Over the past years, decentralized exchanges have experienced a significant surge in popularity, largely driven by the decentralized finance (DeFi) movement. This growing trend has compelled developers to prioritize the pursuit of complete decentralization. While centralized exchanges have their merits, such as user-friendly interfaces and access to substantial liquidity, they inherently lack the level of security and anonymity that decentralized exchanges offer. One notable decentralized exchange that exemplifies this is Serum, which has taken strides to become the cornerstone of the DeFi ecosystem by introducing a range of exciting new features.

What is Serum?

Serum Network is an innovative decentralized ecosystem that operates on the Solana blockchain. Its primary objective is to promote interoperability and emphasize decentralization. The standout feature of the Serum ecosystem is its commitment to providing a user-friendly platform that enables the seamless exchange of crypto tokens without the burdensome requirement of undergoing KYC procedures. Using a traditional swap system, Serum’s decentralized exchange (DEX) permits users to create and engage in trading pairs of their choice.

By leveraging the Solana blockchain, Serum’s DEX capitalizes on the advanced capabilities typically associated with centralized exchanges while ensuring that users maintain complete anonymity and control over their funds. The cross-chain functionality offered by Serum enables the trading of various assets such as BTC, ETH, ERC20 tokens, and SPL tokens (Solana’s native token standard), among others. These robust features make Serum an ideal platform for DeFi users seeking a truly decentralized experience, surpassing the convenience provided by centralized platforms and delivering even more benefits.

History of Serum

The Serum Foundation was established in August 2020, driven by the visionary leadership of Sam Bankman-Fried. Bankman-Fried, a distinguished mathematics and computer science graduate from MIT, is the mastermind behind Alameda Research, a cryptocurrency trading company, and the renowned crypto derivatives exchange FTX. Collaborating with his accomplished FTX colleagues, Bankman-Fried conceived a DeFi protocol featuring an autonomous decentralized exchange (DEX).

Serum has garnered extensive support from various centralized exchanges and has forged numerous partnerships, showcasing its commitment to collaboration and growth. Serum has joined forces with Chainlink (LINK) to integrate pricing oracles, ensuring reliable and accurate market data for its DEX ecosystem. The project benefits from the invaluable guidance of distinguished advisors such as Robert Leshner, the founder of Compound Labs, and Long Vuong, the esteemed founder, and CEO of TomoChain. These notable figures lend their expertise to the Serum project, contributing to its success and development.

How Does Serum Work?

Solana operates on a consensus mechanism, and its primary innovation lies in its implementation of Proof of History (PoH). Solana’s PoH is an additional layer on top of the well-known Proof of Stake (PoS) consensus mechanism, which involves master nodes and staking.

It is important to revisit the fundamentals as this will enable users to understand how PoH works. For example, let’s consider Bitcoin and its consensus mechanism, Proof of Work (PoW). All nodes in the Bitcoin network work in parallel to validate the next block. The process requires a majority of nodes to agree on the validation of a block before it can become a permanent part of the blockchain. This validation process can be time-consuming, necessitating widespread agreement across the network that a particular block was validated at a specific time.

The Solana blockchain incorporates PoH, as this helps it to maximize its technical capabilities and address user requirements. This approach eliminates the need for all validators in the network to reach a consensus on creating a block. The PoH algorithm cryptographically proves the chronological order of transactions, enabling immediate inclusion in the blockchain. Consequently, blocks are created at approximately 400-millisecond intervals on the Solana blockchain, allowing the network to theoretically achieve transaction speeds of 50,000 to 65,000 transactions per second (TPS).

Moreover, transaction costs on the Solana network are exceptionally low, around $0.00001 per transaction, equating to approximately $10 in fees for 1 million transactions. Since Serum is built entirely on the Solana blockchain, it leverages the platform’s high-performance capabilities, essential for the optimal functioning of the Serum ecosystem.

Serum’s Main Features: Serum Core, True Composability and Developer Ecosystem

Serum’s decentralized ecosystem offers a range of benefits through its main features. These features include:

Serum Core

At the foundation of the serum business model is Serum’s Asset Agnostic order book that accurately matches any Solana-based trading product, including options and futures.

True Composability

Serum’s architecture is open source, allowing for different applications. Each of these programs will feature standard design principles while also having room for flexibility in structure.

Developer Ecosystem

The Serum ecosystem is built to be developer friendly. It offers an on-chain order-matching service for developers to build trading applications. In addition, the permissioned markets on the platform promote flexibility and compliance.

What Makes Serum Unique?

Serum’s decentralized exchange (DEX) boasts an on-chain central limit order book and a powerful matching engine. It effectively caters to traders’ liquidity and price-time priority matching needs. This exchange model allows users to determine their trades’ price, size, and direction, offering them a high degree of control.

The unique architecture of Serum and its bootstrapped liquidity and reliable matching service provide many benefits to composting projects. These projects can leverage Serum’s existing infrastructure to seamlessly integrate with the DEX, accessing robust liquidity and a trusted matching service. Using Serum’s well-established framework, composing projects can streamline operations and enhance their trading capabilities within the decentralized ecosystem. Furthermore, its unique selling proposition (USP) allows users to create their own DEX. Simply put, skilled individuals with programming skills can create their own DEX on top of Serum.

Serum Ecosystem

SRM serves as the native token within the Serum ecosystem, facilitating various functionalities and benefits. Serum’s cross-chain swap protocol empowers users to securely and seamlessly swap assets across different blockchains. Investors gain access to a decentralized, automated full-limit order book that grants them complete control over each order, ensuring a tailored trading experience. The integration between Ethereum and Solana enhances Serum’s speed, efficiency, and interoperability, enabling smooth interaction with ERC20 tokens.

With regulated cross-chain contracts, users can easily engage in margin positions within DeFi, particularly on synthetic assets. For instance, SRMBTC is a model for creating BTC-backed tokens on the Ethereum or Solana blockchain. At the same time, SRMUSD enables the creation of a decentralized, fixed-value USD stablecoin.

Stake rewards are distributed based on the performance of nodes that play crucial roles in verifying cross-chain placements, including providing blockchain histories. This incentivizes active participation and ensures the integrity of the ecosystem.

The SRM token also employs a redemption and destruction mechanism that reduces the overall supply of SRM tokens, adding to their scarcity. Additionally, all fees paid in SRM are automatically burned weekly, gradually reducing the circulating supply and enhancing its value.

Leveraging the fast trading experience offered by Solana, Serum continues to attract a growing number of projects to its DEX, expanding its ecosystem and further solidifying its position as a leading decentralized exchange platform.

What is the Serum Token (SRM)?

Serum (SRM) functions as both the utility and governance token for the Serum platform. Users are entitled to discounts on fees by holding SRM in their wallets. SRM operates as a native token on the Solana blockchain, utilizing the SPL (Solana Program Library) token standard. SRM is also accessible on the Ethereum blockchain, implemented as an ERC-20 token.

SRM Tokenomics

The SRM token, the native cryptocurrency of Serum, derives its value from its utility within the network. It serves as the primary form of payment for transaction fees on the Serum platform, allowing users to pay for fees and access reduced fees on the exchange.

In addition to SRM, Serum introduces the MegaSerum token (MSRM), which participants can acquire by locking 1 million SRM tokens. Holding MSRM grants participants slightly higher rewards than holding 1 million SRM tokens alone.

Participants must stake at least 10 million SRM tokens to operate a node and contribute blockchain histories for cross-chain settlement validation, with at least one MSRM token included in the total stake for each node. Users who prefer not to operate a node but still want to earn staking rewards can delegate their SRM tokens to any node operator and receive a portion of the staking rewards.

The supply of SRM tokens is limited, like many other cryptocurrencies. There will only ever be 10 billion SRM tokens in existence. It is worth noting that the total supply of MSRM tokens is set at 1,000 tokens. These supply limitations contribute to the scarcity and potential value of the SRM and MSRM tokens within the Serum ecosystem.

How to Buy SRM

Users who seek decentralization in the crypto space can pander to SRM. One way to have the token is to purchase it. Users can buy SRM tokens on Gate.io. All you need to do is create an account, complete the KYC, and follow the steps to buy SRM.

Serum Network Governance

The SRM token serves as both a utility and governance token within the Serum ecosystem, offering users a range of benefits. Token holders gain access to discounts on protocol fees, allowing them to save on transaction costs while utilizing the Serum platform. Additionally, SRM token holders enjoy voting rights, enabling them to participate in governance decisions and have a say in the future development and direction of the ecosystem.

A significant feature of SRM is that 100% of the exchange fees generated on the Serum platform flow back to SRM holders. This is achieved through mechanisms such as buy-and-burn, where a portion of the fees is used to buy SRM tokens from the market and subsequently burn them, reducing the total supply and potentially increasing the value of the remaining tokens.

Furthermore, staking rewards are distributed to SRM holders, incentivizing them to participate in securing the network and maintaining its performance actively. Additionally, ecosystem grants are provided to support projects and initiatives that contribute to the growth and sustainability of the Serum ecosystem.

By aligning incentives through fee distribution and governance rights, the SRM token incentivizes active participation and rewards token holders’ contributions to the ecosystem, fostering a vibrant and engaged community.

Is SRM a Good Investment?

Serum introduces a distinctive approach to DeFi, offering a fresh perspective and unique advantages. By integrating the strengths of DeFi services with on-chain order books, Serum has created a decentralized exchange (DEX) that delivers swift, cost-effective, and efficient transactions. Although it may not yet encompass all the features of centralized exchanges, Serum surpasses traditional DeFi Automated Market Makers (AMMs) in terms of user experience, providing a more seamless and user-friendly trading environment.

With Serum, users can enjoy the benefits of DeFi, such as decentralized control and permissionless access to a wide range of assets, while benefiting from the speed, affordability, and efficiency of on-chain order books. This hybrid approach strikes a balance, enabling users to experience the convenience and advantages of centralized exchanges without compromising the principles of decentralization.

While Serum continues to evolve and expand its feature set, it stands out as a game-changer in the DeFi landscape, providing users with a more efficient, accessible, and user-friendly trading experience. Its unique combination of DeFi and centralized exchange elements positions Serum at the forefront of innovation, driving the advancement of decentralized finance and empowering users with the best of both worlds. Again, its unique features and use cases make it a project to look out for.

News on Serum

Serum has recently shifted its focus towards NFTs and expanding its ecosystem. On April 12, 2022, they introduced their NFT collection, Serum Surfers, consisting of 5,000 generative NFTs on the Solana blockchain. Holders of these NFTs enjoy various perks, including giveaways, access to conferences, events, parties, exclusive branded merchandise, and more. Notably, the Serum Surfers collection sold out within an impressive 15 minutes.

Serum’s background, being launched in part by FTX took a slight hit after the FTX and Alameda collapse. As a result, the Serum project is now defunct. Solana has however shifted its focus to a new project called Openbook.

Conclusion

The Serum project has garnered robust support, which underscores its potential for success in the face of fierce competition. Serum positions itself as a dynamic and adaptable platform within the DeFi space by enabling seamless cross-chain functionality and facilitating the creation of decentralized exchanges. Using Solana’s infrastructure provides users with fast and cost-effective transactions, enhancing the overall efficiency of the platform.

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