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Serum DEX guide and review

UPDATE:
Here are some updates for SERUM as of Sept 2021

Serum Token Surges After Listing

The Serum decentralized exchange (DEX) went live on August 11th, 2020 and its native token SRM was listed on major exchanges such as Binance, BitMax and Uniswap. Just a few seconds after being listed on Binance, the price of the token shot up from $0.11 to over $1, a surge of 1,029%.

Serum’s brief Initial Exchange Offering (IEO) on the FTX exchange sold the SRM token for $0.11 and raised $660,000. Approximately 10 billion SRM tokens were minted as the maximum supply. However, the initial circulating supply is 181 million tokens. 

On May 3rd, 2021, Serum announced that it had burned and dropped to stakers a combined total of $1.3 million worth of SRM, sending the price of the token to $12.

The first Serum burn was in September 2020 where the exchange burned $400,000 worth of SRM. The burn constitutes 100% of Serum’s revenue. Serum also burned and dropped another $600,000 late in April 2021. Notably, a total of 50 million out of 10 billion SRM tokens are currently in circulation.

The team is keen on limiting circulation to increase the scarcity of the SRM token through continuous token burns. Over time, the number of tokens burnt will rise in line with the prevailing adoption rates.

Automated Market Maker, Swap Launches on Serum

In October 2020, Serum welcomed Swap, an automated market maker (AMM) into its growing ecosystem. 

An AMM is a decentralized asset trading pool that enables market participants to buy or sell cryptocurrencies. AMMs are non-custodial, meaning traders never give up control of their funds like on centralized exchanges. They are permissionless in nature so traders only require a wallet to provide liquidity and earn fees while others trade with the provided tokens.

In a bid to reward early adopters of the Serum Swap platform, the team airdropped 1 million SRM to liquidity providers on 10 different pools including SRM/BTC, SRM/ETH, SRM/USDT, and SRM/SOL among others, until November 25th, 2020.

NFT Marketplace Integration with Serum

In March 2021, non-fungible token (NFT) marketplace Solible announced their plans to migrate to Serum DEX, allowing users within the Solana ecosystem to trade its many collectibles.

The move allows SOL participants to buy and sell Solible’s NFTs in a completely decentralized way. Moreover, Solible’s already open features were made available to SOL participants. This includes being able to easily create and list customizable NFTs.

Solible launched late 2020 in the middle of the NFT boom. Soluble NFTs are entirely redeemable, and users have the option to pay in USDC, FROM, or Serum’s native token SRM.

Blockchain-powered gaming metaverse Star Atlas has also launched its own NFT marketplace called the Galactic Marketplace. The feature-rich marketplace is a decentralized exchange (DEX) that is fully integrated with Serum on the Solana blockchain. The integration with Serum enables the community worldwide to seamlessly trade meta-posters, spaceships, and any other assets. This core launch lays the foundation for a full-fledged metaverse marketplace and allows users to manage all of their asset transactions.

According to Star Atlas’s announcement, “Serum’s DEX protocol fulfills the needs of the expanding Star Atlas metaverse economy.” They go on to reveal that leveraging Serum enables Star Atlas players to participate in play-to-earn and decentralized finance activities through a unique in-game interface. Users are able to access the marketplace’s functionality simply by connecting their Solana ecosystem wallet.

Advisor to Serum, Michael Burgess says that “We’re happy to see the Serum DEX give rise to exciting, concrete use cases like supporting the NFT market of Star Atlas, and we’re excited to see where Star Atlas will go next as an immense metaverse MMO (massively multiplayer online game).”

Mango Markets and PsyOptions Win Hackathon Hosted by Solana and Serum

In March 2021, Solana and Serum hosted a two-week hackathon for decentralized finance (DeFi) projects building on their ecosystem. Over 3,000 builders were invited to develop new projects on top of Solana and Serum.

Mango Markets and PsyOptions came in joint first place at the event.

Mango Markets is a cross-margin trading protocol that integrates Serum’s on-chain order book. Mango Markets offers 5x leverage, a rarity in DeFi today. It will also only charge users for trading fees. Users will also be able to use SRM in the Mango Markets pool to reduce the Serum fees for all users. 

The other winner was PsyOptions, which replicates U.S.-style trading options within the Solana ecosystem. It features SPL token support and uses Serum to create the financial contracts.

The winners were selected based on five categories: functionality, potential impact, novelty, design, and composability. The judges included key figures from Solana, Chainlink, Sushi, Multicoin Capital, Circle, Parafi Capital, and CoinGecko.

Advisor for Serum, Sam Bankman-Fried said, “It seems like there will be multiple really awesome protocols going fully live from the hackathon, which should help continue to build out the Serum ecosystem. I was really excited to see the projects from the first hackathon, and these ones are even better. ”

Anatoly Yakovenko, President of the Solana Foundation, also said that he was “thrilled” with the standard of the competition’s entrants. He added, “Solana was built to scale DeFi to global adoption, and this hackathon gave builders an opportunity to leverage the chain’s speed and composability. We are looking forward to further supporting teams as DeFi rapidly expands onto the Solana blockchain.”

The hackathon was a further sign of development on the Solana blockchain, hoping to capture a portion of the DeFi market that Ethereum currently dominates.

Crypto Investment Fund FD7 Ventures Adds Serum to Their Portfolio

On March 26th, 2021, global cryptocurrency investment fund FD7 Ventures announced that they have added Serum to their holdings.

Prakash Chand, FD7 Ventures Managing Partner, noted that he was “extremely impressed” after learning about Serum co-creator Sam Bankman-Fried, who is also the founder of crypto-derivatives platform FTX and CEO of quantitative crypto trading firm Alameda Research.

“Beyond being a visionary and an incredible philanthropist, Sam is someone who gets things done. He has outlined an amazing roadmap to make Serum the fastest and cheapest DEX out there. Not just a little bit faster or more affordable, but exponentially so,” said Chand. “In order to reach true scalability where 1B people are transacting in DeFi and crypto, the goal is to be a million times faster than Ethereum. From what I’ve seen, I believe Sam and his team have the resources to get it done.”

FD7 Ventures continues to add to their crypto portfolio, which includes Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Polkadot (DOT), Cosmos (ATOM), and now Serum (SRM).

Serum is a decentralised cryptocurrency exchange (DEX). They are run by the Serum Foundation, made up of people with vast experiences in DeFi, cryptocurrencies, and virtual currency trading. The project was born to address issues inherent to decentralised finance (DeFi) such as centralization, speed, usability, and multi-chain support.

What is Serum?

Serum was created from the same team behind FTX Exchange, one of the leading derivatives and cryptocurrency exchanges on the market. Serum powers a DEX ecosystem that is fast while supporting multiple chains, stablecoins, order books, and wrapped coins. Although most DeFi systems are based on blockchain technology, a lot of them currently have centralized aspects.

For instance, the platforms are based on a smart contract, which can be exploited and have its stored funds stolen. Additionally, these platforms interact with the traditional world using centralized oracles that provide price feeds.

However, with Serum, everything is decentralized, making it cheap, fast, and secure for all users. Additionally, the platform powers a decentralized exchange that supports cross-chain trading without compromising its speed. It is also built on the Solana blockchain which can potentially reach 710,000 transactions per second (tps). Although at present, it can only handle around 50,000 tps, it is already exponentially faster than Ethereum’s 15 tps.

Key advantages of Serum

Cross-chain swaps  

In the decentralized currency landscape, trusted parties have to be employed to facilitate swaps. However, for Serum, the swaps are done trustlessly between decentralized projects.

SRM Token

SRM is the native token on the Serum network. SRM token holders benefit via discounted fees on the platform, among other advantages.

SerumUSD/BTC

SerumBTC is a model used on the platform to create tokens using Ethereum’s ERC-20 standards. The model is also ideal for tokenizing Bitcoin (BTC) on the parent blockchain, Solana. SerumUSD, on the other hand, is a model for creating blockchain-based stablecoins.

Physically settled cross-chain contract

To power the derivatives market, the contracts are used to power margin positions for DeFi lovers. With support from a leading derivatives platform, Serum is a platform with basic and advanced margin trading options to cater to new and experienced traders.

A decentralized Order Book

Away from automated market-making (AMM), the protocol has a decentralized order book. This will allow orders to be automatically matched on-chain. This gives traders full control over their trades.

A key hindrance of a distributed order book by other DeFi-focused protocols is because they are based on Ethereum, which has low speeds leading to congestion and increased fees.

Supported cryptocurrencies

Serum is lagging a bit behind other decentralized exchanges in terms of the number of coins and trading pairs listed. Currently, Serum lists 15 coins and 30 trading pairs including Bitcoin, Ethereum, Chainlink, Solana, Swipe, Yearn.Finance etc. See here for a full list.

Fees

Serum is said to have highly competitive trading fees, and with the Serum Token (SRM), you can get 60% discount on fees.

Serum Fees

Serum Token ($SRM)

SRM is the native token on the Serum ecosystem. SRM holders benefit from 50 percent of all fees on the network. Also, those with one megaSerum (MSRM) token, or one million SRM stacked together, are exempted from paying 60 percent of their trading fees.

Other utilities of the token include paying for transaction fees, just like Binance’s BNB. Also, it can be used for staking and providing a limited governance model.

Staking nodes require a minimum of 10 million SRM tokens and at least one MSRM. Nodes on the network can:

·         Provide insurance for multi-chain transactions,

·         Earn staking rewards,

·         Share rewards with its creator or leader,

·         Enhance the performance of Serum.

However, nodes can be fined for not performing their tasks diligently. Note that staking is an activity that involves locking tokens in a wallet to help power functions on a blockchain platform.

SRM’s initial distribution allocated tokens to its team and advisors (20%), project contributors (22%), locked seed and auction purchasers (4%), partner and collaborator fund (27%), and the ecosystem incentive fund (27%).

The net fees on the platform will be used to buy and burn the token. The significance of these is that it reduces the token’s supply, positively impacting on its demand.

Serum guide: How to use Serum

Getting started on and using Serum can be summarised in 4 easy steps: (1) create SOL wallet and deposit funds; (2) Connect SOL wallet to Serum; (3) Trade; and (4) Withdraw funds. Let’s take a look at each of these in turn.

Create SOL wallet and deposit funds

Create SOL wallet

Create a wallet on Sollet.io which will hold your Solana and Solana Program Library (SPL) tokens. Remember to copy down and keep your recovery phrase safe. Then you will have the option to choose a password, which we highly recommend for security. Click “create wallet” and you are done.

Deposit Funds

To deposit funds, you will of course first need some SOL tokens which can be purchased on FTX or Binance.

Click on your wallet and select “receive”. You will be able to either copy the deposit address or use a QR code. Note that you should ONLY send SOL tokens to this address, not SPL tokens such as SRM.

Deposit funds on Sollet
Deposit funds on Sollet

Convert to SOL tokens

There is also a function to convert native ETH to native SOL using MetaMask. To do this, simply go on the ETH tab and click “Connect to MetaMask”

Create another SPL address in your wallet

You will be able to add other SPL addresses to your wallet only if you have SOL tokens in it because adding tokens to your wallet costs SOL.

To add another SPL address click “+” on the top right corner. In the pop-up window, you will be able to add SPL tokens such as SRM, MSRM and wrapped tokens such as BTC, ETH, USDT and USDC. Alternatively, if your token is not on the Popular Token list, you can add it manually on the “Manual Input” tab and entering the token’s Mint Address.

Now that you have added an address you can deposit tokens through several means:

  • Deposit ERC-20 tokens and convert them to SPL tokens; or
  • Deposit your tokens to FTX exchange, withdraw them from the Exchange to Sollet. FTX automatically wraps your cryptocurrency in an SPL token so it can be used with Serum. If you want to do the reverse i.e. convert your wrapped SPL tokens back to their native chain, all you need to do is deposit the wrapped SPL tokens into FTX and withdraw the wrapped assets.

Connect wallet to Serum

Enter one of the Serum DEXes and click “Connect Wallet” on the top right hand corner. In the pop-up window, check that the address corresponds with your Solana wallet and click “Connect”. You will then be taken to the trading page and your wallet balances will be shown.

When you are done, simply click “Disconnect” on the top right hand corner to disconnect your wallet from Serum DEX.

Trading on Serum

Serum trading interface
Serum trading interface

Once you have connected your Sollet to Serum you can start trading. The interface is basically the same as most other cryptocurrency exchanges, however, to buy or sell a cryptocurrency, you will also need to “approve” the transaction on the Sollet pop-up window. You will then see your order in the Orderbook and in the Open Orders section.

To cancel your open orders, click “Cancel” in the Open Orders section.

Settling trades on Serum

If you have completed your trades or cancelled any Open Orders, your wallet balance will not be automatically updated. Instead, your funds will sit in an intermediary account. To move the funds back to your Sollet wallet, go to the Balances tab and click “Settle”.

Settling trades on Serum
Settling trades on Serum

Is Serum safe?

Serum is a decentralised exchange. Unlike with centralised exchanges, you do not need to send your funds to them to the Exchange in order to trade cryptocurrencies. However, you still need to be aware of security, for example, to keep your recovery phrase and password to your Sollet wallet safe.

On the other hand, decentralised exchanges are not controlled by a single entity, so if you make a mistake e.g. send your cryptocurrencies to the wrong address etc, there will not be anyone to help you.

Conclusion: user experience

Many consider a disadvantage of DEXes is that they are not beginner-friendly, and it was that case at its initial launch. However, by the time of writing the Serum team have really taken this common disadvantage into consideration and provided helpful resources and guides in the form of the Serum Academy.

Serum’s interface is very similar to FTX, so those who are already using FTX should not have any problem getting used to Serum. Users of other centralised exchanges, however, would require a little extra time to get used to where things are on the Serum interface, but we do not think it is a huge issue.

As for getting started, as with most decentralised exchanges you do have to do an extra step. setting up a wallet, in this case the Sollet Wallet. However it is not difficult to do so and would probably take most people under 5 minutes to complete.

Most importantly, trading on Serum is notably faster and powerful. In particular, we noticed a marked improvement from other DEXes such as IDEX.

All in all we are very impressed with Serum, but we really hope they can add support for more cryptocurrencies and trading pairs in the future. For now, we do plan to become regular users of Serum and owing to the strong team and what we see so far, the future for them seems highly promising.

Sources:

https://www.fxstreet.com/cryptocurrencies/news/serum-dexs-native-token-srm-goes-live-on-top-exchanges-srm-usdt-enjoys-bullish-domination-202008130244 https://coinquora.com/serum-burns-1m-tokens-sends-srm-to-new-high-of-12/ https://btcmanager.com/swap-automated-market-maker-serum-defi-platform/ https://beincrypto.com/nft-marketplace-solible-set-to-migrate-to-serum-dex/ https://medium.com/star-atlas/galactic-marketplace-solana-serum-powered-core-of-star-atlas-nft-trading-7a18d2d33371
https://cryptobriefing.com/solana-serum-announce-defi-hackathon-winners/ https://www.prnewswire.com/news-releases/crypto-investment-fund-fd7-ventures-adds-defi-project-serum-to-their-portfolio-301256904.html

The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur. 
Disclosure: Authors are invested in cryptocurrency projects and have cryptocurrency holdings – including those covered on this website. 

Angela Wang
Angela loves cryptocurrency, technology that improves our lives...and food. Anything that merges these worlds together is even better.

4 COMMENTS

  1. Hi, please how do I cancel an order?? I have been trying to cancel an order for about a month now it is not working. My money just hanged there.

  2. Tried connecting my Metamask wallet to my SOL wallet and it is literally just a link to the Metamask site. The wallet does not connect.

    Has anyone else been able to connect their Metamask and transfer ETH? Seems like beta version is not entirely functional yet.

Comments are closed.

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