What is MuesliSwap?
MuesliSwap is the first DEX on Cardano. Its story began in 2021 when Cardano launched its awaited smart contracts. It was a moment of joy and celebration among ADA token holders. Everyone was eager to put their ADA to work via Cardano’s DeFi ecosystem. And MuesliSwap was the starting place.
Things were looking nice and dandy at first. ADA skyrocketed to an ATH of $3 and users were certain that Cardano DeFi would take over Ethereum and Solana. MuesliSwap had assured its users one day before the launch that everything was in place for a smooth opening ceremony. But then, the unexpected occurred.
Before we explain what happened, it’s important to mention that Cardano heavily relies on a peer review approach. Every idea is reviewed by academicians and experts before it receives the green light for implementation — it’s the opposite of “move fast and break things” mindset. This means until the smart contracts launch, projects on Cardano haven’t had any chance to test their product in the open. What comes next will amaze you…
On the day of the mainnet, users had problems with swaps on the MuesliSwap platform. The swaps would not go through, even though the interface appeared to work fine. The team explained in a Twitter thread that it was a concurrency issue, which has to do with the design flaw existing in Cardano.
Cardano is a mix between Bitcoin’s eUTXO model and Ethereum’s smart contracts. While users of account-based blockchains like Ethereum control an account whose value can be increased or decreased, users of the Cardano blockchain just control a bunch of UTXOs, all containing a certain value. In the same way as a banknote can be spent, these UTXOs can be spent only as a whole. So, a crypto wallet holding a UTXO worth 1000 ADA wanting to pay 20 ADA to a seller, has to put the whole amount into the transaction. The transaction will then have two outputs: a UTXO worth 20 ADA for the seller and a UTXO worth 1800 ADA (minus the transaction fee) going back to the buyer.
The fact that a UTXO can only be spent once brings us back to the core of the “concurrency issue”: what if two users simultaneously want to include the exchange rate contained in the UTXO in their transactions? Only one of them will get the desired input while the other user will have to try building the transaction again one block later.
While this is far from a hack, MuesliSwap is confronted with a heavy challenge. Before you ditch the project altogether, it’s important to mention that MuesliSwap and Cardano are already working on several solutions. One of them is the L2 scaling solution called Hydra. Another technique will be to ditch the liquidity pool model and go for the traditional order book model.
How does MuesliSwap work?
MuesliSwap uses a hybrid trading model with an on-chain order book connected to liquidity pools. The on-chain order book helps users place limit orders similar to CEXs. Meanwhile, the liquidity pools provide liquidity for trading and enable users to trade at any time, even if there are no matching orders in the order book.
In order to match buying and selling orders, MuesliSwap relies on matchmakers who constantly scan the order book, fulfil the order, and send the assets to the respective parties. For this, the matchmaker obtains a small fee.
When a user places a limit order on MuesliSwap, the order is added to the on-chain order book. If there are matching orders, the trade is executed directly between the buyers and sellers. If there are no matching orders, the trade is executed against the liquidity pool.
The orders are locked in a smart contract in the form of a UTXO and can be unlocked by matchmakers only for a trade that satisfies the trader’s demanded limit price. An order may be partially filled, resulting in a new order that buys or sells the remaining token amount. A pending order may be canceled at any time by its creator, unless it has been completely filled already. If it has been partially filled, a cancel retrieves the remaining order and the part of the order that has been filled already.
MuesliSwap also has a native token, called MILK. The token comes with governance rights over the platform, and it can also be used to pay discounted trading fees. MILK tokens are used to incentivize users to provide liquidity to the MuesliSwap platform. Users who provide liquidity to the platform’s liquidity pools receive MILK tokens as a reward for their contribution.
Milkomeda DEX
Milkomeda is the extension of the MuesliSwap DEX that is operating on the Milkomeda sidechain. Milkomeda is a protocol that equips Cardano with the power of the Ethereum Virtual Machine (EVM). Similar to a portal between two galaxies like the Milky Way and Andromeda, it connects the Cardano blockchain with Ethereum, allowing you to enjoy the best features of both blockchains.
Since Milkomeda is EVM-compatible, users can benefit from easy access to existing smart contracts and DeFi services built on the Ethereum ecosystem. These complement well with Cardano and make it possible to bring the most popular tokens much earlier than anticipated to MuesliSwap users. Thanks to the Ethereum bridge MuesliSwap on Milkomeda will be able to offer trading in Wrapped Ether, USDT, USDC and many other assets
How to make money on MuesliSwap?
Currently, the only way to make money on MuesliSwap is by making swaps and staking. As the protocol evolves, more features will be added.
MuesliSwap Swaps
On MuesliSwaps you have two types of swaps: instant swaps and limit swaps. Because the fees on Cardano are low, users can take advantage of arbitrage opportunities and swap tokens for a profit.
For example, suppose the current market price of Token X is 100 ADA per Token X, and you want to buy Token X for 900 ADA. You can place a buy limit order at 900 ADA, and if a sell order at 900 ADA or lower is placed by another user, your order will be filled, and you will get Token X at a lower price than the current market price. Similarly, if you want to sell Token X for 1100 ADA, you can place a sell limit order at 1100 ADA, and if a buy order at 1100 ADA or higher is placed by another user, your order will be filled, and you will sell Token X at a higher price than the current market price.
By using limit orders to buy or sell tokens at a specific price, you can potentially make money on MuesliSwap. However, it's important to note that limit orders are not guaranteed to be filled, and there may be slippage if the market price moves away from your limit price. It's also essential to consider the transaction fees involved and the risks associated with trading cryptocurrencies before making any investment decisions.
To place a limit swap on MuesliSwap, follow these steps:
1. Open the MuesliSwap app
2. Click on the "Swaps" tab and select "Limit Swaps"
3. Select the token you want to swap
4. Select the limit price (can be higher or lower
5. Choose a token you want to swap for
6. Approve transaction
7. Profit
MuesliSwap Staking
"Where there is a native token, there shall be staking." Staking on MuesliSwap can be a good opportunity to increase your profits over time in a safe and easy way. Just lock your MILK tokens and earn the hottest tokens on Cardano. Staking is commonly referred to as the practice of locking up tokens to secure a platform. In the context of MuesliSwap, staking is the equivalent of offering liquidity. The difference is that instead of making more MILK tokens, you are rewarded in the tokens of the liquidity pool you decide to participate in.
To stake MILK on MuesliSwap, follow these steps:
1. Open the MuesliSwap app
2. Click on the "Earn" tab and select the "MILK Pools"
3. Choose the liquidity pool you would like to join
4. Stake MILK
5. Choose the amount you would like to stake
6. Approve the transaction
7. Profit
The APY varies based on the amount of MILK staked as well as the value of the token you receive. The locking period lats around 2 months, therefore we encourage you to research the project's liquidity pool.
Price Prediction for MuesliSwap — Can it hit $1000?
Buying and hodling MILK — the native token of MuesliSwap — is one way of potentially making money on MuesliSwap.
By looking at its current price, it’s natural to think about the chance of MILK hitting $1000 per token. This can happen sooner, or the way in the future, and is determined by a couple of ever-changing factors.
Let’s examine the potential growth of the MILK token by analyzing its tokenomics. MILK’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} MILK tokens being in circulation today, that means a price of {PRICE} per MILK.
How did we come to that calculation? It’s quite easy, the price of a MILK token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each MILK coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of MILK at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for MILK to hit that price.
At a price of $1000 per token, that means the current market cap of MILK would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. MILK’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} MILK which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of MILK? Taking into account the current price of a MILK token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. MILK coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a MILK token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the MILK protocol fully diluted market cap.
These are all crucial details to know when calculating if MILK can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of MILK depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some MILK to your portfolio, the most trusted places to get some are Binance and Coinbase.