Serum DEX guide and review

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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.

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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.

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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 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.

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

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”.

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.

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