Launched on August 31, 2020, Serum represents a decentralized exchange and a platform for building dApps. Despite being based on the Solana blockchain, it is completely interoperable with the Ethereum ecosystem and ERC20 tokens. Solana helps the exchange solve the problems of high gas costs and slow transactions, allowing users to enjoy 65,000 TPS and 400ms block time.
The Serum project was created by the Serum Foundation, a non-profit entity backed by a group of experts in cryptocurrency trading and decentralized finance that includes FTX, Alameda Research, and the Solana Foundation. The mission of the Serum team is to increase the global mass adoption of DeFi while solving the problems of centralization, capital inefficiency, and liquidity segmentation.
Since the Serum protocol is completely permissionless, the team cannot control it having given away all the rights to the community. The project brings liquidity, high throughput, and low transaction costs to DeFi while remaining fully trustless and transparent. At the same time, Serum provides developers with all the necessary resources, tools, services, and infrastructure for DEXs and dApps creation.
Serum DEX is the matching engine powering Solana-based financial projects. The roadmap of the exchange involves the completion of 3 stages of development. Phase 1 finished with the launch of on-chain DEX and Serum Token in both SPL and ERC20 versions. Phase 2 included the development of the Solana cross-chain bridge, wallet ecosystem, pools, GUI ecosystem, and grant program.
At the time of writing, Serum is going through Phase 3 as the team is focused on adding new services such as borrowing, lending, yield, margin trading, and contracts as well as building more cross-bridges and AMMs. The exchange offers 70+ coins and 140+ pairs for trading including BTC, ETH, LINK, SOL, Swipe, etc.
Serum Token or SRM is the backbone of the Serum ecosystem built on Solana and cross-listed as an ERC20 token. It was launched in August 2020. The maximum SRM supply is capped at 10 billion tokens, 4% of which is spent on block presales, 20% is reserved for the team and advisors and 22% for project contributors, 27% is held in the partner and collaborator fund, and 27% in the Ecosystem Incentive Fund. 90% of all tokens were fully locked during the first year and will be linearly unlocked over the next 6 years starting August 11, 2021. SRM has a number of utility and governance functions in the Serum network that include reducing fees, staking, rewarding, and governing the network. SRM can be staked on FTX exchange or AscendEX exchange.
MegaSerum (MSRM) is a scarce asset that gives increased utility to Serum's core proponents. This token is equivalent to 1,000,000 SRM stacked together as 1 MSRM can be created by locking up 1 million SRM. The total supply of MSRM is limited and can only make up 1,000 coins. Locked SRM and MSRM still get fee discounts and are able to participate in governance.
Features and services
One of the most advanced features provided by Serum is an automated full limit order book, which gives traders full control over their orders. Thus, they have the ability to sort coins by price, size, and trade direction.
Serum also supports cross-chain trading, which, unlike most protocols, is cheaper and more secure. The full integration of Ethereum and Solana into the Serum protocol eliminates the need for a third party such as a custodial exchange to administer swaps allowing users to enjoy transparent cross-chain trading.
To give its clients more trading options, Serum has created and implemented a shared liquidity model. When using an application that trades through Serum, users can trade against someone else through a completely different application. In this case, Serum serves as a portal allowing users to trade on different platforms with different conditions. The main advantage of the model is that the liquidity collected in one place is available for any other applications on Solana.
The staking service involves nodes and SRM holders allowing them to receive staking rewards based on their performance. Anyone can launch a node and become its leader or stake coins in someone else's node. The tasks that nodes accomplish include storing blockchain history, managing the insurance fund, proposing new rules, and voting. For each payment, a node leader receives 15% of the node’s total reward, while the remaining part of 85% is allocated among other participants. Nodes can also receive 2% APY per year on their holdings and 0% - 13% per year according to the performance of their duties.
The platform charges takers 12-22 bps depending on their SRM holdings. Those with less than 100 SRM pay the highest commissions. Makers pay a fee of 3 bps for their trades while the transaction costs start at $0.00001.
Those who hold Serum tokens can get a 60% discount on their fees. It is worth noting that other applications participating in the shared liquidity model may charge their own fees in addition to Serum's commissions.
20% of net commissions go to the graphical user interface hosting the activity, 10% is paid to nodes as staking rewards, 2% goes to the EcoSerum fund, and 68% is spent on buying and burning SRM. Nodes have the right to change the rules of how fees are used.
Serum team and partners
The exchange was founded by Sam Bankman-Fried, the CEO of FTX and Alameda Research. With his help, Serum has attracted many supporters and contributors including FTX, one of the leading centralized crypto exchanges, Alameda Research, a cryptocurrency liquidity provider, CMS and ParaFi (cryptocurrency investment firms), etc. Robert Leshner and Calvin Liu from Compound, Gary Wang from FTX, Long Vuong from TomoChain, and Shane Molidor from AscendEX are on Serum’s advisory board.
The project has established partnerships with many well-known companies such as Solana, Ethereum, AscendEX, Evernew Capital, Binance Exchange, Math Wallet, Raydium (an automated market maker), Gauntlet (a financial modeling and simulation platform), Solanium (a platform for the Solana blockchain), Lemniscap (an investment firm), and others. Alameda and Jump, some of the largest market makers, support Serum’s liquidity.