Expectations, Congestion, & Mainnet Launch.

We’ve been pretty quiet with our heads down preparing for the mainnet launch — you can expect a very exciting announcement in the next few days! In the meantime, there’s something we wanted to discuss first.

As we approach SundaeSwap’s mainnet launch, the team at SundaeSwap Labs believes it’s important to educate our community on some of the expected operational constraints and limitations that the blockchain and the DEX will exhibit on opening day and through the first few weeks after launch.

The Cardano blockchain was designed for global reach and penetration, achieving consensus on transactions across the world in seconds, and engaging people from all economic backgrounds. With the weight of that responsibility, Cardano has always operated by “measuring twice, and cutting once.” This mantra has resulted in the initial parameters of the blockchain being set conservatively at present. With examples of real-world traffic, IOG will carefully increase these parameters over time, with the latest being the 12.5% parameter bump we saw last month.

During our testnet event, the team noticed a large backlog in processing user actions. This was partially due to continued improvements to the Scooper order batching program, but was more due to the current maximum throughput parameters of the Cardano blockchain. While this is likely to negatively impact the user experience, the congestion is a sign of the Cardano network operating as intended by gradually applying backpressure. This created natural queues so that the Cardano network could absorb this load without crashing or decreasing the security of the ledger.

As part of our ongoing discussions with IOG over protocol parameters, we conducted a mainnet load test on December 18th. The first scoop transaction from this load test can be found here: https://cardanoscan.io/transaction/810290ec6caac8ce5812e690c035d6fbe7c04e5688c89d22878071e2b42badeb.

As far as we know, these are the first smart-contract backed automated market maker (AMM) transactions on Cardano mainnet. Over the course of this 40-minute load test, a single SundaeSwap Scooper performed 139 scoops (i.e., transactions which aggregate many user operations), which is approximately 3 scoops a minute. This is lower than the roughly 7 scoops per minute we saw on the testnet. Additionally, due to lower protocol parameters on the mainnet compared to testnet, these scoops on average aggregated 3 user operations each. This is lower than the 5 to 8 operations we observed during SundaeSwap’s operation on the testnet.

With the SundaeSwap DEX quickly approaching its mainnet launch, it’s difficult to predict the load during the first week of operation. There are a few things that must be noted:

• There is a much lower barrier to entry compared to testnet; there’s no need to interact with a faucet, switch your wallet to testnet, etc.
• There is greater incentive to participate in the DEX to capitalize on its utility with real funds
• There is greater risk of participation since users are exposed to losses of real funds through trading activity
• The SundaeSwap DEX must share network bandwidth with other launching protocols, themselves driving additional network demand.

Even with all these factors in play, due to staggering levels of demand and excitement from our community, we expect a large backlog on mainnet as well — even under our most optimistic predictions. To be as transparent as we can, we want to inform you all that while orders (including swapping, providing liquidity and withdrawing liquidity) may take days to process, everybody’s orders will be processed fairly and in the order they were received and executable. It will also be possible to cancel orders at any time before they are processed by the Scoopers.

Although we expect this backlog during the first days of the protocol, we’re very confident that the protocol can meet the normal day-to-day load once things settle down. Given the size of our community and the excitement around our launch, this initial swell of activity is inevitable. As we saw with the testnet, once the Scoopers burn through any large surges and the backlog, orders for common pools should execute within a few blocks.

Because we expect a large backlog during the first days of the protocol, we will be building out features to inform users on what the current backlog is, what the current throughput is, and where your order roughly stands in the queue.

So while this demand surge will result in network congestion and longer order processing times, we don’t expect this situation to last indefinitely; eventually the network will catch up. This will be further improved as IOG implements a planned series of improvements and enhancements to scale Cardano network capacity throughout 2022. This includes increases in block size and Plutus script memory units. Other optimizations and improvements are in the works that will improve throughput and allow further parameter increases over the long term. These include:

• A new version of the Cardano node — due for mainnet release by IOG in early January — will spread staking rewards calculation over the whole epoch, improving headroom and overall network performance significantly
• Another new networking improvement known as “pipelining” will improve block propagation times significantly
• An improvement to the node that allows it to store portions of the protocol state to disk will allow nodes to hold less in memory, allowing an increase in memory limits
• Several Cardano Improvement Proposals — including CIP-0031, CIP-0032 and CIP-0033 — will greatly reduce the size of transactions
• Additional improvements to the SundaeSwap DEX will be presented to and voted on by the community as part of our commitment to decentralized governance
• Layer 2 solutions, such as Hydra and others, will allow large portions of the protocol trade volume to be executed faster and cheaper

Thank you to all our community for your excitement, patience, and support. We have some very exciting news coming for you all soon, stay tuned!

~SundaeSwap Labs Team