Project Serum (SRM) is an effort to build a faster and cheaper decentralized exchange (DEX).
Serum itself is a protocol and ecosystem that supports decentralized exchanges (DEX). They built Serum on the Solana (SOL) blockchain. Partners participate in Serum’s ecosystem to get access to its “on-chain central limit order book. Access to the order book gives decentralized finance protocols the ability to share liquidity and deploy markets based features.
They claim Serum’s on-chain central limit order book and matching engine provides liquidity and price-time priority matching for traders and protocols. They claim this gives users the ability to choose price, size, and direction of trades.
In particular, they claim decentralized finance (DeFi) projects can bootstrap liquidity through Serum. This is important because liquidity is the ability to back assets with cash. For example, you can sell a liquid asset for cash at anytime.
A Faster and Cheaper Decentralized Exchange (DEX)
They claim Serum (SRM) is a faster and cheaper alternative to Ethereum (ETH) decentralized exchanges.
To use an Ethereum exchange, you need to pay a gas price. The gas price is the cost of accessing the Ethereum Virtual Machine (EVM), the digital computer that runs Ethereum. Without EVM access no Ethereum project can function. Gas can be expensive. Ycharts estimates the average Ethereum Gas Price was $27.89 on 16 January 2023. That means processing an Ethereum DEX transaction could cost $27.89.
Ethereum’s speed and capacity are small. I calculate Ethereum was processing 12.23 transactions per second (TPS) on 16 January 2023. That means an Ethereum exchange could crash or freeze up if it tries to process 13 transactions at once. Ethereum runs slowly because of all the encryption.
To elaborate, ycharts estimates Ethereum processed 1.057 million transactions on 16 January 2023. I divided 1.057 million by 24 and got 44,041.66 transactions per hour. I divided 44,041.66 by 60 and got 734.027 transactions per minute. I divided 734.027 by 60 and got 12.234 TPS.
In contrast, Solana was processing 3,305 TPS on 19 January 2023, Solana Explorer estimates. Hence, Serum could process 3,305 TPS because they built it on Solana.
Serum’s features include an asset agnostic order book. They claim this order book can match any Solana based trading project. They call this order book the Serum Core.
They claim many applications and protocols can share middleware in the Serum ecosystem. A developer ecosystem offers an on chain order matching service that matches infrastructure with trading applications. This allows for permission-less markets with greater flexibility and compliance.
For example, a decentralized app (dApp) can use a Serum order book market to match orders placed by another dApp.
They built a Serum DEX on the Asset Agnostic Order Book to allow the system to pool liquidity and share resources with trading features. A long-term goal of Serum is to process trades in under a second and reduce transaction costs to $0.00001.
The Serum Ecosystem supports retail traders, developers, and algorithmic traders. Developers can bootstrap liquidity or build marketplaces on Serum.
The Serum Token
The Serum Token (SRM) is the governance and utility token for the Serum ecosystem. Serum holders can receive a discount on Serum fees. SRM is available on the Ethereum blockchain as an ERC20 (Ethereum Request for Comment) token.
Another Serum Ecosystem token is the MegaSerum (MSRM). The MSRM is one million SRM stacked together. Users receive more benefits by holding a MegaSerum token. Users can create MSRMs by locking up one million SRM.
Serum (SRM) offers some value. CoinMarketCap gave Serum a 45.32₵ Coin Price, a $118.991 million Market Cap, a $4.591 billion Fully Diluted Market Cap, a $4200.862 million 24-Hour Market Volume, and a Total Locked Value of $518,649 on 19 January 2023. Serum had a $199.030 million Centralized Exchange (CEX) Volume and a $1.285 million Decentralized Exchange (DEX) Volume on 19 January 2023.
They base those numbers on a 263.245 million SRM Circulating Supply, a 10.161 billion SRM Maximum Supply, and a 1.093 trillion billion Total Supply on 17 January 2023. Serum was CoinMarketCap’s 176th ranked cryptocurrency on 19 January 2023 and 10th-most trending cryptocurrency on 17 January 2023.
The Serum Ecosystem
The Serum Ecosystem supports many DeFi protocols and apps. Those protocols include:
The VibeDex, the Atrix Automatic Market Maker (AMM), 01 Decentralized Derivatives, Mango Markets permission-less trading platform, Mayan Finance an on-chain Swap mechanism, the Zeta Markets DEX for derivatives trading, the Symmetry Protocol that lets anybody build or purchase an indexed investment, the Solrise DEX Pro uses Civic to verify DEX users, Sonar Watch is a DEX based on Serum liquidity pools, Slope is a Serum based mobile DEX that offers high speeds and low transaction fees, Step Finance allows users to Visualize, Analyze, Execute, and Agregate transactions on Solan’s largest portfolio manager. Raydium is an AMM built to enable fast trades.
Cyclose is a concentrated liquidity market manager. Spin is a derivatives trading platform for perpetual futures, OpenSerum is a community-run DEX. FTR provides fix rate swaps and futures contracts. Aldrin is a decentralized exchange that builds tools for traders. DexLab is a Solana launchpad for token minting that contains a Dex that leverages the Serum order book.
Coin98 is a one-step DeFi platform. The Jupiter Aggregator is a Solana Swap aggregator. Solflare is a simple interface that lets users connect to the Solana blockchain. SarosSwap is a decentralized automated liquidity protocol for exchange Solana tokens. Zelcore is a mobile-friendly platform for Solana digital assets.
Ties to FTX and Alameda Research
They admit the Serum Foundation, the organization building Serum, is backed by the infamous cryptocurrency exchange FTX and its hedge fund, Alameda Research.
Alameda Research’s CEO Caroline Ellison plead guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud and conspiracy to commit securities fraud on 21 December 2022. Federal prosecutors charge Ellison, FTX CEO Sam Bankman-Fried defrauded investors by using Alameda Research and FTX to move money around and manipulate the price of the FTT cryptocurrency.
There is no evidence, Serum was part of Ellison and Bankman-Fried’s scams.
What Value does the Serum (SRM) token offer?
I think the Serum (SRM) token offers some value because it offers liquidity and a faster and cheaper trading mechanism than Ethereum.
Mr. Market thinks Serum offers some value. For instance, CoinGecko gave Serum a 48.22₵ Coin Price, a $170.561 million Market Capitalization, a $47.039 million 24-Hour Trading Volume, a $4.649 billion Fully Diluted Valuation, and a $528,385 Total Value Locked on 19 January 2023.
They based those numbers on a Circulating Supply of 372.782 million SRM, a Total Supply of 1.092 billion SRM and a Maximum Supply of 10.161 trillion SRM. Serum was CoinGecko’s 173rd ranked cryptocurrency on 19 January 2023.
I think speculators need to examine Serum because it could become a powerful trading tool. In particular, Solana makes Serum scalable and fast. Thus, Serum is a trading solution that could reach a mass market.