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Last updated: Aug 16, 2023
Serum is a decentralized cryptocurrency exchange built on the Solana blockchain. It combines features of centralized and decentralized exchanges.
Serum operates through a central limit order book model (CLOB). The speed of the Solana blockchain made it possible for Serum to match all bids and offers fully on-chain dealing with trading, data, pricing, and risk management in a trustless and permissionless way.
Serum’s whitepaper was published in July 2020, and the protocol went live on Solana in September 2020. Since then the project has reshaped itself to answer the needs of its ever-growing number of users.
Serum was created as an open-source project by the united teams of Solana, Alameda Research, and FTX, and is actively backed by a famous DeFi enthusiast Sam Backman-Fried.
The founders call Serum the plumbing and infrastructure system that empowers the whole Solana network it was built on. Basically, Serum is an underlying level of all financial and other services running on Solana as the whole network relies on this DEX one way or another.
Serum’s central limit order book is the main distinctive feature of the protocol that helps it to match transactions on-chain providing users with a CeFi-class experience while keeping the fees and the slippage low and the speed of transactions unbelievably high - all while securing users’ funds in a non-custodial way.
Serum allows all projects in its ecosystem to share liquidity. This mechanics helps to ensure the protocol always has sufficient funds to enable transactions, no matter how large it may be. Therefore, both retail and institutional customers can equally benefit from using Serum by choosing the price, size, and direction of their trades.
Since its creation, the Serum protocol has changed due to the unprecedented growth of its ecosystem. For instance, its initial SerumSwap feature that allowed collateralized swaps between users of different blockchains has been deprecated in favor of other projects that were built upon Solana and Serum in later days, of which Raydium AMM might be the best example.
Despite being built on Solana, Serum is not limited to SPL tokens, allowing users to seamlessly swap assets cross-chain using services of partners such as the Wormhole bridge that connects Solana to Ethereum.
Serum's mainnet is still in beta, so some features are currently limited. Users can buy, sell or swap BTC, ETH, SOL, YFI, SUSHI, LINK, CREAM, USDC, USDT, FTT, UNI, TOMO, AAVE, COMP, and over five dozen other SPL and ERC-20 tokens.
Before starting to trade on the Serum app users need to make sure they are on the mainnet by checking the indicator located in the top left corner of the website. The next step is to connect a wallet Serum supports. Currently, the list of available wallets includes Sollet, Ledger, Solong, Phantom, and MathWallet.
Users have a choice in what Graphical User Interface (GUI) to utilize when interacting with the Serum app. Anyone can set up their own Serum-based DEX GUI or simply embed the Serum Swapper into their UI. This allows for a customizable user experience on the platform and can provide for different market regulations depending on location or other factors. The platform has provided a list of community-made GUIs available for use on its official documentation webpage.
Serum has integrated the Wormhole bridge to allow its users to transfer assets between Ethereum and Solana. To use it one needs to have both a MetaMask Wallet with enough ETH and a Solana Wallet with enough SOL to pay for transaction fees. Serum has provided detailed guides on how to use the bridge on their website.
SRM is Serum’s utility and governance token. It is native to Solana’s SPL standard and is also cross-listed on Ethereum as an ERC-20 token.
The tokenomics of the project includes a buy-and-burn mechanism and rewards for SRM staking to make sure that all the exchange fees will flow back to Serum. Basically, while one part of the fees earned on DEX is getting burned, the other part is divided among SRM stakers. Users can try Serum’s native GUI, as well as use the staking feature on FTX and AscendEX.
SRM can be merged into an MSRM token which equals 1 million SRM and grants its holders slightly better rewards for staking.
SRM holders are granted voting power and are eligible for discounts on the network’s fees. Though, for now, Serum is yet to build up its governance system to become a truly decentralized exchange.
A maximum supply of SRM is set to 10,000,000,000 tokens, though 91.25% of that amount has long-term unlocking periods. The current circulating supply of SRM is 50 million with 125 million tokens being kept in reserves. An additional 825 million SRM is set aside for the ecosystem incentives.
Serum Foundation is behind the ongoing development of Serum. The Serum team was established by the co-founder and CEO of Solana Lab Anatoly Yakovenko and Sam Backman-Fried, the CEO of Alameda Research and FTX. Currently, the two remain the main representatives and spokespersons for Serum. Serum audits can be found in the protocol dashboard on this webpage.
Serum grew to become a crucial part of the whole Solana ecosystem. Perhaps, Raydium is a dApp that relies on Serum the most while complementing the DEX with its AMM product suite. Raydium is a rare type of automated market maker because it provides on-chain liquidity to Serum thus granting its users access to the order flow. Raydium may be used for fast trades, shared liquidity, and yield fSRMing.
Partnership with Bonfida made Serum accessible to a wider circle of users. Bonfida offers GUIs for a number of Solana-based projects, as well as enables automated trading via its separate service BonfidaBots.
Serum is also a base infrastructure layer for a growing number of DeFi projects such as decentralized fund management and investment protocol Solrise Finance, options protocol PsyOptions, DeFi prime brokerage service Oxygen, margin trading, and lending platform Mango Markets, or a borrowing and lending Jet Protocol.
There are also partners beyond Solana. Wormhole, for example, is a cross-chain bridge that allows users to convert between ERC20 and SPL tokens, meaning users can take advantage of Solana’s costs and speeds when settling back into the Ethereum network.
Of course, the list of Serum-powered dApps includes games as well. For example, there’s a space exploration MMO game called Star Atlas which is already up and running. Some projects are yet to be released, such as JRPG-inspired Aurory or fantasy MMORPG OpenEra. Each of the games relies on Serum to manage the in-game economy and to incentivize players.
Solana’s native Sollet, SolFlare, or Bonfida wallets can be used to store SRM tokens. Serum’s cryptocurrency is also compatible with Coin98 and Math Wallet.
The long-term goal of Serum is to attract 1 billion users and to reach the mark of $10 trillion of total value locked - the point its technical capabilities allow at the moment. Currently, Serum is focused on growing its ecosystem and adding more native DeFi services to its DEX, according to the project’s roadmap. Lending and borrowing, yield fSRMing, and margin trading are among the features that will soon appear on Serum. Serum also plans to add more cross-chain bridges and AMMs, as well as connect its DEX and SPL token to more exchanges.
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