Cardano has seen tremendous hype throughout the year 2021. That success has stalled lately when it became clear that Cardano is going to have smart contracts, but that doesn’t imply that decentralized apps are going to start anytime soon. But that has changed recently because SundaeSwap has started its testnet just yesterday.
What is SundaeSwap and why could this particular protocol play an important role in Cardano’s ecosystem in the future?
SundaeSwap is a DEX
SundaeSwap is a decentralized exchange or DEX. It will offer its users the option to trade assets on the Cardano blockchain. In order to provide liquidity SundaeSwap will use similar mechanisms like Uniswap and other DEX protocols allowing participants to provide liquidity in specific tokens in return for a share of the fees that are collected.
The testnet was started yesterday which means that users who are interested in participating have to join a faucet in order to receive testnet tokens. One of the advantages of testing things thoroughly is finding errors that could result in exploits before investors start to put real money into the protocol.
There has been no announcement so far for how long the test will be going to continue but what’s exciting about it is that IOHK, the company behind Cardano’s development announced that it will support the team of SundaeSwap during the testing.
A decentralized ecosystem attracts money
While Cardano aims to serve different use cases other than decentralized finance entering this sector is still crucial for the project. The main reason is the market share that smart contract platforms are usually trying to claim for themselves.
The top DeFi ecosystem is Ethereum, followed by Binance Smart Chain and the third is Terra closely followed by Solana. By increasing the total value locked on a chain it automatically gets a more important and stable position in the market. It can also be observed that with increasing market share the demand for the native token is also increasing since it is needed to transact on blockchain and becomes a part of the portfolio of more market participants.
Cardano is still lagging behind the aforementioned platforms and it remains to be seen when it is going to start an ecosystem that can match or maybe even outpace its competitors. With SundaeSwap making its first steps and testing the protocol thoroughly Cardano is getting closer to entering the competition.