What Is Serum
Serum is a decentralized exchange and DeFi ecosystem that brings unprecedented speed and low transaction costs to decentralized finance. It is built on the Solana blockchain and is completely permissionless.
Since Serum is built on Solana's blockchain, its decentralized exchange benefits from capabilities worthy of a centralized exchange while users retain complete control of their funds. Serum's open-source DEX allows cross-chain swaps when users can add any trading pairs they like - you can trade BTC, ETH, ERC20 tokens, and SPL tokens (Solana's token standard), among others.
Unlike most decentralized exchanges that use AMMs to match orders, the Serum ecosystem uses an on-chain central limit order book (CLOB). It's run by smart contracts and aims to match buyers and sellers, giving them complete control over their trading.
Serum's native utility and governance token SRM is based on the Solana Program Library (SPL) and is an SPL token. It's also cross-listed as ERC20.
The Serum DEX uses generated fees from the protocol activities to buy and burn SRM tokens. So, holders benefit when someone adds liquidity and volume to the protocol and can receive up to a 50% discount on their trade fees. Stakers can vote and participate in the platform's governance mechanism.
The process of SRM burning, when tokens get removed from circulation, takes place weekly.
Serum is designed for long-term investments rather than quick profit-making.
Project Launch and Token Distribution
At the time of its launch on August 11, 2020, the Serum price was $0.11. The ICO closed with 6 million tokens sold in total and $660 000 raised.
A presale was held, as a result of which the project raised $20 million.
Within 12 hours after being listed on Binance and other platforms, the SRM price increased by nearly 1500%, reaching $1.8. Its trading volume surpassed $350 M, and its fully diluted market cap went above $300 M.
Initially, Serum launched 10% of the circulating supply, 175 million tokens. It increases by 15% yearly and, over the next 6 years, the remaining tokens will be unlocked. The maximum supply of SRM tokens is 10 billion, with a total supply of 161.000.001.
27% of the total supply goes to the ecosystem incentive fund for SRM holders and users, 27 % to the partner and collaborator fund, 22% to the project contributors, 20% to the team & advisors, and 4% to locked seed and auction purchaser.
Currently, the token is among the top 200 cryptocurrencies by market cap.
SRM price, trading volume, market cap, and other indicators are influenced by different factors, such as the project's development, features, and the general state of the market. Serum gains value primarily because of its use as a utility token on the Serum DEX. It's also attractive due to scalability, interoperability with Ethereum, and the reputation of the project's founder.
Serum Founders
Serum was built by the Serum Foundation, which was created by Alameda Research and FTX. Among the platform's advisers are Compound founder Robert Leshner, FTX CTO Long Vuong, and others.
The Serum team started to experiment with blockchain to solve issues existing in the current DeFi space and offer a platform with low transaction costs and faster operations.
The founder of the DEX is 29-year old crypto billionaire Sam Bankman-Fried from Hong Kong. He started his career as a Wall Street investment banker and financial advisor at Jane Street Capital in 2014.
In October 2017, Bankman-Fried left his position at Jane Street Capital and founded the quantitative cryptocurrency trading firm and liquidity provider Alamada Research. In 2019, he launched FTX, one of the most popular crypto exchanges and derivatives markets.
Serum is the third project founded by Sam Bankman-Fried.
Serum Usage
Serum may be held, traded, and exchanged like any other currency. Solana's virtual machine supports the execution of smart contracts.
Its cross-listing as an ERC-20 fungible token means it can collaborate in native exchanges with tokens based on the Ethereum blockchain.
Serum benefits from the speed and cost-effectiveness of transactions on the Solana network. Serum protocol is mainly used for liquidity creation and trading. However, it also provides other popular features, such as yield farming, realized via the AMM solutions built on Solana.
The core of the Serum ecosystem is its native token Serum (SRM). Serum (SRM) holders can benefit from its usage in the following ways:
- A 50% reduction of the costs incurred for an exchange on any Serum DEX. In addition, up to 80% of the brokerage commissions from transactions made on Serum's DEX return to users who also have SRM cryptocurrencies.
- Staking with your SRM token. Currently, this is reserved only for users with 1 million SRM in holdings and the technical capacity to operate masternodes.
- The right to vote on the ecosystem's governance.
Serum BTC and Serum USD
Apart from SRM, Serum presents stable coins Serum BTC and Serum USD, which allow physically settled cross-chain contracts. Serum BTC is a Bitcoin-pegged wrapped utility token, and Serum USD is a wrapped token backed by the US dollar.
The ecosystem continues to evolve and bring more use cases following a certain roadmap consisting of 3 phases. Two phases were accomplished, and the team is currently working on the third phase to bring more upgrades.
Serum Network Security
As Serum DEX is fully distributed, the Serum ecosystem does not have a single point of failure. There is no central exchange website for hackers to target.
Transactions and data on the Solana blockchain are cryptographically secured. Serum uses smart contracts to power the exchange of assets across different blockchains. To implement transactions, both the sender and receiver need to provide some amount of collateral.
In case of uncertainty, the parties can dispute the operation by submitting a snapshot of the transaction request stored on Solana. The network will check it, and if the dispute is valid, its originator will earn the stake from the sender via smart contracts. If not, the sender receives part of the stake from the receiver.
It is required to connect wallets to the Serum DEX for trading. Solana ecosystem has its wallet sollet.io, which allows sending, receiving, and interacting with Solana tokens.
SRM also supports MetaMask and many other wallets. Users can choose Ledger or another hardware wallet for offline storage and backup of assets.
Based on the Solana blockchain, Serum uses neither Proof of Work nor Proof of Stake to validate transactions. Instead, Solana uses a unique Proof of Time strategy.
