The Cryptocurrency market has seen a major adjustment from Decentralized finance (Defi) over the years. This new development has attracted both retail traders and institutional investors as traditional finance embraces blockchain technology.
The majority of the renowned Defi protocols with a reasonable amount of locked value and volume operate on the Ethereum blockchain. And their high transaction fees and lower transaction time gave room for the birth of a project like Serum.
The serum is a permissionless (DEX) decentralized exchange that runs on the ‘Solana blockchain.’ It is a network that offers high speed and low transaction fees to eliminate vulnerabilities seen in the Defi space.
This resulted from incomplete decentralization. The serum also allows its token owners to stake their tokens and earn a yield from trading fees.
Also, the Serum token has a ‘buy-and-burn’ mechanism that helps to reduce its circulating supply further and increase the value. More on this Defi protocol will be seen in this serum review.
The review says a lot about the protocol’s token, the founding team, where to buy the SRM token, and lots more. It is a golden treasure for investors, intending investors, and individuals who want to know more about Serum.
The serum aims to eliminate most of the vulnerabilities currently found in the Defi space caused by incomplete decentralization.
It is a permissionless decentralized exchange and introduces low transaction fees and high speed to the Defi. Moreover, it can operate with other cryptos like Ethereum and Bitcoin.
It claims to be ‘fully decentralized’ and operates on a ‘non-custodial exchange with trading support known as cross-chain. It is not built on the Ethereum blockchain but instead on the Solana blockchain and doesn’t require KYC (know your customer).
Serum adopts an order book-based crypto trade like the centralized crypto exchanges. This feature differentiates it from other DEXs.
Solana is a ‘web-scale blockchain that achieves 50,000 transactions in a second through SHA 265 hash chain. SHA 265 hash chain is a verifiable delay function that allows the control of optimistic concurrency. There are more than 18 DEXs in existence. The Serum DEX is available on iOS and android through the Coin98 mobile App.
The Serum Foundation built Serum. The foundation comprises experts in decentralized finance and cryptocurrency trading.
The protocol is the first of its kind to be built on Solana and is present in 30 crypto markets. The serum trades against USDC or USDT in these markets.
Sam Bankman-Fried co-founded Serum. Bankman-Fried is a graduate of physics from the Massachusetts Institute of Technology with a bachelor’s degree. He has more than three years of FTX trading experience with Jane street capital. Jane street capital is a well-known wall street trading firm.
Sam Bankman left Jane street in 2017 to discover a quantitative trading firm-the Alameda Research, shortly afterward. He founded the FTX crypto derivatives exchange in 2019. Based on his DEX experience, he was regarded as the ‘de facto’ community leader of the popular SushiSwap DEX.
Sam and other FTX exchange team members were brainstorming on the Defi protocol to develop. They concluded on building a DEX but not on Ethereum because of the unique features they want it to have. However, they later chose to build it on Solana due to its efficiency after analyzing other blockchains.
The team wants their project to be an outstanding platform different from other FTX exchanges. They later gave the DEX a name-Serum after about three months of hard work. They released the project’s white paper in July 2020 and launched the DEX towards the end of August.
The Serum project is still a developing project. It is more likely that new features will be added to the ones existing in the project currently. 3 mechanisms explain how the project Serum works, namely;
More details on the SRM token, SRM voting, and staking will be explained later under their different subheadings.
Cryptocurrencies like USDT, YFI, and USDC found on the Serum DEX are SPL tokens, not ERC-20 tokens. SPL tokens seen on the Solana blockchain are similar to the ERC-20 tokens on the Ethereum blockchain.
Tokens that are not SPL are wrapped for Solana-based protocols only.
Similarly, Bitcoin is wrapped and reserved for investors to utilize it on protocols based on Ethereum. A good example of this bitcoin wrapping is Ren’s ‘RenVM.’
We can understand the term ‘wrapping’ in the following instance. You give a crypto (1 bitcoin) to exchange or custodian (a protocol). He mints (creates) the crypto’s token equivalent on a different blockchain (1 RenBTC for 1 bitcoin) like Ethtereum. This means that 1 bitcoin equals 1 ren BTC and can be used as an ERC-20 token on the Ethereum blockchain.
However, it is possible to change other blockchain cryptocurrencies to SPL tokens for trading on the Serum platform. The two ways of achieving this are by using either the Metamask wallet or FTX exchange. Both methods require a web-based Sollet.io wallet.
The FXT exchange gives wrapped SPL versions of the most popular cryptos like Chainlink, Ethereum, and Bitcoin. FTX is just a custodian holding the real Ethereum, Bitcoin, etc., offered for the minting of wrapped SPL, then transferred to the ‘Sollet.io’ wallet after minting them FTX exchange.
The Metamask wallet converts the ERC-20 token to a wrapped SPL coin equivalent. The ERC-20 tokens are first locked in an un-trusted smart contract on Ethereum. The Soilet.oi then mints the equivalent of the wrapped SPL tokens for the trader to use on the Serum Decentralized Exchange.
The Serum crypto is an ERC-20 token and an SPL token on the Ethereum and Solana blockchain, respectively.
This implies that the Serum SRM token has an Ethereum version. It is used for staking in the Serum DEX to minimize trading costs and to run a validator node. One can easily convert a million SRM tokens into one MegaSerum (MSRM) & vice versa.
The Mega Serum (MSRM) is necessary to operate the validator node and serve as an ERC-20 token. The maximum number of MSRM that can ever exist is 1,000. MSRM can swap with SRM in the ratio of 1:1 on both the Solana and Ethereum blockchain.
The SRM crypto serves as a governing tool in the Serum DEX. It is a utility token and governing tool for other upcoming Defi protocols in the Serum ecosystem. About 68% of the transaction fees are used in the buying and burning of the SRM token.
The Serum project team had 2 IEOs (initial exchange offerings) for the SRM token simultaneously. These IEOs took place on August 11, 2020, on BitMax and the FTX cryptocurrency exchanges. Each of the exchanges sold a total of 3million SRM at the rate of USD0.11 per token. The two IEOs sold a total of 6million SRM, realizing about USD660 000.
The initial exchange offerings required ‘Know-your-customer’, setting a cap of about 1,800 participants in both exchanges. The presale for SRM token saw 400million SRM (400 Mega Serum) given to investors at the rate of USD80,000 per MSRM.
However, the Project recorded only 20million as proceeds from the presale. This makes up 4% of the 10billion Serums total token supply.
20% out of the 96% remaining is for the Advisors and team members, 22% was reserved for contributors. 27% (825 million SRM) are incentives to users in the Serum ecosystem example is the integration of the Coin98 mobile app. And the remaining 27% was allocated as collaborator and partners’ funds.
The current total SRM supply is about 10% of the total token supply. The remaining 90% will be locked till August 2021, after which they will be released gradually within 6 years. This step is to ensure that the SRM token maintains its value for a long time.
However, most parameters in the Serum project, like transaction fees, can be adjusted through the token governance votes. The total net price is used for buying and burning the SRM tokens.
By staking and using the SRM tokens, holders are sure of getting a 50% slash on all their trading costs.
You can buy and sell the Serum (SRM) token on several crypto exchanges so long as it is supported by the protocol. They include OKEx, Binance, BitZ, HBTC, Xtheta, and Global. The exchange with the highest SRM trading volume is OKEx and Binance.
There are few available options for storing the SRM token; you use the mobile wallet or the web wallet.
For users who prefer the mobile wallet, the Coin98 app is the best. Otherwise, Sollet.io is the only available web wallet option.
However, both wallets guarantee access to the Serum decentralized exchange.
The staking system of the Serum protocol follows an elaborate process. Through staking your SRM tokens, you can earn rewards, participate in the protocol votings and decide on some changes for the Serum ecosystem.
By staking 10 million SRM, you will become a validator node. From your total staked SRM, you will need 1 million SRM in the likeness of 1 MSRM. As a validator node, others will delegate their SRM tokens to you. Thus, the maximum number of SRM tokens for staking in a node is 100 million.
A validator node can perform two duties on the Serum ecosystem. The first function is to activate orders on the Serum decentralized exchange blockchain manually. This is because orders placed on the Serum platform are not automatically executed.
Thus, every order will always need a third-party activation for its execution. The second function of a validator node is to facilitate cross-chain digital asset swapping.
As a holder that wants to stake your tokens, there are certain duties/responsibilities associated with your SRM. Here are some of them:
Below are some of the rewards for nodes through staking, though the network can alter them.
Although there’s no concrete documentation for node rewards and benefits, there’s a set 2% APY per year. Also, there’s the addition of 13% rewards that are tied to a node’s performance.
The yields are generated partly from the set 10% fees on the Serum ecosystem. However, the fees are open for change at any time through community voting. When writing this article on 15th July, FTX exchange remains the only staking platform for SRM.
When it comes to voting, some validator nodes have two designations to belong. They can either be delegated stake nodes or voting stake nodes. For delegated stake nodes, all the SRM are dependent on the node leader. Thus, their votes are automated to follow the voting pattern of the node leader in every given proposal.
However, for voting nodes, all the SRM involved are capable of independent voting without the node leader. Irrespective of which designation a node belongs, all votings are done through the Ecoserum.
Nodes can make proposals for rule changes in the Serum Ecosystem, like in fees. For a node to present a proposal, a total cost of 50,000 SRM will be removed from the staking on the node.
The proposal can only pass when the voting favor is above 60% total SRM currently staked. If the proposal passes, the node that presents it get back the 50,000 SRM. Where the community rejects the proposal, the developers will burn 50,000 SRM.
The Serum SRM price at the time of writing this article on 15th July is at $2.99 per token. The Serum token price is up by 10.86% within the last 24 hours. The cryptocurrency has a 24-hour trading volume of over $70 million.
Image Credit: CoinMarketCap
The maximum supply limit for the SRM is 10 billion SRM tokens with just 50 million tokens in circulation. The cryptocurrency has a market capitalization of over $165 million.
The Serum decentralized exchange provides the platform for its users to perform a cross-chain swap of digital assets. So you can easily exchange ETH for BTC using the Serum DEX.
The cryptocurrency swapping depends on the protocol’s smart contracts and other in-built features and operates in a trustless manner. To execute a swap, the two parties involved will provide some collateral for the seamless transaction.
Where there’s any delay in the receipt of funds, the party involved can exchange with the smart contract. He will need to submit the transaction request snapshot.
The Solana blockchain usually stores all transaction requests and activities. When the dispute is confirmed valid, the receiver gets the sender’s stake. But if it’s invalid, the receiver losses part of his stake to the sender.
The serum uses a full limit order book that is decentralized and automated to allow traders to be in total control of their orders.
The Serum utility token serves as a governance tool in the ecosystem. It has a ‘cross-chain swap feature that enables traders to exchange crypto assets between various blockchains in a free manner.
The Project has both Ethereum and Solana integration. This makes Serum more efficient and faster and also guarantees its interoperability with all ERC-20 tokens.
Serum BTC is perfect for Solana-based or ERC-20 tokens for Bitcoin (BTC). Also, SerumUSD is very good while creating a USD- pegged decentralized stable coin.
Staking rewards for users are allocated based on nodes’ performance. This takes into consideration the relevant on-chain actions like providing blockchain data for cross-chain validation of settlement.
The leader and other nodes that receive the staking result also receive a portion of the ‘nodes staking’ fee. This reward grows with the nodes productively participating in their duties. However, users are also allowed to stake towards a node different from theirs.
The Serum network has cross-chain support that allows the exchange of assets in a trustless manner between various blockchains.
It has a utility and governance token that runs on the Solana blockchain with the ERC-20 version.
The Project utilizes a trustless bridge via a ‘premier validator’ for DLT (distributed ledger technology).
From this Serum review, it is obvious that the Serum mechanism serves as ‘a middle man’ between Defi and professional traders. Its unique features like the order books, cross-chain support, and scalability allow traders to experience CEX while using DEXs.
The CEO, Sam Bankman-Fried, is such an experienced Defi scientist to have developed such a unique project.
The project, though at its infant stage, has already been listed on CoinMarketCap. Also, the DEX 24-hour volume is more than one million USD within just six weeks of existence. It has been rising steadily and slowly since then.
More so, the future of the Serum project as Defi protocol and a DEX is auspicious. It recorded an increase in decentralized exchanges running on it from a few to 20 DEXs within one month.
After reading this Serum review, do more research before investing in SRM cryptocurrency.
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