What is Project Serum: should we expect more ?

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3 years ago

In community: Cryptocurrency(66bf)

Decentralized Finance (DeFi) is now the brightest sector in the cryptocurrency industry because it can provide financial services without the interference of a third party such as banks or any other non-bank financial institution.

The DeFi market grew by leaps and bounds in 2020 and shows no signs of slowing down in 2021. According to DeFi pulse, the total locked value (TVL) in DeFi has grown to $27.13 billion from $15 billion on January 1, 2021 .

With the rise of DeFi, this space has also seen a large increase in the number of projects offering DeFi services. The Ethereum blockchain platform hosts almost every DeFi project that exists on the market. But the question is how long can this growth be sustained on the Ethereum blockchain? The problem is already there, as Ethereum fees have risen a lot in recent months.

So the FTX cryptocurrency derivatives exchange team sat down to build a DeFi. They decided to build a decentralized exchange (DEX) but not on Ethereum, given the congestion on the network. After analyzing different blockchains, the team finally chose Solana, which promises a high TPS and lower transaction fees. Thus was born the Project Serum.

What is Project Serum?

Project Serum is a decentralized exchange (DEX) built on the solano blockchain from the same team that created the crypto derivatives exchange FTX. Through Project Serum, or simply Serum, the FTX team aims to offer a scalable and liquid decentralized exchange (DEX) for derivatives, solving some of the vulnerabilities and structural limitations in the existing DeFi space.

This project is the brainchild of Sam Bankman-Fried who founded the cryptocurrency derivatives exchange FTX in 2019.The Serum whitepaper was published in July 2020 and the project went live on August 30, 2020. The Serum It is one of the first major projects built. in Solana.

Despite being native to Solana, serum Dex is designed to be fully interoperable with Ethereum and Bitcoin. It currently has around 30 different cryptocurrency markets, all of which are traded with USDT or USDC.

The serum is pure DeFi. Let's take a look inside the serum:

What do we find in Serum?

Serum is a decentralized exchange (DEX) and ecosystem that provides unprecedented speed and low transaction costs for decentralized finance (DeFi). According to its website, Serum offers less than a second trading and settlement speed, and $0.00001 per transaction.

According to serum whitepaper, there are seven main ingredients of Serum DEX: Orderbooks, Cross-Chain Support, native SRM token, full integration of Ethereum and Solana, physically established cross-chain contracts, SerumBTC and SerumUSD.

Features of Serum DEX

Order Book: Serum DEX features decentralized automated limit chain order books that allow users to submit orders with addresses, prices, and sizes, giving them control over their trades. The standalone feature of Serum DEX is that it also has ETH and BTC order books, which are made possible by cross-chain support. These order books are not centrally controlled. They are completely programmatic and automatically match requests between third-party users.

They serve as the main source of Serum prices. A fee is also charged for each trade that goes into a buy / burn of SRM, Serum's native currency. Keeping SRM gives you up to 50% discount on all Serum fees.

Cross-chain support: This feature allows users to exchange assets between chains without trust, unlike more current protocols that rely on trusted parties to manage the exchange. Users can trade BTC, ETH, ERC20s, SPL token, and more on Serum DEX.

This means that Serum is fully interoperable with Ethereum and Bitcoin, giving it a huge advantage when pitted against other DeFi DEXs like Balancer and Uniswap. As Serum is based on Solana, all assets used on the platform are SPL-based tokens, including its native SRM token. SPL is a token standard on Solana like ERC20 on Ethereum.

All non-SPL tokens are packaged for use in Serumin in the same way that Bitcoin is packaged for use in Ethereum-based protocols. This allows cross-chain exchanges without the need for trusted parties to manage the exchanges. Users can trade BTC and ETH in seconds.

The FTX exchange offers SPL wrapped versions of Bitcoin and Ethereum. ERC20 tokens can be converted to an equivalent wrapped SPL token using the Metamask wallet.

In cross-chain exchanges in Serum, both parties involved in the exchange must deposit a certain amount of collateral to execute an exchange. If one of the parties does not receive their funds on time, they can dispute the exchange with the smart contract by sending a snapshot of the transaction request that was stored on the Solana blockchain. If the receiver's dispute is valid, you get the sender's warranty. If invalid, the sender receives part of the recipient's share.

SerumBTC and SerumUSD: SerumBTC is a wrapped SPL-based decentralized utility token in which the price is pegged or linked to its underlying asset or BTC form.

SerumUSD is a decentralized shrouded stablecoin that follows ERC-20 and SPL tokenizations that have no single point of failure.

Serum Token (SRM)

SRM is a native SPL-based utility token from the Serum ecosystem. SRM also exists as an ERC20 token on the Ethereum blockchain. Maintaining SRM brings many benefits to users. As already mentioned, trading through the Serum order book charges a fee that goes towards an SRM buy / burn. SRM tenure offers 50% discount on all commercial fees on Serum.

1 million SRM tokens can also be converted to a MegaSerum (MSRM) and vice versa. Having 1 MSRM gives 60% of all commercial rates. But only 100 can exist at any one time.

According to Whitepaper, 10,000,000,000 SRM tokens have been minted and there will never be more. Total circulating supply at launch was approximately 10% and will grow 15% annually.

The SRM token drives a limited governance model at Serum. According to the Serum whitepaper:

"While most of the Serum ecosystem will be immutable, some parameters without major security risks (eg future fees) can be changed by an SRM token government vote."

SRM is also required to run a validator node for the SRM stake.

Stake SRM

SRM tokens can also be wagered on a node. Each validation node must Each node must have at least 10,000,000 SRMs and must include at least one MSRM. The person who creates a node becomes the leader, and others delegate the necessary SRM to their node to become a validator. There will be an SRM pool that will be distributed as wagering rewards to each node.

The validation nodes perform two functions in the Serum network: they help in the exchanges between chains and receive a part of the fees for any transaction in which they do this, and they activate the orders since the orders in the Serum DEX are not fulfilled automatically due to the nature of the Solana blockchain. Therefore, the orders are activated manually by a third party. In the case of Serum, they are validation nodes.

To validate each transaction, the node leader receives 15% of the node's total reward, and the other 85% is divided proportionally. They also receive the Annual Percentage Yield (APY) set at 2% per year, with up to an additional 13% based on node performance. These returns come from a portion of the Serum ecosystem fees, currently set at 10%.

SRM Wallets

SRM can be stored in web-based mobile app wallets and browser extension wallets. On the web, there are three wallets: Sollet.io , Bonifida and solflare wallet .

Math wallet is a mobile app-based wallet, while Coin98 comes in both the mobile app and browser extension versions. Solong wallet is also available as a browser extension wallet.