Here we are going to introduce you to the Serum project, a decentralized exchange (DEX) that allows you to exchange cryptocurrencies and manage your funds with the simplicity of a centralized exchange, but paying less fees and with impressive speed. Serum is built on Solana which is an unauthorized blockchain (permissionless) whose different characteristics we will look at here.
Serum does not use the so-called proof of work validation system (Proof-of-Work) as is the case with Bitcoin, nor the proof of stake (Proof-of-Stake) as is the case with Dash. With Serum, we find the Solana blockchain and its proof of history (Proof-of-History).
To fully understand the link between the Serum project and Solana, we can draw a parallel with the Ethereum protocol on which decentralized exchanges are built. Most DeFi projects like Uniswap or Kyber Protocol operate through the use of smart contracts that run on Ethereum. Well it’s the same with Serum which offers all its users tools to build decentralized exchanges, the only difference is that they work on Solana and its unique blockchain.
The proof of history or proof of history is the basis of the Solana blockchain. To understand the principle, we must return to the technical fundamentals of a blockchain. On the Bitcoin blockchain for example, it is necessary to wait for one of the miners to validate a block so that the transactions are registered in his blockchain. This is a process that takes time, it will be recalled that a block on the Bitcoin blockchain takes between 10 and 12 minutes to be validated on average: it is blocktime. Thanks to this process, the whole network can “agree” on the fact that the block has been validated at an instant T, and the following block at an instant T + 1.
What happens with Solana and its Proof-of-History is that this validation system will ensure that all validators in the network will agree upon creation of the transaction. With this proof of history, the blockchain will thus cryptographically prove that a transaction was indeed created before another, to all validators and this almost instantly.
More transactions, lower fees
It is thanks to this validation system in proof of history that Solana can deliver such a high speed. To give an idea, Bitcoin has a blocktime of about 10 minutes while Solana has one of 400 milliseconds. Solana therefore creates 1,200 blocks while the Bitcoin protocol validates only one.
Solana’s technology not only makes it possible to reach between 50,000 to 65,000 transactions per second (when Ethereum reaches 15 transactions per second) but also to offer extremely low fees, we are talking about 0.00001 dollars per transaction, which represents about $ 10 in fees for 1 million transactions.
This high speed and low costs mean that Solana is a model that is more scalable than Ethereum in its current version for example and that this project is perfectly suited to decentralized finance which needs to carry out millions of transactions per hour. .
The large wrap
It should be noted that the Solana blockchain is intercompatible with those of Ethereum and Bitcoin. Concretely, it is quite possible to wrap your bitcoins or ethers as well as any other ERC20 token to exchange them while benefiting from the speed offered by Solana.
It is no longer necessary to wait 10 or 15 minutes for a Bitcoin transaction to take place since by using the wrapping technique, we can make many transactions or very fast transfers and then unwind them, thus taking advantage of the speed and very low costs inherent in Solana.
A strong team
We measure the solidity and seriousness of a project, in particular by looking at the team that constitutes it. Regarding Solana, we find a team with influential people from the world of finance and IT like Anatoly Yakovenko, a Qualcomm and DropBox alumnus and the creator of Proof-of-History Jeff Levy, an alumnus of Twitter and Google.
The founder of Project Serum is also the CEO of FTX and Alameda Research, the world’s largest crypto investment fund. There is no need to go through a KYC process to use Solana, just a wallet.
Some FTX and Solana employees are now working for the Serum project. Among the advisers, we will remember:
- Gary Wang |, Chief Technology Officer of FTX
- Robert Leshner, founder of Compound Finance
- Long Vuong, founder and CEO of TomoChain
The Sollet portfolio and the SOL
Like MetaMask with Uniswap, all you have to do is create a Solana wallet (a ‘solana wallet’, called a sollet) on https://www.sollet.io. Once the wallet is created, all you have to do is send SOL (Solana’s tokens) to your wallet. You can also add any ERC20 token by adding the smart contract. There will therefore be a swap between the SOL tokens, the native Solana tokens and the SRMs, the native Project Serum tokens.
Create your own DEX
One of Serum’s strengths is that it offers the tools necessary to create its own decentralized platform (DEX) by allowing you to connect your wallet and exchange in a decentralized manner. Anyone can therefore create an interface of DEX and build what is called a GUI (Graphic User Interface). This graphical interface will allow any user to do decentralized trading, without KYC and to use Ethereum and Bitcoin. Another advantage is that it will be possible for the creator to recover 20% of the transaction costs generated on his interface.
It is not necessary to bring liquidity into this process. Each DEX interface built on Serum is in fact linked to a central order book which is linked to all the DEXs. Concretely, this means that by selling a crypto on a DEX, the user is potentially selling it to another user of another DEX, and vice versa at the time of the purchase.
Note that it is also possible to do Liquidity Providing on Serum, to borrow and lend via a market interface built by Serum on Solana, to lend and borrow SPL or ERC20 tokens that have been wrapped on Solana (“SPL-wrapped”).
As a guide, you will find the list of all DEXs that have been built with Serum here: https://serum-academy.com/en/dex-list/.
Creation of market pair
It is quite possible to trade an ERC20 token whose pair is not available on a particular DEX, you just have to create it via the “Add Market” functionality. For example, we can create an ETH / BTC pair, which would not be available on this DEX (at least on the GUI to be precise).
Le lives SRM
The SRM is the governance token found in the Serum ecosystem, much like Binance’s famous BNB token.
When you keep SRMs, you get the right to vote on the progress of the project, you reduce the costs during trades and you can also staker them. You should know that with regard to masternodes, these are only possible from 10 million tokens or 1.2 million dollars at the time of writing, not accessible to all budgets, we will agree.
The Serum project is still a recent project. When it was created, 175 million SRM tokens were put into circulation with the aim of providing liquidity for early investors. Serum then decided that 125 M of these tokens be blocked in reserve with the aim of bringing them out later if liquidity needs arose. The current supply is 50 M tokens.
From the start of 2021, the first unlocking phase will begin: 825 million tokens will be unlocked, in particular via staking rewards, to reach the first billion SRM tokens in circulation at the end of 2021. The rest of the supply will be unlocked in a linear fashion every day until the end of 2027, to arrive at a total supply of 10 billion tokens in circulation. Concretely, today, there is 0.5% of the total supply in circulation.
We will note, to finish this overview, that Serum has very high level partners: FTX, TomoChain, Chainlink (integration of oracles for price referencing on DEX), Kyber Network, Compound, etc.
Discover the whole Serum project by going to the official project website: https://projectserum.com/