Serum is one of the largest decentralized trading protocols on the Solana blockchain. It owes its popularity to the extremely high transaction speed, tiny trading fees, an on-chain limit order book, and ecosystem grants. Here’s what you need to know about the Serum protocol.
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WHAT IS SERUM?
From the beginning of cryptocurrency, Decentralized space, and the development of DEXes, users and developers have always been limited by the high gas cost and slow transactions, hence the development of Serum DEX.
The Serum DEX aims at solving these problems and also providing a user-satisfactory platform for users to trade cryptocurrencies and perform other activities which will be discussed in this article. It leverages the exceptional speed and low transaction costs of the Solana blockchain to provide users with a highly satisfying trading experience.
WHAT IS A DEX?
According to the Chainlink blog, Dex (Decentralized Exchange) is a peer-to-peer marketplace where users can trade cryptocurrencies in a non-custodial manner without the need for an intermediary to facilitate the transfer and custody of funds.
Decentralized Exchange employs the integration of blockchain-based smart contracts to replace traditional financial systems like banks, brokers, and payment processors, also allowing users to maintain full custody of their funds via their self-hosted wallets during trading. An example of a DEX is Serum DEX.
THE HISTORY OF SERUM
Serum was founded by Sam Bankman-Fried and was launched on the 31st of August, 2020 being the first major open-source project to be built on Solana. Serum is supported by various projects like the Serum foundation and is backed by a consortium of experts in cryptocurrency trading and decentralized finance like FTX, Solana Foundation, etc.
WHY SOLANA BLOCKCHAIN?
Solana blockchain has a unique characteristic of high transaction speed and a low transaction fee. The Solana blockchain is designed to support a large number of transactions per second, statistics according to Nansen research show that the Solana blockchain supports up to 65,000 transactions per second.
BENEFITS OF THE SERUM DEX
Serum, like most decentralized exchanges, leverages a smart contract called Automated Market Maker to offer peer-to-peer asset exchange. An Automated Market Maker (AMM) is an underlying protocol in the decentralized finance (DeFi) ecosystem that allows digital assets to be traded automatically through a mathematical formula of pricing algorithm to price assets.
Serum aims to solve the problem of high gas fees, and slow transactions and improve the issues of centralization. Serum also aims to drive the Global mass adoption of DeFi.
One of the features that make Serum different from other DEXes is that it has an on-chain limit order book. An order book, according to Wikipedia, is a ’list of orders that a trading venue uses to record the interest of buyers and sellers in a particular financial instrument’. An order book shows the various lists of orders, be it buy orders or sell orders taken by users/traders. It also serves as a guide to traders indicating the direction of the momentum of the price of a certain cryptocurrency asset
While centralized exchanges like Binance have order books hosted off-chain (on a server). But Serum’s on-chain limit order book is hosted on a distributed ledger which is then confirmed by the network.
The on-chain limit order book and engine provide liquidity and price time matching to traders, users, and composing projects. This gives users and traders the leverage to choose the price, size, and direction of their trades.
SERUM USP (Unique Selling Point)
One of the features of Serum that makes it unique is its fast and accurately efficient way of finding the best order for users to swap. In other words, Serum is unique for its extremely fast transaction speed and relatively low transaction fee. Serum has a gas fee or transaction of $0.00002 per transaction and takes only 1 second to initiate a transaction.
FEATURES OF SERUM
- Governance Token: Serum uses a system similar to DAO which helps in governance where the power of decision-making is put in the hands of users hence, its decentralization. Here, Serum holders get a chance to participate in voting sessions and network developments. These sessions involve discussion on topics such as the Liquidity mining program, voting on the addition of new features, and voting on which projects may receive grants.
- Trading Pairs: Serum offers 45 swap pairs so far. Some of the major cryptocurrencies traded on Serum include BTC, LINK, SOL, ETH, and stablecoins like USDC and USDT. Others include FTT/USDC, YFI/USDC, STEP/USDC, RAY/USDT, SRM/USDC, etc.
- Staking and Rewards: Serum offers users/holders the opportunity to stake their tokens and get rewarded. Holders can stake their SRM tokens on AscendEx, FTX, and project Serum to receive exciting rewards and interest.
- Trading Fee Payment: The Serum Token (SRM) can be used to pay trading fees on the Serum DEX for every transaction done on the platform. Also, holders of the token get a 60% discount on all transaction fees done on the DEX. The trading fee on Serum Dex cost $0.00002.
- Orderbook: The order book allows users to make transactions on the DEX at their desired prices. It might interest you to know that the On-chain order book is less censored, meaning it doesn’t rely on any centralized body to function.
- Ecosystem Grant: Serum Dex has an ecosystem called Ecoserum connecting investors, developers, and other traders within the network. The Serum Ecosystem has a fund that aims at fostering development; these funds are obtained from the transaction fees of transactions done on the DEX.
Let’s spotlight some of the services Serum offers:
- Serum Core: The Core feature of Serum is its Asset Agnostic Order book whose modularity and feel structure will allow other projects to build on it as their backend testing engine for various types of features in DeFi.
- True composability: Serum allows the possibility for a diverse range of applications.
- Developers’ Ecosystem and services: Solana permissions market allows for even greater flexibility
- Solana speed and cost.
Serum (SRM) is the utility and governance token of Serum. SRM is native to the Solana blockchain and is also available on the Ethereum blockchain (as an ERC20 token).
Serum token is currently trading at $0.8273 with 24hr trading volume of $73.59 Million and a Market Cap of $227.39 Million with a circulating supply of 263.24 million SRM.
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