Why we invested in Project Serum

A Billion Person Vision for Blockchain

To properly articulate our thesis for Serum, we must first provide context on how the vision of “mass appeal” products supported by blockchain technology has evolved.

DeFi TVL compared to traditional markets is small, but growing. However, the Solana/Serum vision extends to payments, social media, and other “mass appeal” applications as well.

Enter Project Serum

To support 1B users on-chain, strong “primitives” or building blocks need to be available. These primitives include stable stores of values (stablecoins), borrowing/ lending protocols, oracles, asset pools, etc. Decentralized Exchanges are also a key primitive that has been addressed via AMM type-projects on Ethereum and other L1s.

Key Advantages: Orderbook design allows greater capital efficiency

“The past is orderbooks. So, I think, it is the future.” — SBF

Daily DEX volume has recently been below $3B, versus peak volumes in the $200B range for CEX, and $558B for US Equities Market Volume. Source: https://duneanalytics.com/queries/4388/8550
  • Rather than “passive” AMM liquidity, orderbook liquidity is “active” because the orders represent a desire to execute at a certain price.
  • The “active” nature of an orderbook appeals to a wider group of users (e.g. market makers).
  • The introduction of limit orders on orderbooks takes away possibilities for “impermanent loss” which is a byproduct of trading both sides of a market passively.
  • The switch from AMM to orderbook results in a market with deeper liquidity, ability to handle larger trades with lower slippage and allows participants to actively control positions via hedging.

Key Advantages: Composability allows protocols to begin building with a fully fledged financial infrastructure

Composability is a system design principle that refers to the ability of various systems to work together and assemble in multiple, different combinations. In the DeFi/blockchain ecosystem, this means that any application building on a certain blockchain can integrate with any other application on that chain as though the two were natively linked.

Serum, a key building block that leverages the Solana L1, powers numerous applications that compose with Serum’s CLOB.

Key Advantages: Solana performance

The Solana blockchain provides the infrastructure necessary to support Serum and allow for its key advantages. Solana has: scalability (50K TPS/subsecond global state finality), low costs (avg. txs fee is $0.0007), composability (high performance without layer 2s/sharding), top tier ecosystem partners, and decentralization and security.

The high-performance of Solana makes it a natural L1 to support mass appeal applications

Key Disadvantages

Early Days — The Serum/Solana ecosystem has been battle-tested, but it is still in its early days. Solana, for example, still operates in “Mainnet Beta” while stability is being optimized. Bugs are sometimes found and promptly fixed (https://medium.com/solana-labs/mainnet-beta-stall-postmortem-ba0c6064e3), making the product stronger and more resilient going forward. Serum is still progressing on its own roadmap to improve functionality and optimize efficiency.

When measured purely on speed, Serum has too high a latency to support some TradFi institutional use cases. However, it is ideal for applications with lesser speed requirements and/or those that operate better with near instant settlement. Additionally, it is important to note that even some equities and derivatives trading (for example, Robinhood-type platforms) are not very latency sensitive.


Serum is currently in Phase 3 of their roadmap. Phase 3 has a focus on igniting the Serum ecosystem while also adding necessary infrastructure to expand the addressable market, like more cross-chain bridges. More info: https://projectserum.com/#/roadmap.


Governance is a key part of the Serum ecosystem, which adopts a staking-based governance model to allow SRM stakers to have a key voice in determining the direction of Serum’s future.

Serum node list. Source: https://twitter.com/ProjectSerum/status/1312176559185301504

Ecosystem Development

“Whichever way the ecosystem is expanded, it all bottoms-out to the DEX and orderbook” — Project Serum (Medium).

The high-performance of the Solana blockchain unlocks additional “design space” which allows better primitives to be built, like Serum. This performance initiates a positive feedback loop that could result in mass appeal applications clustering around the Solana/Serum ecosystem.
In a short amount of time, the Serum/Solana ecosystem has exploded; while not all projects listed directly interact with Serum, most do. Source: https://twitter.com/solanians_/status/1402843464841064451

Ecosystem — Projects building and composing with Serum

Below we “deep dive” into some projects that have integrated or build on Serum to create an experience and differentiated product that was previously unattainable:


Bonfida is a straightforward and archetypal example of a Serum integration. Bonfida describes itself as the “flagship Serum GUI”, and for good reason. On top of offering a highly intuitive DEX GUI to trade through Serum, the Bonfida dashboard also features powerful complementary features for an enriched trading experience: advanced on-chain order types, exclusive markets and listings, and different trading modes for users of varying skill. Bonfida also developed Bonfida Bots to allow users to automate trading strategies on Serum, including TradingView strategies and copy trading.

Mango Markets

Mango Markets seeks to create a trader and maker friendly decentralized trading platform, starting with on-chain margin trading (on Serum’s central limit orderbooks) as well as perpetual futures.

Decentralized Gaming — Star Atlas, Aurory, OpenEra, DefiLand, etc…

Gaming represents a massively untapped market with a huge community of gamers that have yet to experience the power of decentralization. Avid gamers will be all too familiar with strict rules and regulations around buying/selling of in-game items for fiat money.


Oxygen is a decentralized prime brokerage focusing on collateralized lending/borrowing. Lending protocols have been a staple of DeFi for years with a core demographic being niche crypto traders, but Oxygen has a strategy to scale to hundreds of millions of retail users via direct integration with Maps.me (100M+ users). Users will be able to earn passive interest on their portfolio or borrow cash against their existing positions. Built with a performance-first approach, Oxygen has a suite of professional features for leverage, shorting, options writing, and structured products.

Oxygen will use Serum as a building block to achieve their vision of being an on-chain prime broker with borrow/lend, yield generation, and structured products production.

Mercurial Finance

Mercurial Finance uses dynamic market making vaults to provide low slippage swaps for stablecoins, while also improving liquidity provider yields by optimizing capital returns across various strategies. Mercurial will be deeply integrated with Serum, tapping into its orderbook flows and liquidity to reduce slippage and boost transactions on both protocols.


Options minted on Psyoptions are represented as SPL tokens to allow composability such as trading options on Serum orderbooks. Users will be able to write and trade options on their dapp, which will be integrated directly with Serum orderbooks.


Raydium, a hybrid automated market maker (AMM) with over $275M TVL at time of writing and built on the Solana blockchain, leverages the central orderbook of the Serum DEX to enable lightning-fast trades, shared liquidity and new features for earning yield (https://raydium.io/Raydium-Litepaper.pdf).

  • Raydium is unique because it places orders on the Serum orderbook using liquidity from its liquidity pools. This means that Raydium is a “pure” market maker taking locked tokens to “create a series of orders at different price points and sizes to provide liquidity.”
  • This liquidity, posted to Serum, can be accessed by anyone using Serum orderbooks. In practice, “approximately 50% of swaps” from Raydium customers ended up on Serum orderbooks with the other 50% of small transactions being sent to internal pools (https://twitter.com/burglol/status/1386218173851004929).
  • Much was made of Serum’s decision to depreciate their front end swap UI (https://twitter.com/projectserum/status/1385488823656742912), but this was a healthy development for Serum made possible by the strong building from projects like Raydium. It allows both projects to focus on their strengths: Serum focuses on improving their infrastructure, Raydium on creating a strong and differentiated experience for their customers, all while $SRM burns increase.
  • Future Raydium integrations with best-in-class projects like SushiSwap should further enhance customer experience while deepening Serum’s orderbooks (https://raydium.medium.com/100-days-of-raydium-453863c684f6).


There are two tokens in the Project Serum ecosystem: Serum ($SRM) and MegaSerum ($MSRM), both of which derive value through utility & governance.

  • Reduced fees — up to 50% off
  • Participation in weekly “buy and burns”
  • “Specialized” governance (such as future fees)
  • Staking
  • Payment of platform fees
  • 1 $MSRM is required to run a node
  • Holding $MSRM increases fee discount to 60%

Demand Side

Buy and Burn — The key mechanism to increasing the value of $SRM is a buyback-burn mechanism where tokens are bought and burned equal to a percentage of platform fees. 68% of fees go directly to this mechanism. A full breakdown can be seen here: https://projectserum.com/#/staking-and-voting.

SRM burn metrics at time of writing.

Supply Side

Roughly 50M out of 10B tokens are currently unlocked and circulating with the first large unlock in August 2021. Notably, a large proportion of the unlock is related to ecosystem and partnership related tokens.

Serum’s 7-year unlock schedule maximizes long-term incentives for stakeholders. Source: https://projectserum.com/#/srm-token-summary

Supply and Demand Dynamics

Modeling supply and demand dynamics with cryptocurrencies is notoriously difficult. Coinmonks created a “buyback/flow model” designed to “evaluate the potential price impact of buyback-burn programs, based on impending supply.”

Coinmonks Buyback/Flow Model Framework. Source: https://medium.com/coinmonks/buyback-flow-model-a-way-to-model-crypto-buybacks-through-the-srm-case-study-cf8ca92a0e2f


Serum is ambitious, really ambitious. While many think of Serum only in a strictly financial sense, we see it as a key primitive for many industries and ecosystems that are collectively worth trillions of dollars. The advantages of open use, composability, and first-principle design allow for a reduction in friction and increase in experience that is unmatched.



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Sino Global Capital

Sino Global Capital


A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution