One of the most highly sought DeFi services is decentralized exchanges. Dex service providers are among the Defi projects with the highest TVLs. Dex platforms leverage smart contracts called Automated Market Makers to offer peer-to-peer asset exchanges.
However, one of the biggest problems most Dexes face is low speed and high transaction costs. Being based on Solana, Serum Dex comes as a solution for investors.
What is Serum?
Serum defines itself as a multichain decentralized exchange platform. This Dex platform fosters low transaction costs and high speeds in the DeFi space by leveraging Solana and other fast smart chains. The platform allows participants to leverage liquidity pools to ensure assets are accessible and easy to exchange.
At the core of the Serum Dex is their native token Serum, which helps power the network. This guide will look into the use cases of the SRM.
Serum Use Case: Ecosystem Grants
One of the main use cases associated with the Serum token is issuing grants. The Serum Dex has an ecosystem dubbed EcoSerum, connecting investors, developers, and other traders within the network. The EcoSerum has a fund that aims at fostering developments.
According to the network, all participants building on Serum can apply and get grants. The process of applying for the grants is simple as follows;
- Get a pitch showing your vision, roadmap, demos, and team
- State the entire grant size you are requesting for
- Thoroughly describe your project and how it will be linked to Serum.
Just recently, EcoSerum raised $100 million to foster developments. The fundraisers help in the growth and expansion by building projects. Ecoserum funds all promising proposals passed through the governance process.
EcoSerum gets its funds through the fees. 2% of Serum fees automatically go to EcoSerum. In the past, promising projects got grants from 1000 to 100000 SRM. Therefore, the Serum token is a significant player in funding ecosystem grants and projects.
Serum Use Case: The Governance Token
Another major use case connected to the SRM token is governance. Most crypto projects use DAO to help in project governance. DAO is basically a system that helps in automating decisions within a network. The Serum network follows a similar system by leveraging its token SRM.
According to the network, SRM holders will get a chance to participate in voting sessions and participate in network developments. The Serum network has an excellent protocol designed to ensure efficiency in the governance of the network.
According to them, their process starts with a formal and informal discussion on the proposed topics by the community forums. The governance proposals must relate to;
- Liquidity mining programs
- Voting on addition of new features
- Voting on which projects can receive the grants
After a series of discussions and a final proposal, the voting begins. Serum holders will be able to participate in the voting session. 1 SRM token represents precisely one vote. Hence, the more the token you hold the voting power.
For persons intending to create proposals for the voting, you must hold 25 thousand SRM. To create the entire governance, you must stake 100 thousand SRM tokens. Hence, the SRM token plays a significant role in governance and voting.
Serum Use Case: Staking and Rewards
The third use case associated with the SRM token is specifically in staking and rewarding. Holders of the SRM token can stake it in pools and earn rewards in the same token.
Users can stake SRM on the FTX exchange, AScend, and Project Serum page. Setting up a staking node for the SRM token requires you to hold a minimum of 10 million tokens, including 1 Mega Serum. A staking node is a machine running software, designed to interact and communicate with the blockchain.
According to the network, Nodes are responsible for performing some on-chain tasks and receiving rewards in the process. Users of the SRM token can also stake on the available nodes and share a part of the rewards.
The reward is not well known since they depend on the volumes of the Serum Dex. All in all, the SRM token is popularly used within the network as a staking and rewarding asset.
Serum Use Case: Trading Fees Payment
Finally, the SRM token is majorly used in the network to pay trading fees in the DEX. The Serum platform, as mentioned earlier, is a decentralized exchange network based on the Solana chain.
In every transaction passing through the Dex, Serum will charge some fees for completion. Accordingly, the SRM token helps in fee payments for all Serum transactions.
Accordingly, holders of the token will get discounts on the protocol fees. The project’s token summary page highlights the various discounts on fees SRM holders will receive.
Serum Moving Forward
The guide has been exploring the use cases of the Serum token. SRM helps in governance, ecosystem grants, paying trading fees, staking, and rewarding. But what is in store for the future?
Of course, investors have a lot of hope that this coin will succeed. Its presence in multiple chains, including Ethereum, is genuinely a sign of a better future.
The network boasts of high transaction speeds. However, since the platform is also available on Ethereum, it’s doubtful that Ethereum users enjoy the same rate. Considering that Ethereum is set for improvements in the coming months, Serum users on Ethereum cold also enjoy high transaction speeds and reliability.
Indeed SRM tokens can be a good investment. However, investors should know that it faces stiff competition from other similar projects.