel="noopener noreferrer">retrospective</a> at the end of 2022, reflecting on the milestones achieved post-August launch and what the community can look forward to in the New Year. In this article, several core goals were stated:</p><ul><li><em>Expand moat within Hedera and cross-chain</em></li><li><em>Further transparency and autonomy through a governance process</em></li><li><em>Adapt tokenomics to current DeFi narratives</em></li><li><em>Optimize capital efficiency and transition to real yield incentives</em></li><li><em>Rework UX to onboard new users</em></li><li><em>Provide more insight and functionalities to users</em></li><li><em>Maximize cross-chain market exposure</em></li></ul><p>This article highlights several ways these goals will be accomplished in Q1 this year and beyond.</p><p></p><h3>SaucerSwap v2</h3><p>In the last AMA, it was announced that the team is working on a concentrated liquidity market maker (CLMM) as a means to increase capital efficiency. This upgrade paves the way for more profitable and risk-capped liquidity provision, along with low-slippage trade execution, and will reduce the protocol’s reliance on inflation-driven yields. The SaucerSwap community can expect feature parity with leading dexes on more established chains. Regarding this upgraded protocol, our core contributors have swap, mint, and burn functions working on the Hedera testnet, and the pool contract is nearly complete. The team will continue to provide updates as progress is made.</p><p>SaucerSwap v2 is still a ways out; however, another major release is just around the corner. This will include: MetaMask integration, front-end bridge integration, user analytics, and a website redesign.</p><p></p><h3>MetaMask &amp; Bridge</h3><p>MetaMask and bridge integrations achieve a common goal: onboard new users. As it currently stands, cross-chain users must create a new wallet to participate in Hedera DeFi. The ability to switch networks within MetaMask removes this pain point. Friction is further reduced by the fact that MetaMask users can then bridge assets directly to Hedera within SaucerSwap’s web app.</p><p>A significant portion of the $60B+ in DeFi is interacted with via MetaMask wallets (with over 30M MAUs, comprising 80–90% of all web3 users). Therefore, there is enormous value in seamlessly onboarding these users into the Hedera ecosystem. Given SaucerSwap’s clear benefits (e.g., fast txs w/ finality, predictable fees, no frontrunning, attractive yields, Larry), it stands to reason that the protocol will experience an influx of new users and liquidity as a direct consequence of these new front-end features.</p><p></p><h3>Website Redesign</h3><p>One of SaucerSwap’s core philosophies is good UI/UX. As such, the MetaMask &amp; bridge integrations will coincide with a full reimagining of the <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">website</a>. This will include a top performers section on the landing page; real-time charts and statistics on the swap and liquidity pages; user-specific charts (e.g., account value), transactions, positions (e.g., tokens, pools, farms), and more on the portfolio page; various performance optimizations; and a revamped look. This breadth and granularity of data will streamline accounting and empower users who take trading and liquidity provision seriously.</p><p></p><h3>Insights &amp; Notifications</h3><p>In true SaucerSwap fashion, this user-tailored data will be taken a step further and introduce configurable insights and notifications. Here the power of Ledger Works’ <a href="https://www.lworks.io/product#Sentinel" target="_blank" rel="noopener noreferrer">Sentinel</a> will be harnessed, granting users the ability to subscribe to topics and allowing for the easy creation of notification streams. These notifications are customizable and can range from trading signals to security alerts, all in-app. These advanced features will be entirely optional, likely via a subscription-based model. Here, the subscription fee would be paid in SAUCE, which can then be redistributed to active participants of the protocol, thereby giving further utility to the token. Please note that insights and notifications are further down the pipeline and may not be included in the upcoming release.</p><p></p><h2>Conclusion</h2><p>As mentioned in our last update, this release will occur once Hedera’s <a href="https://docs.hedera.com/hedera/core-concepts/smart-contracts/json-rpc-relay" target="_blank" rel="noopener noreferrer">JSON-RPC relay</a> is production-ready, which is currently slated for Q1. In the meantime, we will continue to develop and test the features discussed in this article. Concurrently, our Solidity team is working on SaucerSwap v2 and will be joined by our full-stack team once the front-end features are in production.</p>

Hedera has experienced explosive growth in the first month of 2023.

January 2023 development update outlining product improvements, protocol changes, and ongoing initiatives across the SaucerSwap platform.

SaucerSwap Development Update | January 2023

<p>As we bid farewell to 2023, we reflect on a remarkable year for <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap</a> and the broader <a href="https://hedera.com/use-cases/defi" target="_blank" rel="noopener noreferrer">Hedera DeFi</a> ecosystem. The year, marked by groundbreaking developments, substantial community growth, and significant technological advancements, was pivotal. Here is a retrospective of our year and a preview of what lies ahead.</p><h2><strong>Key Developments and Achievements</strong></h2><p>Defining the year was the launch of <a href="https://docs.saucerswap.finance/protocol/saucerswap-v2" target="_blank" rel="noopener noreferrer">SaucerSwap V2</a>, a unique concentrated liquidity market maker that leverages the Hedera network’s unmatched advantages. Even before the <a href="https://medium.com/@SaucerSwap/saucerswap-v2-launch-details-f6d4244e27c7" target="_blank" rel="noopener noreferrer">November launch of V2</a>, SaucerSwap achieved remarkable growth and expanded into the broader DeFi ecosystem through various integrations, partnerships, and milestones.</p><p>The year commenced with an announcement in January of a partnership with <a href="https://www.lworks.io/" target="_blank" rel="noopener noreferrer">Ledger Works</a> Sentinel DNaaS, enabling a more robust event-listening architecture for improved scalability. In February, we smoothly transitioned away from the <a href="https://www.hbarfoundation.org/blog-post/the-hbar-foundation-announces-its-support-of-saucerswap-the-decentralized-exchange-built-on-hedera" target="_blank" rel="noopener noreferrer">HBAR Foundation grant</a> by <a href="https://medium.com/@SaucerSwap/extension-of-hbar-mining-incentives-on-saucerswap-7063d118ddc5" target="_blank" rel="noopener noreferrer">extending HBAR rewards</a> to yield farmers indefinitely via a novel yield-bearing WHBAR contract that takes advantage of Hedera’s Proof-of-Stake rewards. This pivotal moment for SaucerSwap served as a harbinger of further sustainability developments later in 2023. In the following months, SaucerSwap integrated with data aggregators and accessibility platforms such as, Mises dApp browser, <a href="https://www.geckoterminal.com/hedera-hashgraph/pools" target="_blank" rel="noopener noreferrer">GeckoTerminal</a>, <a href="https://dexscreener.com/hedera/saucerswap" target="_blank" rel="noopener noreferrer">DexScreener</a>, and <a href="https://coinmarketcap.com/exchanges/saucerswap-v1/" target="_blank" rel="noopener noreferrer">CoinMarketCap</a>. Our presence expanded further by attending the <a href="https://blockworks.co/event/permissionless-2023" target="_blank" rel="noopener noreferrer">Permissionless II web3 conference</a> in Austin, TX alongside Hedera.</p><p>Throughout 2023, SaucerSwap more than doubled its Total Value Locked (TVL) to $60 million, ascended from #45 to #29 in <a href="https://defillama.com/protocols/Dexes" target="_blank" rel="noopener noreferrer">Top DEX rank on DeFiLlama</a>, and increased its daily average volume by over 300% to $3 million. With the integration of MetaMask and enhanced capital efficiency through SaucerSwap V2, we observed an increase in website traffic exceeding 250%. Additionally, with the publication of extensive <a href="https://docs.saucerswap.finance/developer/developer-resources" target="_blank" rel="noopener noreferrer">developer documentation</a>, we anticipate more dApps will be developed on SaucerSwap V1 &amp; V2 in the near future, as evidenced by the heightened activity in our developer forums.</p><p>As we approach 2 million total trades, SaucerSwap has facilitated interaction for users of all types with Hedera DeFi in a permissionless and non-custodial environment. With an average transaction speed of 5 seconds and a cost of less than $0.10 (<a href="https://hedera.com/fees" target="_blank" rel="noopener noreferrer">fixed in USD, regardless of network traffic</a>), SaucerSwap has realized its vision of decentralized access to a fair, accessible, and efficient trading protocol on Hedera, the most performant network in web3.</p><p>In 2023, SaucerSwap’s social network presence saw significant growth, evidenced by a <a href="https://twitter.com/SaucerSwapLabs" target="_blank" rel="noopener noreferrer">500% increase in Twitter followers</a> and a 250% rise in impressions. Furthermore, the SaucerSwap Labs team conducted 16 AMAs throughout the year, maintaining an active dialogue with the community.</p><p>Most importantly, SaucerSwap attained a crucial 2023 goal: reducing reliance on token emissions and transitioning to real-yield incentives. Following the successful implementation of <a href="https://medium.com/@SaucerSwap/saucerswap-v2-tokenomics-proposal-b355182545a6" target="_blank" rel="noopener noreferrer">SaucerSwap Tokenomics V2</a>, SAUCE token emissions were reduced by 60%, along with an 80% reduction in V1 yield farms. Despite this substantial reduction in the inflation rate of newly-minted SAUCE, APRs remain competitive, driven by increased trading volume and consequently higher fees for liquidity providers, as well as the development of the <a href="https://docs.saucerswap.finance/protocol/saucerswap-v2#liquidity-aligned-reward-initiative-lari" target="_blank" rel="noopener noreferrer">Liquidity-Aligned Reward Initiative (LARI)</a>. This shift towards a more sustainable model marks a remarkable achievement for SaucerSwap and a significant victory for Hedera DeFi.</p><p>Presented below is a detailed list of key events, milestones, and developments for SaucerSwap in 2023:</p><ul><li>January 4: Announced partnership with Ledger Works Sentinel DNaaS for scalability.</li><li>January 12: Achieved 500,000 all-time trades.</li><li>January 14: Held SaucerSwap AMA; released Discord price bots for default listed tokens.</li><li><strong>January 17: Reached $25M in Total Value Locked (TVL).</strong></li><li>January 20: TVL reached $30M.</li><li>January 28: SaucerSwap AMA.</li><li>January 29: Published Japanese documentation.</li><li>February 3: Published Turkish documentation.</li><li>February 4: Achieved $100M in total trade volume.</li><li><strong>February 11: SaucerSwap AMA; announced post-grant extension of HBAR mining incentives via staking in WHBAR contract.</strong></li><li>February 26: Integrated into Mises dApp browser.</li><li>March 1: Open-sourced LP token timelock smart contracts.</li><li><strong>March 7: Released an overhauled web-app.</strong></li><li>March 11: SaucerSwap AMA.</li><li>March 13: Upgraded HTS charts for price, liquidity, and volume in terms of HBAR.</li><li>March 25: SaucerSwap x Citadel Wallet AMA.</li><li>March 26: Announced partnership with Citadel Wallet.</li><li>March 30: Launched SAUCE buyback Discord price bot.</li><li>April 9: Achieved $150M in total trade volume.</li><li>April 22: SaucerSwap AMA.</li><li><strong>April 28: Achieved 1M all-time trades; integrated as an exchange on CoinMarketCap.</strong></li><li>May 6: SaucerSwap AMA.</li><li>May 11: Updated SaucerSwap Token Listings methodology and documentation.</li><li><strong>May 17: Announced upcoming SAUCE Pro feature.</strong></li><li>May 20: SaucerSwap AMA.</li><li>June 3: SaucerSwap AMA; collaborated with CoinMarketCap to create a ‘Hedera ecosystem’ category.</li><li>July 1: Announced plans to navigate HSCS security update via token allowances.</li><li>July 10: Published tutorial video for navigating HSCS security update.</li><li>July 12: SaucerSwap V2 passed all unit tests.</li><li><strong>July 15: SaucerSwap AMA; published ‘SaucerSwap Tokenomics Model V2’ proposal.</strong></li><li>July 29: SaucerSwap AMA.</li><li>August 5: Celebrated SaucerSwap’s one-year anniversary.</li><li><strong>August 9: ‘SaucerSwap Tokenomics Model V2’ officially confirmed by SaucerSwap DAO.</strong></li><li>August 12: SaucerSwap AMA.</li><li>August 16: Published job opening for front-end software engineer.</li><li>August 18: Achieved $200M in total trade volume.</li><li>August 26: SaucerSwap AMA.</li><li>September 9: SaucerSwap AMA.</li><li><strong>September 11: Attended Permissionless II with Hedera.</strong></li><li>September 17: Featured on the main stage at Karate Combat KC41.</li><li>September 26: Announced LARI (Liquidity-Aligned Reward Initiative).</li><li>September 28: Achieved 200M HBAR balance in WHBAR contract.</li><li>September 29: Published SaucerSwap V2 audit results.</li><li><strong>October 1: Integrated into GeckoTerminal.</strong></li><li>October 2: Achieved 500 unique liquidity pools.</li><li>October 4: Unveiled SaucerSwap V2 UI.</li><li>October 13: Announced SaucerSwap V2 volatility strategies.</li><li>October 14: SaucerSwap AMA; announced SaucerSwap V2 testnet public beta and bug bounty.</li><li><strong>October 19: Published overhauled ‘<a href="https://docs.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap Docs V2.0’.</a></strong></li><li>October 25: Published “SaucerSwap V2: Create Position” and “SaucerSwap V2: Manage Position” video tutorials; released SaucerSwap V2 Core Whitepaper.</li><li>October 28: Launched SaucerSwap V2 Testnet Beta.</li><li>October 30: Published written tutorials for SaucerSwap V1 &amp; V2 in official documentation.</li><li>November 1: Announced SaucerSwap DAO legal wrapper established in the state of Florida.</li><li>November 4: Concluded SaucerSwap V2 Testnet Beta.</li><li>November 6: Published “SaucerSwap V2: Depth Chart” video tutorial; distributed rewards for SaucerSwap V2 Testnet Bug Bounty program.</li><li>November 8: Secured #35 Top DEX spot on DeFiLlama.</li><li>November 11: SaucerSwap AMA; announced SaucerSwap V2 launch date.</li><li>November 15: Announced MetaMask integration into SaucerSwap web-app.</li><li>November 16: Published “SaucerSwap V2: MetaMask” video tutorial.</li><li><strong>November 17: Published “SaucerSwap V2: Migrate Liquidity” video tutorial; published “SaucerSwap V2 Launch: What to Expect” article; launched SaucerSwap V2; commenced LARI Epoch 1; initiated Phase I of SaucerSwap Tokenomics V2.</strong></li><li>November 18: Achieved $5M TVL in SaucerSwap V2.</li><li>November 19: Achieved $10M TVL in SaucerSwap V2.</li><li>November 20: Published extensive Developer Documentation for V1 &amp; V2.</li><li>November 29: Integrated into DexScreener and KarateCombat iOS &amp; Android apps.</li><li>December 1: Commenced LARI Epoch 2.</li><li>December 3: Created CLXY-HBAR V2 pool.</li><li>December 5: Achieved $40M TVL.</li><li><strong>December 8: SaucerSwap V2 integrated into CoinGecko and GeckoTerminal; initiated Phase II of SaucerSwap Tokenomics V2.</strong></li><li>December 15: Commenced LARI Epoch 3; announced partnership with The Creator’s Galaxy for LARI rewards in CLXY token.</li><li>December 16: Announced weekly trading volume all-time high.</li><li><strong>December 21: Achieved $50M TVL.</strong></li><li>December 23: Created SaucerSwapEs X account for Spanish users.</li><li><strong>December 24: Secured #29 Top DEX spot on DeFiLlama.</strong></li><li>December 27: Announced SAUCE buyback record.</li><li>December 29: Initiated LARI Epoch 4; announced expansion of CLXY rewards to multiple pools; commenced Phase III (final) of SaucerSwap Tokenomics V2.</li><li><strong>December 30: Achieved all-time high in weekly trade volume.</strong></li></ul><h2><strong>2024 Prospective</strong></h2><p>Looking forward to 2024, SaucerSwap Labs is thrilled to continue developing the SaucerSwap protocol. Although not comprehensive, here are some select highlights from our 2024 roadmap:</p><p><strong>In Development (</strong>projects actively being developed):</p><ul><li><a href="https://medium.com/@SaucerSwap/introduction-to-sauce-pro-enhancing-the-saucerswap-experience-96a4fbb68650" target="_blank" rel="noopener noreferrer">SAUCE Pro</a></li><li>Active Liquidity Management Protocol Integration</li><li>Upgraded Buyback Program</li><li>Initiate more Custom-Tailored LARI Campaigns</li><li>Improved LARI Analytics</li><li>Ongoing Web-App Optimizations</li></ul><p><strong>Planned for Development</strong> (projects that are on the near-term roadmap):</p><ul><li>Token-Weighted Voting System</li><li>Auto Router</li></ul><p><strong>Prioritized for Development</strong> (projects that are prioritized but not yet planned for development):</p><ul><li><a href="https://docs.saucerswap.finance/protocol/community-pools" target="_blank" rel="noopener noreferrer">Community Pools</a></li><li>On-Chain Limit Orders</li><li>Front-End Bridge Integration</li><li>Fiat Onramp Integration</li><li><a href="https://hips.hedera.com/hip/hip-551" target="_blank" rel="noopener noreferrer">Batch Transactions (HIP-551)</a></li><li>Hedera <a href="https://walletconnect.com/" target="_blank" rel="noopener noreferrer">WalletConnect</a> Integration</li></ul><p>Generally speaking, our overarching goals for 2024 are to expand and improve accessibility, increase reach and presence within the larger web3 ecosystem, and leverage the unique benefits of the Hedera network to develop technologically superior and user-friendly solutions to push forward the realm of decentralized finance.</p><h2><strong>Conclusion</strong></h2><p>The extraordinary growth in 2023 has set a new benchmark for SaucerSwap’s potential. We extend our profound gratitude to our community, partners, and team members, whose contributions have been pivotal in this success. As we enter 2024, we are enthusiastic about further innovating and expanding Hedera DeFi together.</p><p>Wishing a Happy New Year and a fruitful 2024!</p>

As we bid farewell to 2023, we reflect on a remarkable year for SaucerSwap and the broader Hedera DeFi ecosystem.

A year-in-review summary highlighting SaucerSwap’s 2023 growth, protocol innovation, ecosystem expansion, and key performance milestones.

SaucerSwap 2023: A Year of Unprecedented

<h2>Introduction</h2><p>As we enter 2025, the decentralized finance (DeFi) landscape continues to evolve at a rapid pace. <a href="https://www.saucerswap.finance/" target="_blank" rel="noopener noreferrer">SaucerSwap</a>, <a href="https://hedera.com/" target="_blank" rel="noopener noreferrer">Hedera’s</a> leading decentralized exchange, has shaped the network’s DeFi ecosystem from the start. Today, we’re thrilled to share our roadmap — one that builds on our proven foundations while charting an ambitious course for the future.</p><h2>Where We Stand</h2><p>Since launching in 2022, SaucerSwap has evolved from a nascent AMM into a cornerstone of Hedera’s DeFi infrastructure. We now command the majority market share among <a href="https://defillama.com/chain/Hedera" target="_blank" rel="noopener noreferrer">Hedera DeFi protocols</a>, boasting approximately $130 million in Total Value Locked (TVL), over 165 million <a href="https://coinmarketcap.com/currencies/hedera/" target="_blank" rel="noopener noreferrer">HBAR</a> secured in our <a href="https://hashscan.io/mainnet/contract/0.0.1456985" target="_blank" rel="noopener noreferrer">wrapped HBAR contract</a>, and more than $2.4 billion in cumulative trading volume across seven million swap events.</p><p>Our late-2023 launch of SaucerSwap V2 introduced concentrated liquidity, setting new standards for capital efficiency on Hedera. Meanwhile, the Liquidity-Aligned Reward Initiative (LARI) has optimized incentive structures for liquidity providers, building a more sustainable and efficient model for market-protocol alignment.</p><h2>Vision &amp; Strategic Direction</h2><p>Our mission is simple: build the most efficient, accessible, and secure decentralized exchange — on Hedera and beyond. As we look to 2025 and beyond, our roadmap centers on four core pillars:</p><h3>1. Protocol Improvement &amp; Innovation</h3><p>We remain committed to expanding DeFi’s possibilities. Our immediate priority is optimizing existing systems to ensure fair rewards, robust core functionality, and a seamless user experience. We will also explore transformative features such as permissionless V2 pool creation, on-chain limit orders, and, eventually, perpetual futures trading.</p><h3>2. User Experience &amp; Accessibility</h3><p>DeFi’s future relies on making complex tools universally accessible. Our roadmap emphasizes near-term improvements — faster charting, enhanced mobile responsiveness, and more intuitive transaction flows. We are also building comprehensive solutions like a dedicated mobile app and multi-currency support to serve our expanding global community.</p><h3>3. Infrastructure &amp; Security</h3><p>As our protocol scales, our commitment to robust infrastructure deepens. We are improving app performance via global backup locations (Multi-AZ), expanding our data analytics capabilities (via a subgraph), and fortifying our security framework through integrations with leading providers like <a href="https://www.chainalysis.com/" target="_blank" rel="noopener noreferrer">Chainalysis</a>.</p><h3>4. Ecosystem Growth</h3><p>We aim to support the ecosystem in every possible way. By integrating bridge protocols like <a href="https://www.axelar.network/" target="_blank" rel="noopener noreferrer">Axelar</a> and <a href="https://layerzero.network/" target="_blank" rel="noopener noreferrer">LayerZero</a>, we will attract more cross-chain liquidity and a broader user base. Enhanced token classification systems and a frictionless listing process will further empower token creators seeking to leverage SaucerSwap. Our goal is a more interconnected, efficient, and accessible DeFi ecosystem on Hedera.</p><h2>Our Roadmap</h2><p>Informed by these four key pillars, we have put together a roadmap that incorporates new ideas and highly-requested items from the community.</p><p>This roadmap outlines our development priorities across three timeframes:</p><h2><strong>Immediate Term</strong></h2><ul><li><a href="https://docs.saucerswap.finance/protocol/saucerswap-v2#liquidity-aligned-reward-initiative-lari" target="_blank" rel="noopener noreferrer">LARI</a> system refinement and automation</li><li><em>— Streamlined campaign initiation and reward distribution</em></li><li><em>— Data-driven reward weight optimization</em></li><li><em>— Improved epoch analytics for liquidity providers</em></li></ul><h3><strong>User Interface &amp; Experience</strong></h3><ul><li>Global search functionality</li><li>Comprehensive website redesign</li><li>Swap widget implementation</li><li>Transaction flow optimization</li><li>Enhanced token menu with balance sorting</li><li>Advanced charting integration</li><li><em>— Higher-fidelity data for top-traded pairs</em></li><li><em>— Technical indicators</em></li><li><em>— Improved price feeds</em></li><li>Mobile responsiveness improvements</li><li>Expanded token information on swap pages</li><li><em>— Market data integration</em></li><li><em>— Analytics overlays</em></li><li><em>— Key performance metrics</em></li></ul><h3><strong>Infrastructure &amp; Security</strong></h3><ul><li>Resilient, faster app performance via global backup locations (Multi-AZ)</li><li>Launch of SaucerSwap subgraph, <em>integrating with <a href="https://dune.com/discover/content/trending" target="_blank" rel="noopener noreferrer">Dune Analytics</a> and other key protocols</em></li><li>SAUCE 300 implementation</li><li><em>— Pool ranking system</em></li><li><em>— Improved token classification system</em></li><li>Basic user support system automation</li><li>Transaction reliability improvements</li></ul><h3><strong>Ecosystem Development</strong></h3><ul><li><a href="https://www.squidrouter.com/" target="_blank" rel="noopener noreferrer">Axelar bridge</a> integration <em>to enable cross-chain liquidity</em></li><li>Strategic protocol partnerships</li><li>Token classification system enhancements</li></ul><h2><strong>Near Term</strong></h2><h3><strong>Protocol Features</strong></h3><ul><li>Auto-slippage implementation</li><li>Permissionless V2 pool creation</li><li>On-chain limit orders</li><li>Automated Dollar-Cost Averaging (DCA) functionality</li><li>Community Pools</li><li>V2 compound and rebalance features</li><li>Comprehensive pool performance dashboard</li><li><em>— Position analytics</em></li><li><em>— Earnings tracking</em></li><li><em>— Historical performance metrics</em></li></ul><h3><strong>User Experience</strong></h3><ul><li>Local timezone integration</li><li>Push notification system</li><li>Dedicated faucet interface</li><li>iOS and Android mobile applications</li><li>Pool performance analytics dashboard</li></ul><h3><strong>Infrastructure</strong></h3><ul><li>Chainalysis and <a href="https://www.chainabuse.com/" target="_blank" rel="noopener noreferrer">Chainabuse</a> integration</li><li>Developer documentation overhaul</li><li>LLM-powered semantic search</li><li>LayerZero integration</li></ul><h3><strong>Market Expansion</strong></h3><ul><li>Community Pools launch</li><li>SAUCELING NFT launch</li><li>Localization for key markets</li><li><em>— Spanish-speaking regions</em></li><li><em>— Southeast Asia</em></li><li><em>— Other high-growth areas</em></li></ul><h2><strong>Future Development</strong></h2><h3><strong>Protocol Innovation</strong></h3><ul><li>SaucerSwap V3 development</li><li>Perpetual futures platform</li><li>HTS ↔ ERC-20 compatibility layer</li><li>Hedera “ETF” contracts</li></ul><h3><strong>Infrastructure</strong></h3><ul><li>Decentralized website mirrors</li><li>Universal analytics dashboard</li><li>Advanced trading tools</li><li>Cross-chain security framework</li></ul><h3><strong>Ecosystem Growth</strong></h3><ul><li>DAO-as-a-service infrastructure</li><li>Sub-DAO framework</li><li>Institutional partnerships program</li><li>Cross-chain liquidity networks</li></ul><h2><strong>Technical Implementation Notes</strong></h2><p>This roadmap’s execution considers several key technical factors:</p><h3><strong>Smart Contract Development</strong></h3><p>Near-term protocol features requiring contract development (auto-router, community pools, and limit orders) are sequenced to ensure thorough testing and auditing.</p><h3><strong>Infrastructure Scaling</strong></h3><p>Multi-AZ deployment and enhanced monitoring systems remain top priorities to support rising transaction volume and global user adoption.</p><h3><strong>Data Architecture</strong></h3><p>Subgraph implementation will improve analytics, data retrieval, and third-party integrations.</p><h3><strong>Security Considerations</strong></h3><p>Each phase includes matching security upgrades — from standard transaction monitoring to advanced cross-chain security frameworks.</p><h2><strong>New Vision for Community Pools</strong></h2><h3><strong>Background</strong></h3><p>Since our initial protocol launch in 2022, community pools have been a highly anticipated feature among SaucerSwap users. In Phase 1, we introduced SAUCE staking (to mint xSAUCE), enabling participants to earn passive APR on their SAUCE tokens.</p><p>However, Phase 2 — staking xSAUCE to earn external project tokens — was delayed as our attention turned to foundational improvements like SaucerSwap V2. Additionally, the slow pace of new token projects launching on Hedera in 2023 and early 2024 meant fewer opportunities to partner on meaningful community pool campaigns.</p><h3><strong>The Turning Point</strong></h3><p>Recently, we’ve witnessed a surge of new projects on Hedera. HeadStarter has been steadily onboarding promising ventures, and <a href="https://memejob.fun/" target="_blank" rel="noopener noreferrer"><strong>memejob.fun</strong></a> (analogous to pump.fun) has shown creativity in incubating community-driven tokens. With more projects seeking fast and efficient token distribution, the time is right for community pools to thrive.</p><h3><strong>Embracing Decentralization</strong></h3><p>Our new vision for community pools puts decentralization at the core. Rather than limiting these pools to a single launchpad or specific partnership model, we will enable multiple pathways for projects to create their own pools on SaucerSwap. Whether a token graduates from <a href="https://memejob.fun/" target="_blank" rel="noopener noreferrer"><strong>memejob.fun</strong></a>, is incubated by <a href="https://headstarter.org/" target="_blank" rel="noopener noreferrer"><strong>HeadStarter</strong></a>, or emerges from another community launchpad, the process should be accessible, fair, and transparent. This approach empowers teams of all sizes — from indie devs to larger DAOs — to leverage SaucerSwap for token distribution and liquidity growth.</p><h3><strong>How It Works</strong></h3><p><strong>1 . Stake xSAUCE</strong> in community pools to earn new project tokens.</p><ul><li>Projects looking to distribute tokens can use this mechanism to engage xSAUCE holders directly.</li></ul><p><strong>2 . Boosted Rewards with SAUCELING NFTs</strong> (Phase 3).</p><ul><li>Future community pools will offer reward multipliers for those who hold and stake <strong>SAUCELING NFTs</strong>.</li><li>SAUCELING NFTs themselves will be obtainable by exchanging legacy <strong>Planck Epoch NFTs</strong>, bridging our earliest supporters into this new rewards ecosystem.</li></ul><h3><strong>Why Community Pools Matter</strong></h3><ul><li><strong>Faster, More Efficient Token Distribution</strong>: Projects can tap into an established user base by incentivizing xSAUCE stakers with their tokens.</li><li><strong>Community-Driven Liquidity Growth</strong>: By distributing tokens directly to engaged users, new projects can bootstrap liquidity more effectively on SaucerSwap.</li><li><strong>Inclusivity and Innovation</strong>: Any project, regardless of its origin or size, can build community pools. This opens the door to a richer, more diverse Hedera ecosystem.</li></ul><h3><strong>Next Steps</strong></h3><p>We recognize the community’s enthusiasm for this feature and regret the delays. SaucerSwap V2 needed our full attention to bring concentrated liquidity and improved capital efficiency to the ecosystem. But now that the DeFi landscape on Hedera is rapidly expanding, community pools are back in focus. We’re working on a decentralized framework to ensure minimal friction for projects that want to launch pools and maximum choice for xSAUCE stakers looking to diversify their rewards.</p><p>Stay tuned for further updates on Phase 2, where xSAUCE holders will be able to stake in community pools for project tokens — and Phase 3, where staking SAUCELING NFTs for boosted rewards will bring additional depth and opportunity to our rewards ecosystem.</p><p>Together, we’ll usher in a new era of community-driven DeFi on Hedera, where projects of all shapes and sizes can thrive on SaucerSwap.</p><h2><strong>Conclusion</strong></h2><p>This roadmap represents a technically grounded strategy for scaling SaucerSwap’s infrastructure, improving capital efficiency, and expanding cross-chain functionality. As the DeFi market evolves, we will refine timelines and specifics based on technological breakthroughs, market conditions, and community feedback.</p><p>We remain steadfast in our commitment to delivering an accessible, secure, and innovative DeFi experience — pioneering the next chapter of decentralized finance on Hedera and beyond.</p><p><em>For discussion, join us on:</em></p><ul><li><strong>Discord</strong>: <a href="https://discord.gg/saucerswap" target="_blank" rel="noopener noreferrer">https://discord.gg/saucerswap</a></li><li><strong>Twitter</strong>: <a href="https://twitter.com/SaucerSwapLabs" target="_blank" rel="noopener noreferrer">https://twitter.com/SaucerSwapLabs</a></li><li><strong>Governance Forum</strong>: <a href="https://gov.saucerswap.finance/" target="_blank" rel="noopener noreferrer">https://gov.saucerswap.finance/</a></li></ul>

As we enter 2025, the decentralized finance (DeFi) landscape continues to evolve at a rapid pace. 

A forward-looking view of SaucerSwap’s long-term vision, covering product direction, protocol strategy, and priorities beyond 2025.

SaucerSwap | 2025 & Beyond

Insights, updates, news, guides, and how-tos on SaucerSwap covering product, protocol, Hedera ecosystem, and DeFi research from the leading Hedera DEX.

Welcome

to the

SaucerSwap Blog

Featured

Introducing SaucerSwap Widget

Introducing the New SaucerSwap

Hashport is sunsetting May 31: what SaucerSwap users need to know

Introducing SaucerSwap V3

SaucerSwap Labs Launches a Dedicated Bridge, Powered by Squid and Axelar

SaucerSwap V3 on Historical Flow: Lower Slippage, Stronger Execution

Our Topics:

SaucerSwap x The HBAR Foundation | 2024 Spring Incentives Campaign

SaucerSwap V3 on Historical Flow: Lower Slippage, Stronger Execution

Welcome to the SaucerSwap Blog

Featured

Introducing SaucerSwap Widget

Introducing the New SaucerSwap

Hashport is sunsetting May 31: what SaucerSwap users need to know

Introducing SaucerSwap V3

SaucerSwap Labs Launches a Dedicated Bridge, Powered by Squid and Axelar

SaucerSwap V3 on Historical Flow: Lower Slippage, Stronger Execution

Our Topics:

SaucerSwap x The HBAR Foundation | 2024 Spring Incentives Campaign

SaucerSwap V3 on Historical Flow: Lower Slippage, Stronger Execution

Welcome

to the

SaucerSwap Blog