When you buy crypto coins, do you want to make use of a decentralized crypto exchange? Or do you rather choose for a centralized exchange, such as Binance or Gate.io? Nowadays more people are seeing the benefits of a decentralized crypto exchange and use of it is increasing.
Serum is one of several decentralized crypto exchanges in the crypto world. In this article we explain what Serum is, what tokens it has and where you can buy it.
What is Serum?
Serum is a decentralized cryptocurrency exchange (DEX) built on the Solana blockchain . Serum is one of the first major projects built on Solana and also supports other cryptocurrencies including Bitcoin and Ethereum . Since it was one of the first projects on this blockchain, there were many people who still had a lot of doubts about the functioning of the project. However, the blockchain and the project has proven itself for some time. This is partly due to the advantage that Serum has over other decentralized crypto exchanges.
Because unlike other DEXs, trading at Serum is based on the order book, like on centralized exchanges. It can process between 50 and 65,000 transactions per second, which is also the current TPS of the Solana blockchain.
Serum exchange currently has about 30 different coins that you can all trade against USDT or USDC. Anyone can create their own DEX on top of the Serum DEX and support additional trading pairs using the instructions outlined on Serum Academy. There are over 18 Serum DEXs to date and Serum DEX is also available on Android and iOS devices through the Coin98 mobile app.
How does Serum work?
It is important to note that Serum DEX is still under development and its functioning will likely be affected by its changing role in the blockchain and projects around it. There are three fundamental mechanisms that are the basis of the Serum DEX. See a short video below on how Serum works.
The cryptocurrencies you see on Serum DEX such as YFI , USDC and USDT are not ERC-20 tokens, but SPL tokens. SPL tokens on Solana are just like ERC-20 tokens on Ethereum. All non-SPL tokens used on the DEX serum are packaged for use on Solana-based protocols, the same way Bitcoin is packaged for use on Ethereum-based protocols.
Crypto wrapping can simply be understood as giving your crypto to a borrower who then mints (creates) an equal amount of tokens on another blockchain.
Cryptocurrencies from other blockchains can be converted into SPL tokens and traded on the DEX Serum in two ways: using the FTX exchange or using the Metamask browser extension/wallet.
In both cases you need the Sollet.io wallet, which is also used to communicate with the DEX Serum. The Sollet.io wallet is not a browser extension and does not require any software download. It is completely web based.
The FTX exchange offers SPL wrapped versions of popular cryptocurrencies such as Bitcoin, Ethereum, and Chainlink . As you may have guessed, FTX is the custodian that holds the Bitcoin, Ethereum, etc. that you provide to create wrapped SPL versions that you can use on Serum DEX. These are deposited into your Sollet.io wallet when you mine them through the FTX exchange.
Any ERC-20 token can be converted into an equal wrapped SPL token using the Metamask wallet. When you do this, your ERC-20 tokens will be locked into a smart contract on Ethereum. Next, the SPL token’s Sollet.io wallet will create equal tokens for you to use in Serum’s DEX.
Serum hosted two simultaneous initial exchange offers (IEOs) for the SRM token on August 11, 2020. These offers took place on the FTX and BitMax exchanges. Each exchange sold 3 million SRMs at a price of about $0.11 per token. With a total of 6 million SRMs sold, 660,000 dollars were raised. KYC was required for both IEOs and a maximum of 1800 participants was set for both exchanges.
Distribution of the tokens
During the pre-sale, approximately 4% of the total stock of 10 billion SRMs was collected. Of course, the remaining tokens of Serum have also been considered. The remaining tokens (i.e. the remaining 96%) were distributed in the following way:
- 20% was reserved for the team and the advisors.
- 22% was reserved for project employees.
- 27% was set aside for ecosystem stimulation funds.
- 27% was reserved for a partner and cooperation fund.
Only 1% of the total Serum stock is currently in circulation. This includes 161 million SRMs. This number also includes the SRMs that were sold during the IEO, but also the SRMs that are already for sale on the crypto exchanges.
More tokens have been created over time. An additional 825 million SRM tokens were pulled out to encourage users to build on the Serum platform (by eagerly leveraging the Coin98 app, for example).
The remaining 99% of SRMs that are not in circulation will be completely locked up until August 2021. After that date, the remaining MRS will be unlocked on a straight-line basis over a six-year period. This was done to ensure the long-term viability of the Serum project. Thus, there will always be a good balance between the supply and demand of the token, which benefits the price of SRM.
Cessation of SRM
Serum DEX has a fairly extensive staking system. To start, to become a node, you need to deploy 10 million SRMs, 1 million of which are in the form of an MSRM. Anyone can create their own node by becoming a leader and letting others delegate the necessary SRMs to their node to become a validator. Each node has a maximum stake of 100 million SRM.
Nodes have two functions on the Serum network: supporting cryptocurrency exchanges between blockchains and running the network. The second function refers to the fact that orders on the Serum DEX are not executed automatically due to the nature of the Solana blockchain: they must be manually activated by a third party, in this case another node.
While node rewards are not set, the annual rate of return is set at 2% per year, with a maximum of 13% additional based on the node’s performance. These revenues come from a portion of Serum’s ecosystem fee, which is currently set at 10%. This fee is subject to change by a community vote in the future. It seems that SRMs can only be listed on the FTX exchange at the moment.
Vote with SRM
In the context of the elections, the serum validation nodes can be set to ‘voting’ or ‘delegated participation’. For voting nodes, the SRM delegated to the node can vote independently of the leader of the node. All delegated RSs on delegated nodes automatically vote in the same way that the masternode votes for a particular proposal. Voting takes place via Serum’s platform.
It costs 50,000 RS to submit a proposal, which is deducted from the total amount at stake for a node. More than 60% of the total number of SRMs currently in play must vote in favor of the proposal for it to be passed. If the proposal is approved, the 50,000 SRMs are returned to the node. If rejected, the 50,000 SRMs will be burned. Nodes can propose changes to protocol rules, such as fees.
Serum (SRM) Chart
How can you buy Serum (SRM)?
If you are looking to buy SRM tokens, the best way to do it is on Binance and Bitvavo . Of course, these tokens are also offered on other crypto exchanges, although they are not as secure as Binance and Bitvavo. In addition, these two crypto exchanges also offer the greatest liquidity for SRM.
It is also possible to buy SRM on a decentralized crypto exchange . However, the chance that things will go wrong here is many times greater, since you have to go through many more steps. In addition, there is no customer service that you could fall back on. That is why it is important to think carefully before you actually use a decentralized crypto exchange.
How can I save SRM?
If you want to save your SRM, you don’t have too many options at this point. SRM is a token based on Solana, and Solana is a new project. SRM is also one of the first cryptocurrencies built on the Solana blockchain. Unfortunately, there are therefore only a few wallets that support these tokens.
Do you want to go for a smartphone wallet? Then it is best to use the Coin98 app. Other options are the Sollet.io web wallet. This wallet also supports the SRM tokens. If you want to go for the safest choice, choose a hardware wallet . However, there are few hardware wallets that support SRM tokens. Therefore, pay close attention before you decide to deposit SRM on a hardware wallet.
Is the Serum DEX safe to use?
Serum is a decentralized exchange. Unlike centralized exchanges, you don’t have to send your money to the exchange in order to buy cryptocurrencies. However, you should still be aware of your security, for example by keeping your seed phrase and password for your Sollet wallet safe.
On the other hand, decentralized exchanges are not controlled by a single entity, so if you make a mistake like sending your cryptocurrencies to the wrong address, there will be no one to help you.
The roadmap of Serum
The script for the Serum project appears to be divided into five parts. Parts one and two have already been completed. Part one is the launch of the Serum token and Serum DEX. Part two is building a bridge between the channels, opening the door for third-party DEX development on Solana, and introducing ecosystem grants for promising projects related to Serum.
Of the remaining three parts, only the third is currently visible. The intent is to implement well-known DEX benefits such as decentralized borrowing and lending, yield farming, and even the integration of automated market maker smart contracts (this is the technology behind current DEXs such as Uniswap ). It is unclear when the third part will be completed, as the Serum project does not have a specific timeline.
One specific element missing from the current roadmap was noted in Serum’s white paper and promotional video, namely two unique tokens, SerumBTC (FBTC) and SerumUSD (FUSD). Both will be “truly decentralized” tokens representing Bitcoin and USD respectively.
While the details of the first option are a bit more speculative and include a series of perpetual futures contracts, the second option will simply base its price on a basket of stablecoins . This ensures that there is no central point of failure for stablecoins.
More generally, Serum hopes to draw enough attention to Solana to convince other projects to build on it. Sam Bankman-Fried is also investigating the possibility of launching Sushiswap on Solana with the help of the community. It’s not clear how Serum’s centralized roadmap will coexist with the protocol’s decentralized management, which is also still in its infancy.
Serum is a very ambitious project. The Serum project still has a long way to go. The Serum DEX is still in its infancy, but progress is being made. The number of DEXs built on Serum has grown from a handful to almost 20 in a month. You can also find the Serum DEX on CoinMarketCap.
We are very curious about the role that Serum will play within the market of decentralized crypto exchanges. There are many exchanges that are way above Serum, such as Uniswap and PancakeSwap . It is difficult to rise above them as a newcomer. However, it is more than possible when Serum understands what the market needs and then adjusts their product accordingly. The future will tell us which way things are going. Until then we will have to wait.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com