Serum

Market Making

Serum is an exchange infrastructure provider built on Solana that offers partner protocols on-chain trading at a speed and efficiency that rivals centralized exchanges.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Serum's open-source nature allows DeFi protocols and other projects to seamlessly plug into its network of liquidity to power their own exhanges or marketplaces.
What we like less
The protocol lacks any official audits despite being backed by top institutions and leaders.
What it means for you
Serum is a fully on-chain order book built on Solana that enables you to trade peer-to-peer in an efficient, trustless, and non-custodial way.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: SRM
  • Tags: Market Making
Key Metrics
  • TVL: $20M (Rank #124)
  • TVL Ranking by Market Making: #0
  • Blockchain: Solana
  • Chain TVL
    • Solana: $20M
Risk Assessment
Watch Out
Protocol Code Quality
  • Code not reviewed by any experienced auditors
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig requires only one signer (EOA wallet) which implies the protocol is highly centralized as control resides with just one admin
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to decentralized exchanges (DEXs), such as impermanent loss
Things to know about Serum

How Serum works

Serum is a decentralized exchange (DEX) built on Solana to leverage its high speed and low transaction costs. The majority of DEXs use an automated market maker (AMM) model as opposed to an orderbook due to Ethereum's low scalability and high gas fees, which makes an on-chain matching system inefficient. Serum was able to use an on-chain central limit orderbook (CLOB) as it was built on Solana, which can produce blocks every 400-600ms. The CLOB also allows liquidity to be aggregated across pools, rather than being fragmented across protcools. Ecosystem partners can compose with Serum's on-chain CLOB to share liquidity.

How Serum makes money

Serum collects fees on each trade. Trading fees are incurred when an order is executed. The protocol has 6 different fee tiers that vary depending on the amount of SRM the user is holding. 80% of the fees earned are used to buy back and burn SRM tokens. This leads to deflationary model over time as usage expands.

How you make money on Serum

SRM holders receive discounts on trading fees. The more you stake, the greater the discount. You can also stake SRM to earn 20% of the trading fees.