Run by Project Serum operating on the Solana blockchain, Serum is a next-generation decentralized exchange (DEX) and ecosystem. The Serum DEX offers traders fully decentralized crypto trading, including trustless, fast, and cheap limit orders using an automated order book system. Furthermore, as a decentralized platform, Project Serum uses the native Serum token (SRM) to govern the network and incentivize honest behavior. Also, the SRM token and sister MegaSerum token (MSRM) work together to offer incentives to attract users to the platform.
In this article, we’re going to dive deep into the Project Serum crypto ecosystem. Also, we’ll explore the Serum decentralized exchange (DEX) and the blockchain it operates on, Solana. Additionally, we’ll look at Serum’s two native tokens, SRM token and MSRM token, and the similarities and differences between them.
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What is Serum DEX?
As the core feature of Project Serum, Serum is a decentralized exchange (DEX) and ecosystem operating on the Solana blockchain. Serum DEX offers some of the most competitive trading fees and transaction finality speeds within the cryptocurrency industry. Decentralization is paramount to Project Serum, ensuring there are zero centralized aspects of its infrastructure. This includes abstaining from using oracles to centralized price feeds, a centralized service often used by decentralized finance (DeFi) protocols. However, Serum DEX is a blockchain-based, fully decentralized service. Moreover, it’s extremely fast, cheap, and easy to use!
The Serum decentralized exchange (DEX) facilitates cross-chain trading, meaning users can trade assets from across different blockchains. Furthermore, Serum DEX supports wrapped coins and stablecoins too. Also, Project Serum gives users the opportunity to use the Serum DEX to create their own custom financial products. Additionally, instead of using the traditional automated market maker model, Serum DEX facilitates decentralized automated limit order books. Serum end-users can place orders with fully automated matching through an on-chain order book. This allows traders to have more control over their trades.
Project Serum and the Serum decentralized exchange (DEX) use the native Serum token (SRM) as the main incentive and governing asset for the Serum ecosystem. SRM token holders can choose to trade, stake, and participate in buy and burn fee incentives for a reduction on trading fees. Moreover, Project Serum plans to physically settle cross-chain contracts, enabling frictionless margin positions in decentralized finance (DeFi) when trading synthetic assets. With the average exchange transaction fee being just $0.00001, Serum DEX offers cheaper trading fees than any other decentralized exchange (DEX). Further, settlements on Serum DEX are near-instant. This is thanks to using the Solana blockchain as a host for the application.
Solana is one of the fastest-growing blockchain ecosystems in the industry, recently achieving a top-ten position of cryptocurrency projects by market cap. Capable of processing over 50,000 transactions per second (TPS), Solana holds the title of the fastest blockchain in the world at the time of writing. Solana achieves this status without the need for layer-2 solutions, operating with a novel decentralized clock that time-stamps transactions in conjunction with an optimized Proof-of-Stake (PoS) consensus mechanism.
As a reputable, fast, and scalable smart contract-enabled blockchain, Solana is becoming an increasingly popular choice for blockchain developers to design and deploy decentralized applications (dApps). Transactions are settled in sub-seconds, plus the cost of transactions is under a penny!
The Serum decentralized exchange (DEX) living on the Solana blockchain mirrors the speed and cost of Solana. Serum DEX aims to offer users a fully decentralized trading platform with the ease of using a centralized exchange. Moreover, despite operating from the Solana blockchain, the Serum DEX has fully interoperable features and functions with the Ethereum blockchain. This allows traders to exchange assets such as Bitcoin (BTC), Ethereum (ETH), ERC-20-based tokens, and SPL-based tokens (the Solana blockchain standard), plus more.
Serum Token (SRM)
Project Serum’s native utility token, Serum token (SRM) is natively on the Solana blockchain using the SPL token standard. However, the SRM token is now also cross-listed as an Ethereum ERC-20 token standard too.
A core principle of the SRM token is accruing its value through utility and adoption rather than hyperinflation. As such, Project Serum designed economic lockups for the SRM token, ensuring true value and commitment to the project. Over 90% of the available SRM tokens have long-term unlocking periods. This includes all seed sales. All SRM tokens are cryptographically locked in a smart contract for a year, impossible to attain. Then, there is a six-year unlocking period equating to approximately 1/2190 SRM tokens per day.
Serum has a maximum supply of 10 billion SRM tokens. The initial circulating supply of 175 million tokens was introduced primarily for providing liquidity to the project. However, many SRM token holders chose to lock up their tokens, in turn reducing the circulating supply. At the time of writing, Project Serum states there are 50 million SRM tokens in circulation, with 125 million in reserves. Moreover, there is an allocation of 825 million SRM tokens to go towards Serum ecosystem incentives and initiatives. This includes the distribution of staking rewards for the Serum platform.
Traders use the Serum token (SRM) largely to earn a passive income with crypto through staking rewards and a reduction in fees when trading on the Serum decentralized exchange (DEX). Token holders can receive a trading fee discount of up to 60%!
Moreover, token holders can participate in specialized on-chain governance. SRM token holders who choose to participate in governing the network can vote on updates to certain parameters of the project. This includes fees and rewards structures.
MegaSerum Token (MSRM)
Project Serum’s second token in the Serum ecosystem is the MegaSerum token (MSRM). MSRM tokens are native to Solana with an SPL token standard while also being cross-listed as an ERC-20 token, much like the SRM token. The two tokens are very similar, offering trading fee discounts and governance rights. However, there are several key differences.
One MegaSerum token (MSRM) is equivalent to one million SRM tokens. Users can either lock up one million SRM tokens to receive one MSRM token or redeem one MSRM token for one million SRM tokens. MSRM tokens are far more scarce than SRM tokens, with a maximum supply of 1,000 MSRM tokens. This works out so that at most, only 10% of the SRM token supply could be locked with MSRM tokens.
MegaSerum tokens (MSRM) are available for Serum ecosystem users to show their commitment and belief in Serum, alongside increasing utility of its platform. MSRM token holders who stake on the platform receive slightly more rewards than if they were to stake one million SRM tokens. This helps incentivize the utility of the token and the Project Serum crypto ecosystem.
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Serum Staking Nodes
To become a Serum node, users must provide at least 10 million SRM tokens, including at least one MegaSerum token (MSRM). However, there is a cap on the amount one node can stake, at 100 million SRM tokens, or 100 MSRM tokens. Nodes receive network participation rewards varying upon the performance and the amount of activity within the Serum ecosystem. Nodes are responsible for part of the blockchain’s operations, including providing “blockchain histories for cross-chain settlement validation”.
For traders and users of the Serum ecosystem who wish to earn a passive income with decentralized finance (DeFi) and contribute to the project but don’t have 10 million SRM tokens, there are other options. SRM token holders can stake their tokens towards a node. Each Serum node has a leader, who is the founder of the node, and not necessarily the holder of the most SRM or MSRM tokens. The leader receives a small fraction of the node staking fees.
Anyone can found a node, plus, anyone can stake SRM tokens to support someone else’s node. Moreover, Serum node staking offers governance rights over trading fees within the Serum decentralized exchange (DEX). Traders can stake their SRM tokens on the platform in an instant. However, there is a cooldown period following unstaking tokens for one week.
SRM token holders can stake across various platforms, including AscendEX and FTX. Moreover, SRM token and MSRM token holders can stake their locked tokens towards a node or use them towards creating their own node.
The Serum node rewards distribution is via the native Serum token (SRM). As previously mentioned, the leader of nodes receives a small proportion of rewards more than other node contributors. Leaders receive 15% of the total rewards, with the remaining 85% split proportionally between other Serum node stakers.
As standard, each node receives a 2% annual percentage yield (APY) base rate on staked funds. However, this has the opportunity to increase to an additional 13% based upon the performance of challenges and duties. Moreover, nodes have the opportunity to receive further rewards for specific challenges to nodes. Some of these challenges include nodes providing collateral of SRM tokens. This is to ensure honest behavior with the risk of funds being slashed (and burned) for malpractice.
At the time of writing, nodes receive 10% of the Serum decentralized exchange (DEX) fees. However, the SRM token holders have the opportunity to adjust this in the future. Furthermore, the remaining 90% goes towards a “buy and burn” initiative of the SRM token. In turn, this increases value for SRM token holders.
Project Serum Crypto Ecosystem
The Project Serum crypto ecosystem offers services for developers and users, from initiation to deployment. Project Serum provides a crypto ecosystem with a wealth of resources for creating your own applications on Serum. Also, Project Serum offers a wide variety of user-friendly decentralized applications (dApps) for non-technical-minded users interested in dipping their toes into decentralized finance (DeFi).
Developers who choose to build on Serum are automatically eligible for an EcoSerum grant. This enables promising projects to receive the funding and support they need to increase brand awareness and user adoption. One of the projects in receipt of the EcoSerum grant is Phantom, a decentralized finance (DeFi) and non-fungible token (NFT) crypto wallet. Another is Coin98, offering its users payment gateway services alongside a non-custodial wallet.
The “Built on Serum” section of the Project Serum crypto ecosystem showcases an extensive list of live applications operating on Serum and Solana. One of the popular decentralized applications (dApps) is Raydium (RAY). Radium facilitates the yield farming aspects of the Serum decentralized exchange (DEX) as an automated market maker project running on Solana. Additionally, Solrise Finance (SLRS) is Solana’s core decentralized asset management platform offering non-custodial services.
The Project Serum crypto ecosystem also provides a list of developer resources and contact points. Here, you can view pinned repositories, client code, on-chain code, and much more. Further, the “Project Ideas” section offers various tutorials, which can also be found in the “Developers Resources” section on the Project Serum website, under “Ecosystem”.
Additionally, the Project Serum crypto ecosystem allows users to explore the list of nodes operating on the network. Also, users can see a comprehensive overview of all the SRM token integrations and other project tokens active within the Project Serum crypto ecosystem. Furthermore, the “Ecosystem” provides a link to the project Whitepaper.
Exploring Serum DEX & SRM Token Summary
Project Serum’s main feature is the Serum decentralized exchange (DEX) and ecosystem. Running on the Solana blockchain, the fastest blockchain in the world, Serum DEX offers traders cross-chain trading with the most competitive fees in the industry. Furthermore, with the native SRM utility token, traders can save up to 60% on trading fees! Also, the Project Serum crypto ecosystem makes use of a second token, MegaSerum token (MSRM), as a further incentive for the platform.
Serum DEX is not like most decentralized exchanges or automated market makers. Project Serum’s native DEX facilitates fully automated order matching, using order books for transactions. This enables traders to use limit orders, allowing more control over their trades. Moreover, transactions cost less than a hundredth of a cent with orders filled in under a second.
In the future, Serum plans to introduce the SerumBTC and SerumUSD assets into the project ecosystem. SerumBTC will be a model for implementing a Solana (SLP) and Ethereum (ERC-20) tokenization of Bitcoin as a trustless interoperable BTC token. Plus, SerumUSD will provide a decentralized stablecoin with full transparency and no single-point-of-failure.
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