What is Serum (SRM)? A complete explanation! =

When you want to buy crypto, you can choose between a central exchange (CEX) and decentralized exchange (DEX) . There are many different types of the latter. This is because every blockchain needs its own DEX, and it is not difficult to develop a DEX. In fact, you could duplicate another DEX just like that.

However, building a DEX that works well and is used often is a lot more difficult. Alameda Research and FTX exchange try Serum . This is a decentralized exchange that runs on the Solana (SOL) blockchain. You can also buy tokens that run on other blockchains here.

In this article we explain what Serum (SRM) is, who founded it, how the DEX works and what the main advantages and disadvantages are.

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  • View quickly
  • What is Serum (SRM)?
    • Who developed Serum?
  • How does serum work?
    • Serum runs on Solana
    • Decentralized order book
    • Swap tokens between different blockchains
  • Serum’s SRM token
  • What can Serum be used for?
  • Serum pros and cons
    • Advantages
    • Cons
  • How do I buy Serum?
  • Conclusion

What is Serum (SRM)?

Serum (SRM) is a decentralized exchange that runs on the Solana blockchain . However, it is also possible to trade tokens from other blockchains on Serum. Serum is interoperable. This means that the protocol can work between different blockchains, which is quite unique. We often see that only tokens that run on the same blockchain as the DEX can be traded on the DEX.

Another unique feature of Serum is that it uses a decentralized order book . Most other DEXs use an Automated Market Maker (AMM). An AMM is an automated algorithm that determines the prices for tokens, but also allows sellers and buyers to swap their tokens between liquidity pools and the user’s wallet address. An order book is normally only used by central exchanges.

Serum is also interoperable. This means it can interoperate with other blockchains, allowing users to also trade tokens from the likes of Ethereum or Polkadot on Serum . This greatly contributes to the further development of DeFi, as this is a problem that many applications and protocols encounter.

The exchange also has its own native token called SRM. You can use this token for various things. For example, it is possible to pay transaction costs with SRM tokens, which means you receive a 60% discount on the costs. You can also use the SRM token for staking or use it for governance functions.

Who developed Serum?

Alameda Research and FTX exchange are behind the development of Serum . Both companies have several years of experience in the crypto and blockchain market, and decided to launch Serum on Solana in 2020. They chose this blockchain because it is a lot faster than competitors such as Ethereum, but also because of its low transaction costs. In addition, Solana is interoperable with many other blockchains.

https://www.youtube.com/watch?v=MykQvvtacCk

How does serum work?

Serum is designed to be able to execute transactions quickly and cheaply. According to the team behind Serum, users should experience the benefits of both CEXs and DEXs. The best of both worlds has therefore come together in Serum.

Serum runs on Solana

Serum is built on a smart contract that runs within Solana’s blockchain. So it is a decentralized application (dApp), like many other projects that run on Solana .

Solana is a blockchain known for its high speed. The blockchain can process up to 50,000 transactions per second (TPS). Users often pay less than 1 eurocent to carry out a transaction! According to many people, Solana is therefore one of the main competitors of Ethereum.

Because Solana can process transactions quickly and cheaply, Serum users will also be able to benefit from this high degree of scalability. Serum’s competitors, such as Uniswap (UNI), do not have this advantage . For example, Uniswap runs on Ethereum, which is experiencing many problems with its scalability. Users here sometimes pay hundreds of dollars in transaction fees and have to wait tens of minutes for their transaction to be processed successfully.

In the video below, from AllesOverCrypto itself, we tell you more about what Solana is.

 

Decentralized order book

Instead of an AMM, Serum uses a decentralized order book. In an order book, buy and sell orders are placed on a list. This is done based on price. There is normally a central authority that ensures that this is done correctly. That is a lot more difficult to do when it has to be done on a decentralized network. That’s why other DEXs use an AMM.

In an AMM, users trade their tokens between liquidity pools. The AMM first sets the price of the trading pair, after which the token swap can take place. In that case, as a user you have little input. For example, you will have to make do with the fixed price, and you cannot use special order types.

The developers of Serum have ensured that a protocol automatically links buy and sell orders . This makes it possible to select an order yourself, which also makes it possible to offer cryptocurrencies for a self-determined price. Or you can buy cryptocurrencies by selecting a price.

As a user you have much more control over the buying and selling of your cryptocurrencies. That is one of the biggest advantages of the decentralized order book used by Serum.

Not quite sure what an order book is yet? The video below explains more about how an order book works on crypto exchanges. You could watch this video if you want to learn more about this topic.

 

Swap tokens between different blockchains

Serum has a built-in mechanism that allows you to swap tokens between other blockchains . It does not matter which blockchain the tokens run on. Still, as you may know, you cannot simply swap tokens between different blockchains. So how does Serum do that?

Let’s say you sell a Solana token on Serum for an Ethereum token. When you want to swap your Solana token, you will first send it to a smart contract on Solana. The other user sends their token to a smart contract on Ethereum. Both tokens serve as collateral. Subsequently, the collateral is released on both blockchains, after which the swap has been successfully executed.

Because you can also swap tokens from other blockchains, you can go to Serum for all your trades. Normally you should use a different DEX for each blockchain. That is no longer necessary when you use Serum. So it provides more convenience and takes less time.

Serum’s SRM token

Serum has its own native token: SRM. You can use this token for various things, and it therefore has an important function within the Serum DEX.

  • Transaction Fees . When you perform a transaction on the Serum DEX, you can pay for it with SRM. In that case you will receive a discount of 60% on the transaction costs to be paid. It can therefore be advantageous to use SRM tokens.
  • Governance . When you own the SRM token, you can help decide on the future of Serum. You are part of the organization and can vote on the decisions that need to be made, but you can also make a proposal to the community. Serum is therefore a DEX for and by users!
  • Speculation . Like any other cryptocurrency, you can also use the SRM token for speculation. By trading SRM you can generate profits and returns on your assets. This is of course risky, because the price of SRM can also fall.

A total maximum supply of 10 billion SRM Tokens has been set . During the presale, 4% of the maximum stock was sold (400 million tokens). The team then carefully thought about the other distribution of the tokens. Serum’s tokenomics (SRM) looks like this:

  • 20% – for the team and advisors;
  • 22% – for project employees;
  • 27% – for ecosystem incentive funds;
  • 27% – for a partner and cooperation fund.

What can Serum be used for?

Serum can be used for trading tokens. If you want to buy or sell cryptocurrencies, you can go to Serum’s website. You will first have to link your external wallet here. It is important that you link the correct wallet so that you can store the purchased cryptocurrencies.

After performing a token swap, you will find your tokens directly in the linked wallet. You can then leave it here, use it for another swap or send it to another wallet.

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Serum pros and cons

Now that you’ve read what Serum is and how it works, you might have an idea of the main benefits of this project. To briefly summarize what Serum is, we will list the most important advantages and disadvantages of Serum for you.

Advantages

  • The decentralized order book provides more control . Unlike most other DEXs, Serum uses a decentralized order book. This gives users more control over the orders they execute. This way they can set their own prices and choose the orders they want to fulfill.
  • Swapping Tokens Between Different Blockchains . Although Serum runs on the Solana blockchain, you can also buy tokens that run on other blockchains here. Think of ERC20 tokens that run on Ethereum, or BEP-2 tokens that run on the Binance Smart Chain.
  • Process transactions quickly and cheaply . You can process transactions quickly and cheaply on Solana’s blockchain. Since Serum runs on Solana, you can take advantage of this scalability. You have performed a swap on Serum almost immediately, and in many cases you pay virtually no transaction costs.
  • Discount on Transaction Fees . When you pay your transaction costs with the SRM token, you receive a 60% discount on the transaction costs. This encourages many users to leverage the SRM token, which can positively promote liquidity and price.

Cons

  • Serum runs on a smart contract . Something can always go wrong with a smart contract, because they are fully automated. In that case, an error cannot be corrected manually and you may lose tokens.
  • Risk of Losing Bet . When you buy cryptocurrency you always run the risk of losing money. You can buy more exotic crypto coins on a DEX. The chance that you buy a scamcoin here is many times greater than on a central exchange. Cryptocurrencies are first checked on a central exchange before users can trade them.

Would you like to see the information about Serum that you have read in this article summarized in a video? In that case, the video below is recommended.

https://www.youtube.com/watch?v=6uuwNCPLAo8

 

How do I buy Serum?

Buying serum on Binance is a piece of cake. With this explanation you will be the proud owner of SRM within a few steps.

  1. Sign up for free at Binance here
  2. Login to your account
    Please note: keep your username and password safe!
  3. Press Buy Crypto at the top left and choose Bank Deposit
  4. Fiat tab instead of Crypto and check that it ‘s on Euro
  5. Choose iDEAL if you want the money directly on your account and Bank Transfer (SEPA) if you also like it if it takes a few days before the money is on your account
  6. Wait until your euros have been deposited into the Binance account
  7. Click on Trading at the top and select Classic
  8. You are now on the trading section of Binance. Click on FIAT on the right and select EUR
  9. A number of coins can be traded on Binance for euros. But, most of them are traded against Bitcoin. Look up the trading pair BTC/EUR and buy Bitcoin with your euros.
  10. BTC tab and look up Serum by its ticker SRM
  11. BTC/SRM trading pair . By clicking on it, you can buy Serum
  12. Congratulations! You are in possession of your favorite cryptocurrency!

Conclusion

Serum is a decentralized crypto exchange that runs on the Solana blockchain . You can buy various crypto tokens here. These do not necessarily have to run on Solana, because Solana also offers support for other blockchains, such as Ethereum and Polkadot.

Instead of an AMM, Serum uses a decentralized order book . Normally, order books are only used by central exchanges. The team behind Serum have therefore found a way to still use an order book on a decentralized network.

If you believe in the operation and successful future of Serum, you could buy the SRM cryptocurrency. This is Serum’s native cryptocurrency. Always do your own research before making a purchase decision. This way you can base your choice on research and learn from possible mistakes you make.

After reading this article you will hopefully know more about what Serum is and how it works . Do you want to know more about Serum, the SRM cryptocurrency or other projects after reading this article? Then ask your questions in our AllesOverCrypto Facebook group and our experts will answer all your questions.

Do you have other crypto related questions? The easiest way is to look up your question in our FAQ. What you can also do is that you google your question + “AllesOverCrypto”. You will then quickly arrive at one of our other articles that deal with that topic, so that you can quickly learn more about that topic.

Header photo by Serum

 

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