Saddle Finance's Curve Copycat Launch Costs Early LPs a Quarter-Million Dollars

Saddle Finance entered the market as a near-replica of Curve Finance's stablecoin-swap design, having secured $4.2 million in funding before it ever shipped a feature the original protocol lacked. The launch quickly became a case study in what can go wrong when a heavily backed clone reaches production without matching the technical rigor of what it copied.

Within hours of going live on January 19, 2021, arbitrageurs picked apart the new pools, extracting value in a way that contradicted Saddle's own pitch of "fixing the problem of slippage in DeFi." Three large trades alone pulled more than 7.9 BTC (about $275,735) from early liquidity providers in a span of six minutes:

• 4.01 BTC (~$139,961) — 04:06:54 PM UTC (transaction)
• 0.79 BTC (~$27,573) — 04:08:46 PM UTC (transaction)
• 3.11 BTC (~$108,548) — 04:12:37 PM UTC (transaction)

Anyone who supplied liquidity in that opening window ended up unable to withdraw the full value of their deposit, left dependent on whatever incentive rewards the protocol would later distribute.

The Saddle team subsequently issued a statement acknowledging that some of the early transactions were executed with high slippage and that affected users may not have heeded the warnings shown to them, adding that the front end had been updated to display more explicit slippage alerts going forward. Researcher Igor Igamberdiev had already been advising the community to withdraw from the pools, while co-founder Matt Luongo offered little in the way of sympathy for users hurt by a protocol his team had spent roughly six months building by porting Curve's Vyper code into Solidity.

An audit commissioned from Quantstamp ahead of launch had turned up 14 issues across all severity levels, and the auditors noted they were unable to fully reconcile some of Saddle's implemented formulas with the original StableSwap whitepaper due to insufficient documentation — a red flag that went largely unheeded.

Developers close to Curve were quick to point out how much of the original codebase had carried over. Curve's Ben Hauser noted that Saddle's contracts still contained comments referencing Curve's own code, including an instruction to check the curve.fi implementation, while seemingly missing the reasoning behind Curve's gas optimizations. Developer Valentin Mihov argued that rewriting rather than forking a protocol creates a long-term maintenance burden, since future Curve upgrades can't simply be merged in — unlike straightforward forks such as Sushi or DSD. A Telegram community administrator known as Ivangbi summarized the criticism with an analogy: translating someone else's book, adding two pictures, and calling it original work.

Saddle's founders are also connected to Thesis, the team behind tBTC, and in the wake of the exploit, veCRV holders voted to cut CRV emissions to the tBTC pool. Several media outlets that had accepted paid promotional placements from Saddle prior to launch faced criticism from the community for lending credibility to the project without scrutinizing its technical claims.

Whether by accident or as an acceptable cost of a marketing push that generated attention regardless of outcome, it was retail liquidity providers — not the well-funded venture backers behind the project — who absorbed the financial damage. Saddle Finance did not go on to displace Curve, but the episode renewed debate over the wisdom of funding close copies of existing DeFi infrastructure rather than genuinely new technology.