Hedera is a high-performance public distributed ledger known for its energy efficiency, low fees, and rapid transaction speeds, making it an ideal network for decentralized applications. Powered by the innovative hashgraph consensus algorithm, Hedera provides scalability and security, attracting developers and users worldwide. Its ecosystem fosters seamless token transfers, decentralized finance (DeFi), and other blockchain-based solutions. SaucerSwap, considered one of the leading crypto protocols on Hedera, enhances the DeFi landscape by offering token swaps, liquidity pools, and staking opportunities, empowering users to make the most of the network’s capabilities.

What is SaucerSwap (SAUCE)?

SaucerSwap was co-founded by Peter Campbell, Joseph Bergvinson, and Matthew DeLorenzo, each bringing unique expertise to the platform. Peter Campbell, with extensive experience in blockchain technology, played an important role in developing the protocol’s smart contracts. Joseph Bergvinson contributed his background in financial modeling, ensuring robust economic frameworks and security measures within the platform. Matthew DeLorenzo, known for his work in decentralized finance (DeFi), focused on integrating the Hedera Token Service (HTS) for fast, low-cost transactions. Together, the trio laid the foundation for SaucerSwap’s innovative and efficient decentralized exchange.

Funding

In July 2022, SaucerSwap secured a 20 million HBAR grant from the HBAR Foundation, underscoring the project’s alignment with Hedera’s growth objectives. The grant was allocated to incentivize liquidity mining, ensuring early adoption and the development of a vibrant DeFi ecosystem on the network. This funding allowed SaucerSwap to enhance its protocol and attract a strong user base, positioning it as the leading DEX on Hedera. The strategic support from the HBAR Foundation continues to drive the platform’s development and market presence.

SaucerSwap V1 was deployed on Hedera’s mainnet in August 2022 following a successful beta on the testnet. Strategic alliances with HeadStarter and Stader Labs through the Hashgraph DeFi Alliance (HDA) further solidified its presence in the Hedera ecosystem. Security audits conducted by Hacken and Omniscia ensured the platform’s robustness.

SaucerSwap V2 launched in November 2023, introducing advanced features to enhance user experience and expand functionality. By February 2024, the platform dominated Hedera’s DeFi market, holding $120 million in Total Value Locked (TVL), 230 million HBAR in wrapped contract balance, and achieving $550 million in cumulative trading volume across 3 million swap events. With over 800 liquidity pools, it remains a vital part of Hedera’s decentralized ecosystem.

Supported by the HBAR Foundation and The Hashgraph Association, SaucerSwap continues to innovate, focusing on key developments like WalletConnect enhancements, slippage optimizations, and future plans for on-chain limit orders and governance delegation. The protocol exemplifies Hedera’s vision for energy-efficient and scalable DeFi solutions, establishing itself as a cornerstone of the network’s growing ecosystem.

How Does SaucerSwap Work? Protocol Versions

V1

SaucerSwap V1 is the foundational version of the SaucerSwap decentralized exchange protocol, modeled on the Uniswap V2 automated market maker (AMM) system. Designed to work seamlessly with the Hedera Token Service (HTS), it leverages the Hedera Smart Contract Service (HSCS) to ensure fast, secure, and low-cost transactions. The protocol facilitates peer-to-peer cryptocurrency exchanges, prioritizing self-custody and censorship resistance while eliminating the need for intermediaries.

At the heart of SaucerSwap V1 is the constant product formula, x × y = k, where x and y represent the token reserves in a liquidity pool, and k is a constant that remains unchanged during swaps. This mechanism ensures that liquidity pools stay balanced, automatically adjusting token prices based on supply and demand without requiring an order book or centralized authority. Each swap incurs a 0.30% fee, with 5/6 of the fee distributed to liquidity providers and the remaining 1/6 directed to the SAUCE token buybacks and distribution protocol.

To demonstrate, consider a pool with 10,000 HBAR and 1,000 USDC, reflecting market prices. If a trader swaps 100 HBAR, the pool adjusts the reserves, resulting in a slight price change due to the swap’s impact on the token ratio. The design ensures continuous liquidity and fair price adjustments.

Source: saucerswap.finance

Liquidity providers in SaucerSwap V1 earn fees and can stake LP tokens for dual rewards in HBAR and SAUCE through the Masterchef contract. This incentivizes participation while supporting yield farming. The platform integrates seamlessly with Hedera’s architecture, benefiting from its high transaction throughput, energy efficiency, and resistance to miner extractable value (MEV) attacks.

V2

SaucerSwap V2 represents a significant evolution of the decentralized exchange, building upon Uniswap V3’s concentrated liquidity model and adapting it to Hedera’s unique infrastructure. Launched in November 2023, SaucerSwap V2 addresses the limitations of its predecessor by introducing innovative features designed for greater efficiency and flexibility. Liquidity providers (LPs) now can specify custom price ranges for their token pairs, allowing them to concentrate their liquidity within those ranges. This creates a composite curve, aggregating individual positions into a unified pool that users trade against. By doing so, SaucerSwap V2 achieves heightened capital efficiency and minimizes slippage compared to the broader, less focused liquidity distribution of V1.

A multi-tiered fee structure is another advancement in V2, ensuring LPs are fairly compensated based on the risk associated with their positions. Trades involving more volatile tokens may incur higher fees, incentivizing liquidity provision in these riskier markets. This tailored approach improves the overall balance and attractiveness of the protocol for various stakeholders.

Technologically, V2 modifies Uniswap V3’s core and periphery contracts to integrate seamlessly with Hedera’s ecosystem. Unique challenges, such as the separation of tokens and smart contracts on Hedera, were overcome by leveraging Hedera’s Smart Contract Service (HSCS). This ensures compatibility with Hedera Token Service (HTS) while maintaining Hedera’s low fees and high throughput.

One notable enhancement in V2 is using HTS-based non-fungible tokens (NFTs) to represent liquidity positions. Instead of tracking data structures within the pool, liquidity positions are minted as NFTs, providing proof of ownership and simplifying management tasks like fee collection or position adjustments. These NFTs can be transferred between owners, making them versatile assets within the DeFi ecosystem.

SaucerSwap V2 also addresses the operational cost challenges presented by Hedera’s network, such as storage fees for expanded smart contract states. Fees are applied to liquidity pool creation and position minting to mitigate these. These costs help offset rent expenses tied to contract storage, ensuring long-term sustainability without undermining the platform’s usability.

Combining Uniswap V3’s innovative concentrated liquidity model with Hedera’s unique features, SaucerSwap V2 offers a refined trading experience characterized by lower slippage, higher efficiency, and increased LP control.

Source: saucerswap.finance

SaucerSwap Use Cases

SaucerSwap offers a wide range of use cases for traders, investors, and liquidity providers. By leveraging Hedera’s low-cost, high-speed infrastructure and innovative features like concentrated liquidity, SaucerSwap provides a robust platform for decentralized finance (DeFi) activities. Below are three primary use cases for SaucerSwap:

• Seamless Token Swaps: SaucerSwap enables users to trade Hedera Token Service (HTS) tokens directly through an automated market maker (AMM) model without intermediaries. With features like low fees and instant settlement, it supports efficient, secure, and censorship-resistant trading. V2’s concentrated liquidity design enhances these trades by reducing slippage and offering better pricing for large transactions.
• Liquidity Provision and Yield Farming: Liquidity providers (LPs) can earn rewards by supplying token pairs to liquidity pools. SaucerSwap V2 allows LPs to concentrate liquidity within specific price ranges, maximizing capital efficiency. Providers also benefit from dual rewards in HBAR and SAUCE tokens, incentivizing participation while supporting the overall liquidity of the Hedera DeFi ecosystem.
• NFT-Based Liquidity Positions: With SaucerSwap V2, LPs receive non-fungible tokens (NFTs) representing their liquidity positions. These NFTs streamline position management and can be transferred or sold, creating new opportunities for liquidity monetization. They enhance transparency and flexibility, empowering users to manage their assets more effectively.

SaucerSwap Main Features

SaucerSwap combines advanced DeFi mechanisms with Hedera’s efficient architecture to provide users with robust tools for staking, liquidity provision, and governance.

Single-Sided Staking

SaucerSwap introduces single-sided staking through the Infinity Pool, allowing users to stake SAUCE tokens for xSAUCE receipt tokens. This innovative mechanism benefits from automatic compounding, fueled by SAUCE buybacks, farm emissions, and HBAR staking rewards. The pool offers a threefold yield mechanism: a portion of swap fees, farm emissions from the Masterchef contract, and rewards from proxy-staked HBAR. As the SAUCE/xSAUCE ratio grows over time, users’ holdings increase in value, offering an attractive and simplified staking opportunity without exposure to impermanent loss. This feature enables users to maximize returns while actively contributing to the ecosystem’s liquidity.

Source: saucerswap.finance

Bridge

Hashport is a secure, enterprise-grade bridge connecting Hedera to Ethereum, Polygon, and Avalanche networks. It enables seamless asset transfers, supporting tokens like WBTC, WETH, USDC, and USDT. Bridged tokens on Hedera are marked with an [hts] subscript, distinguishing them from native counterparts. For example, USDC[hts] represents a bridged asset, while USDC is native to Hedera. Users can trade these tokens on SaucerSwap or transfer assets to Hedera via the Hashport Portal. Users can access Hashport through its intuitive portal, enabling smooth and straightforward asset transfers to Hedera.

Source: app.hashport.network

Community Pools

Community Pools, an upcoming feature, enable high-quality projects to gain rapid access to liquidity without centralized intermediaries or venture capital. These pools are initiated after rigorous vetting through the HeadStarter accelerator program and require DAO approval. Projects allocate a percentage of their token supply to the pool, while xSAUCE holders can stake to earn rewards in the project’s tokens. By removing impermanent loss risks and fostering ecosystem growth, Community Pools streamline token launches and introduce innovative bootstrapping opportunities, ensuring alignment between projects and the SaucerSwap community.

Governance

The SaucerSwap DAO governs protocol activities: reward allocation, liquidity pool creation, and treasury management. Using token-weighted voting via the Hedera Consensus Service, SAUCE and xSAUCE holders influence decisions through a transparent process. Governance occurs in three phases: Request for Comment (RFC), Proposal, and Election. Each phase ensures meaningful community participation, with votes reflecting users’ holdings and conversion rates. The DAO also oversees critical tokenomics adjustments and protocol development, ensuring a decentralized and community-driven approach to decision-making. SaucerSwap maintains its position as a collaborative and adaptive DeFi protocol through this structure.

Source: saucerswap.finance

What is the SAUCE Coin?

SAUCE is SaucerSwap’s native utility token, powering staking, rewards, and governance functionalities. Its maximum supply is capped at 1 billion units, of which 740 million (74%) are already in circulation (December 2024).

The SAUCE token was created using the Hedera Token Service (HTS). It serves as a cornerstone for governance, liquidity, and staking within the SaucerSwap ecosystem. Launched with an initial supply of 200 million tokens, SAUCE operates under a maximum supply cap of 1 billion tokens, distributed through predefined mechanisms to ensure sustainable growth and participation incentives.

Governance within SaucerSwap is powered by SAUCE, enabling token holders to vote on critical decisions through the decentralized autonomous organization (DAO). These decisions include protocol upgrades, reward allocation, and treasury management, ensuring community-driven oversight.

Liquidity provision is another key function of SAUCE. The Masterchef contract governs the minting and distribution of tokens to incentivize liquidity providers. Initially focused on V1 yield farming, SAUCE now supports the Liquidity-Aligned Reward Initiative (LARI) in V2, aligning incentives with efficient liquidity management.

Staking is central to the SAUCE ecosystem, allowing users to earn rewards through single-sided staking in the Infinity Pool. Staking participants benefit from compounded returns sourced from swap fees, farm emissions, and HBAR proxy-staking rewards.

The SAUCE token initial supply of 200 million was allocated as follows: 70% (14% of max supply) to the community, 10% (2% max supply each) to liquidity, marketing, and operations. Community tokens rewarded PEC NFT holders based on NFT type. DAO-controlled multi-sigs manage marketing and operations funds.

Source: docs.saucerswap.finance

SAUCE’s tokenomics include a vesting process for 300 million tokens allocated to core development, marketing, and operations. Emissions are governed by the Masterchef contract, with rates adjusted to balance rewards and ecosystem sustainability. With its multifaceted utility, SAUCE underpins SaucerSwap’s mission to drive DeFi innovation on the Hedera network.

The 300 million SAUCE tokens allocated for vesting include 80% for core development, 6.67% each for marketing and operations, and 6.66% for advisors, collectively representing 30% of the maximum token supply.

Source: docs.saucerswap.finance

Is SAUCE a Good Investment?

SAUCE offers strong potential due to its integral role in the SaucerSwap ecosystem, powering governance, liquidity incentives, and staking on the efficient Hedera network. Its well-defined tokenomics, including capped supply and multi-functional utility, enhance its appeal. However, a potential drawback is its reliance on the growth and adoption of the Hedera ecosystem, which may limit its scalability and value if Hedera fails to gain broader traction. As with any investment, careful research and consideration of market dynamics are essential before making decisions.

How to Own SAUCE?

To own SAUCE, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account and get it verified and funded. Then ,you are ready to go through the steps to buy SAUCE.

News on SaucerSwap

As reported on the official X channel on December 2, 2024, SaucerSwap has globally entered the Top 20 decentralized exchanges (DEXs) by liquidity. This impressive milestone, achieved without venture capital funding, reflects the protocol’s community-driven growth. Surpassing protocols with billions in TVL during previous cycles, SaucerSwap’s success highlights its commitment to building sustainable infrastructure on Hedera. This organic growth validates its long-term vision and innovation, positioning it as a leader in the DeFi ecosystem. According to the team, this is only the beginning.

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