This guide lays out the philosophy and primary objectives of Project Serum.
Serum is an answer to a number of conceptual challenges encountered during DeFi summer of 2020. Among these challenges include driving mass adoption at the scale of 1 billion users.
This is not a unique feature to Serum, yet it is essential. Composability means that any application building on DeFi can automatically integrate every other one as if it was native. Every project starts as if it had already built out its own full service financial ecosystem. Builders and users can stitch protocols together to build something greater than the sum of their parts.
Speed and Usability
DeFi is slow and expensive. Trades are expensive and are slow to clear. Hence, customers prefer the cheaper, faster executions of CEXes. Serum runs on Solana blockchain, however, which brings the ability to process 65k transactions per second at block times of 400ms and at costs of $0.00001 per transaction.
Solana has plans to further scale these specs. An on-chain orderbook is now possible, paving way for a powerful ecosystem of decentralized financial services on par with TradFi giants.
Users will reap the advantages of an on-chain orderbook—the ability to choose the price, size and direction of your trade. Furthermore, the matching of bids and offers is fundamental for all financial transactions.
Builders can join the Serum ecosystem and leverage what the Serum DEX can offer. Networks like Ethereum, on the other hand, are currently too expensive and slow to support an orderbook due to operational complexity.
Most DeFi protocols ultimately rely on a centralized exchange API, tribunal of token holders, or the protocol team itself for oracle data. Serum abides by the principles of decentralization without sacrificing speed or usability:
Anyone can create SPL tokens, add markets to the DEX, host a GUI, and trade.
The orderbook and matching engine are all on-chain, thanks to Solana blockchain. Serum DEX does not rely on a centralized server to match trades.
Tokens only travel between users' personal wallets and on-chain programs which behave deterministically.
Solana has introduced Wormhole, a secure, decentral bridge connecting Ethereum to Solana. Wormhole allows existing projects, platforms, and communities to move tokenized assets seamlessly across blockchains to benefit from Solana’s high speed and low cost. Interoperability unlocks network effects and allows for the most efficient use of resources.
Bridging across to Solana negates that friction and still allows for the value to settle back to the Ethereum network if so chosen. Ultimately, teams need not encumber themselves to a single chain if they want to leverage the community of one chain with the performance of another.
Project Serum is built by the Serum Foundation, a group of experts in cryptocurrencies, trading, and decentralized finance. While they have built the Serum protocol, it is permissionless–they do not hold special power anymore.
It is up to you, the crypto community, to use it as you will.