Project Serum is a brand new decentralized exchange (DEX) for the decentralized finance (DeFi) sphere from the same team that created FTX Exchange. It is said to test the boundaries of DEXs using a non-Ethereum blockchain. Built on Solana, Serum was created to solve the centralized vulnerabilities existing in the current DeFi space in the same trustless and permissionless way that DEX traders are comfortable with. With that being said, Serum still needs to be tested with real users first. Although the team boasts that the DEX is already functional, it hasn’t been launched as of now. But we might see Serum go live sometime in the next couple of weeks.
Here’s our interview with Sam Bankman-Fried, Co-founder and CEO of FTX Exchange.
What is Project Serum?
Dubbed to be the next frontier, Serum is claimed to be a “pure” form of DeFi that is built on the Solana blockchain and will run on a central limit order book that is fully trustless. This makes it highly scalable, cheap, and fast.
Serum is completely decentralized down to its seed protocol. It runs on a non-custodial exchange with cross-chain trading support and no KYC required. This will offer users the same UX level comparable or even better than what centralized exchanges can currently offer. With the price, speed, and usability that Serum has, there’s no reason that customers who are used to trading in centralized exchanges wouldn’t give it a chance.
Despite being native to Solana, Serum is designed to be completely interoperable with Ethereum and Bitcoin, a huge advantage when pitted against Binance DEX or other DeFi DEXs like Balancer and Uniswap. This gives them an edge since many traders are keen to trade other cryptocurrencies besides the ERC-20 tokens that most DeFi platforms currently offer.
With this in mind, there’s a chance that Serum could eclipse other DEXs in the crypto space when it launches. It has the convenience and familiarity that a centralized exchange can offer but in a non-custodial setup. Serum also offers incentives to node operators to participate in staking from a referral system with “leaders,” inflation, and trading fees.
A demo of Serum was shown during The Antidote: Serum’s Weekly Convergence on 18th August 2020. The demo showed how users can trade on Serum. Here’s the demo shown during the broadcast:
During the demonstration, Sam Bankman-Fried commented that there may be some further changes to the appearance of the interface and there will be more features to come. However, the trading feature is already functional.
Solana is the first-of-its-kind web-scale blockchain that can potentially reach 710,000 transactions per second (tps). This is possible with a verifiable delay function called SHA 256 hash chain that enables Optimistic Concurrency Control. At present, it can handle around 50,000 tps, which is exponentially faster than Ethereum’s 15 tps.
Ethereum dominates the crypto space today but in terms of scaling capabilities, Solana has something more lucrative to offer. This doesn’t make it better than Ethereum. But for now, it is more scalable. Compared to older blockchains, Solana can process transactions quickly at much lower costs. Its transaction throughput could rival even Visa. While other smart contract platforms are loud in terms of their blockchain scaling capabilities, very few have claimed to reach the level of throughput Solana claims to have achieved.
Solana has also partnered with other crypto giants like Terra, ChainLink, and many others.
The Team Behind Project Serum
Project Serum is coined to be the new DEX to be launched by FTX Exchange- a cryptocurrency exchange and derivatives platform. Check out our review of FTX Exchange. The founders of Project Serum are also behind FTX exchange and they have also partnered with titans in the industry who have successful projects including the founders of Multicoin Capital, TomoChain, Compound, and Kyber Network.
Serum ($SRM) Token
$SRM is Serum’s governance token based on the Solana blockchain but alternatively also has an Ethereum or ERC-20 version.
Around 10 billion SRM was minted as the maximum supply at inception; of which approximately 175m tokens will be circulating initially and will grow to 181 million tokens after the IEO (see below). This amount is then set to grow by around 15% annually. It gives holders governance power over the Serum ecosystem. While most components in Serum are deemed immutable, some parameters, like future fees, can be modified via SRM governance votes. The net prices are used to buy and burn the SRM tokens.
SRM can be staked and can also be utilized to pay for fees. This gives SRM holders as much as 50% discount on all trading costs. Also, 90% of all SRM tokens are designed for long-term hold or lock-ups. This is to ensure that the team is here for the long-term.
Serum has cross-chain support which enables the trustless exchange of assets from different blockchains. This is a striking contrast to other protocols that would require trusted parties to permit cross-chain swaps. Serum opts to do this is in a fully decentralized way, using over 100 validators.
SerumBTC and Serum USD
Serum BTC is a wrapped utility token in which price is pegged or tied up with its underlying asset or BTC form. It’s also an entirely decentralized Solana-based BTC token.
Meanwhile, Serum USD is a decentralized wrapped stable coin which follows both ERC-20 and SPL tokenizations for USD and has no single point of failure.
DeFi, in essence, has become incredibly disruptive, challenging the status quo of money in our economy. But up until now, it has mostly served the appetites of yield farming speculators. Serum’s revolution is aimed to bridge the gap between professional traders and DeFi. Their cross-chain support, order books, scalability, and other features could serve as a dangle-the-carrot to professional traders so they would take business from centralized counterparts to DEXs. Overall, Serum is a very promising DEX and DeFi protocol. But we could only know what it’s truly capable of once it launches in the next few weeks.
On 28th August 2020 the team announced that Serum DEX will be launching “this week”.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. We also take a deep dive into popular DeFi topics such as Yearn.finance ($YFI), Balancer ($BAL) and ($COMP).
The DeFi series on this website also covers topics not explored in YouTube. For an introduction on what is DeFi, check out Decentralized Finance (DeFi) Overview: A guide to the HOTTEST trend in cryptocurrency
Learn about Yearn.finance ($YFI) and all its various hard forks and iterations:
- Yearn.finance ($YFI) farming with yEarn Pool
- YFII Yield Farming- the controversial $YFI Fork
- YFFI Yield Farming – Another fork of the popular yield farming Dapp
- Andre Cronje, Founder of yEarn.Finance ($YFI) talks DeFi with FTX
For in-depth information other specific DeFi projects, check out our DeFi token guides:
- 0x ($ZRX) guide: The future of cryptocurrency exchanges?
- AAVE ($LEND)
- Ampleforth ($AMPL) review: The essential guide to this DeFi protocol
- Bella Protocol ($BEL): One-click crypto banking
- Balancer Finance Guide and Review ($BAL)
- ChainLink ($LINK) guide: A key link in the DeFi space
- Compound Finance ($COMP)? A guide to hacks and tips on the latest DeFi platform
- Cream Finance ($CREAM): What is it?
- Curve Finance ($CRV) guide
- DeFi Money Market and DMM Governance ($DMG) guide
- FalconSwap ($FSW) Guide
- Fuse Network ($FUSE): What is it?
- Hedget ($HGET): Does it live up to the hype?
- Kusama ($KSM): How is it Polkadot’s wild cousin?
- Linear Finance ($LINA): The future of synthetic exchange platforms?
- Mantra DAO ($OM): The DeFi project that’s all about community
- OIN Finance ($OIN): DeFi’s first foray into Ontology
- Orion Protocol ($ORN) explained
- Polkadot ($DOT): Everything you need to know about the DeFi darling of China
- RAMP DeFi: How does it unlock the value of staked assets?
- Rio DeFi ($RFUEL): The next frontier of finance?
- Serum ($SRM): First look at FTX’s new DEX for the DeFi wave
- Solana ($SOL) explained
- SushiSwap ($SUSHI) explained
- Synthetix ($SNX): Everything you need to know about this top DeFi project
- THORChain ($RUNE) information and guide
- Trustswap ($SWAP) explained- Next generation of DeFi transactions
- YF Link ($YFL): Combining the best of ChainLink ($LINK) and Yearn Finance ($YFI)?
- YFV Finance Yield Farming
Tutorials and guides for the ESSENTIAL DEFI TOOLS:
- MetaMask Guide: How to set up an account? PLUS tips and hacks for advanced users
- Uniswap review and tutorial: Beginners guide and advanced tips and tricks
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel and (for now) FREE weekly newsletter so you can be notified as soon as they come out!
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.