Decentralized finance is one of the most hyped-up segments of the cryptocurrency market. Blockchain technology provides freedom from the woes of centralized institutions, which is why it has garnered so much attention. Decentralized exchanges work similar to traditional ones, but instead of relying on a centralized intermediary, DEXs automates the complete process by utilizing blockchain technology and implementing transactions through smart contracts. Serum is one such example of a decentralized exchange and, while they are generally considered having a bright future outlook, we take a deep dive into what Serum is and whether it is a viable project.
What is Serum?
Serum is the joint project of Alameda Research and FTX exchange. The decentralized exchange was created by Sam Bankman-Fried in 2020. Being a recent project in the market, there are some problems that critics have raised.
Serum is a project built on top of Solana’s blockchain—one of the most popular blockchains. Solana is known for its cheap transactions and speed, which makes it ideal for projects to be built on top of it. Serum benefits from the speed and affordability as well as the reputation of Solana, which is a good thing for the exchange.
Unlike other decentralized exchanges, Serum offers cross-chain interoperability. The lack of interoperability has been one of the woes of the blockchain industry and offers that sets Serum apart from the crowd. Through the cross-chain supports, users can trade tokens built on other blockchains like Ethereum. DeFi projects in the market can also gain access to the liquidity and other features of Serum regardless of the platform they operate on.
The cons of the DEX
User-provided collateral is not something everyone is a fan of. For executing a trade, both the sender and receiver must deposit an amount of ETH – or any other acceptable collateral. This causes unnecessary confusion and complexities. The cross-chain swapping of Serum is not the end of interoperability woes as the arbitration contracts are deployed on Ethereum’s blockchain. This means that either the sender or the receiver must be holding ETH for the transaction to be completed. Lastly, there is not much clarity about how the network aims to perform the cross-chain swapping. The vagueness in the white paper is a source of confusion for many.
Does SRM have a future?
At the time of writing, the SRM token stands at a price level of $9.13. Despite the criticism surrounding the decentralized exchange, it has established itself in the market–standing at 129th rank. Moreover, the future projections for Serum are bullish. According to the estimates of Wallet Investor, SRM is expected to be trading hands at $17 in a year’s time and reach towards $40 in five years’ time. Digital Coin Price projects a year-end price of $13.
