Decentralized Finance (DeFi) experienced explosive growth in 2021, with the total value locked (TVL) across protocols peaking at $250 billion. While Ethereum initially dominated this space, alternative blockchains like Solana, BNB Chain, and Avalanche have steadily gained traction. Among them, Solana has emerged as a frontrunner—thanks to its high throughput and low transaction costs. At the heart of Solana’s DeFi ecosystem lies Serum, a foundational protocol enabling fast, efficient, and composable decentralized exchanges.
Serum isn’t just another DEX—it’s a base layer that empowers developers to build decentralized trading platforms with shared liquidity and on-chain order books. Projects like Mango Markets, Raydium, Bonfida, and Jupiter leverage Serum’s infrastructure to deliver advanced financial products such as margin trading, limit orders, and swap aggregators.
In this comprehensive review, we explore Serum’s architecture, core features, tokenomics, governance model, and long-term viability—offering insight into why it remains a critical pillar of Solana’s DeFi landscape.
What Is Serum?
Serum is a permissionless, non-custodial protocol built on the Solana blockchain that provides a fully on-chain central limit order book (CLOB) and matching engine for decentralized exchanges. Unlike automated market maker (AMM)-based DEXs such as Uniswap or SushiSwap, Serum enables users to place precise bid and ask orders—mirroring the experience of centralized exchanges like Binance.
Because it operates entirely on-chain and leverages Solana’s sub-second block times, Serum supports high-speed trading with minimal fees. This makes it ideal for developers building DeFi applications that require real-time price discovery and deep liquidity.
As of now, Serum ranks among the top three protocols by TVL in the Solana ecosystem, with over $222 million in assets locked, according to Defi Llama.
The Team Behind Serum
Serum was developed by the Serum Foundation and launched on August 31, 2020. It received early backing from key players in the crypto space—including the Solana Foundation, Alameda Research, and former FTX CEO Sam Bankman-Fried.
While some of these associations have become controversial due to recent events, Serum continues to operate as an open-source, community-governed protocol.
The project was conceived as a solution to Ethereum’s limitations during DeFi’s 2020 summer boom—when high gas fees and slow confirmation times made trading prohibitively expensive. By building on Solana—which can process up to 65,000 transactions per second—Serum offered a scalable alternative with near-instant finality and negligible fees.
Initially, Serum provided its own basic trading interface. However, once third-party developers began launching their own user-friendly frontends (GUIs), the core team removed the native UI to encourage innovation and decentralization across the ecosystem.
Key Features of Serum
Central Limit Order Book & Matching Engine
Most decentralized exchanges rely on automated market makers (AMMs) that use liquidity pools to determine prices based on asset ratios. While effective for simple swaps, AMMs don’t support limit orders or stop-loss mechanisms.
Serum solves this by implementing a fully on-chain order book, made possible by Solana’s ultra-fast consensus mechanism (400–600ms block times vs. Ethereum’s ~14 seconds). This allows:
- Limit and stop-loss order placement
- Precise price control
- Real-time trade execution
The matching engine processes trades directly on-chain without intermediaries, ensuring transparency and censorship resistance.
👉 Discover how decentralized trading is evolving with next-gen infrastructure.
Developer Ecosystem & Services
Serum acts as a backend engine for over 30+ front-end interfaces, each offering unique DeFi products:
- Mango Markets: Perpetual futures and margin trading
- Raydium: AMM + order book hybrid with concentrated liquidity
- Jupiter Aggregator: Best-price swap routing across multiple DEXs
- Bonfida: Algorithmic trading tools and API services
Developers benefit from plug-and-play access to shared liquidity and modular components, allowing them to focus on UX and product innovation rather than rebuilding core infrastructure.
True Composability
One of Serum’s most powerful advantages is true composability—the ability for different protocols to seamlessly interact using shared middleware. In contrast to fragmented ecosystems like Ethereum—where liquidity is siloed—Serum enables cross-application functionality. For example:
- A lending protocol can integrate with a derivatives DEX using shared order books
- Aggregators can route trades through multiple Serum-based platforms for optimal pricing
This modularity fosters innovation and strengthens the overall resilience of Solana’s DeFi stack.
Serum DAO & Governance
Governance is managed through the Serum DAO, where SRM token holders vote on protocol upgrades, funding proposals, and ecosystem initiatives. Key aspects include:
- Minimum of 25,000 SRM required to submit a proposal
- Voting locks tokens temporarily during active proposals
- Discussions occur on the official DAO forum
This decentralized approach ensures community-driven development while maintaining alignment with long-term goals.
Serum Core: The Next Evolution
An upcoming upgrade called Serum Core, developed by Bonfida, introduces an asset-agnostic order book system. This enhancement allows:
- Trading of complex instruments like perpetual futures without tokenizing positions
- On-chain storage of position state (e.g., collateral, entry price)
- Greater flexibility for builders to create custom order books or share existing ones
This marks a significant leap forward in functionality—enabling DeFi applications that were previously difficult or impossible to implement on-chain.
Fees & Incentives
Serum follows a maker-taker fee model:
- Maker fees: 0% — incentivizes liquidity provision
- Taker fees: 3–4 basis points (0.03%–0.04%), depending on SRM holdings
Protocol fees are distributed as follows:
- 80% used for SRM buyback and burn
- 20% allocated to the frontend (GUI) facilitating the trade
Additionally:
- Open order account rent fee: 0.02 SOL per market pair (refundable)
- No deposit or withdrawal fees (non-custodial design)
Holding SRM reduces taker fees progressively—the more SRM you hold, the lower your trading costs.
👉 Learn how low-cost trading is reshaping DeFi strategies.
Supported Assets & Accessibility
Serum supports any SPL token (Solana’s equivalent of ERC-20) as long as there's market demand and liquidity. With Serum Core’s release, support will expand to include:
- Derivatives
- Perpetual contracts
- Synthetic assets
There is no KYC, fiat support, or centralized account verification—users only need a self-custody wallet like Phantom or Backpack and some SOL for transaction fees.
Security & Audits
Serum has undergone private audits. A public audit for Serum V4 (Serum Core) is currently underway—a crucial step toward enhancing trust and transparency in the upgraded protocol.
Validators play a key role in maintaining network integrity by “turning the crank”—manually triggering matched orders due to Solana’s event-driven architecture.
Tokenomics: SRM & MSRM
Serum has two native tokens:
SRM (Serum Token)
- Max supply: 10.161 billion
- Utility: Governance, fee discounts, staking
- Emission: Linear unlock over 6 years starting August 11, 2021 (~1/2190 daily)
MSRM (MegaSerum Token)
- Supply: Only 1,000 MSRM exist
- Created by locking 1 million SRM
- Benefits: Higher fee discounts, validator node eligibility
Validators earn rewards by supporting cross-chain swaps and processing trades. Running a node requires 10 million SRM (including 1 MSRM).
SRM reached an all-time high of $13.72 in September 2021**, but currently trades around **$0.90 amid broader DeFi market cooling. It’s available on both centralized (Binance, Gate.io) and decentralized exchanges (Raydium, Serum DEX).
Challenges & Areas for Improvement
Despite its strengths, Serum faces several challenges:
- Poor documentation: Critical updates and technical details are often hard to find.
- Limited beginner support: The Discord community lacks responsiveness—new users may struggle to get help.
- Complexity for newcomers: The absence of a native UI and reliance on third-party frontends can be confusing for less technical users.
Improving educational resources and community engagement will be essential for wider adoption.
👉 See how leading protocols are tackling usability in DeFi today.
Frequently Asked Questions (FAQ)
Q: Is Serum a decentralized exchange?
A: Yes—but it doesn’t host its own trading interface. Instead, it serves as a backend protocol powering dozens of DEX frontends built on Solana.
Q: Can I stake SRM tokens?
A: Yes. You can stake SRM for governance participation and rewards. To run a validator node, you need 10 million SRM (including 1 MSRM).
Q: Does Serum charge deposit or withdrawal fees?
A: No. Serum is non-custodial and peer-to-peer. However, Solana network fees apply (~$0.001 per transaction), plus a one-time 0.02 SOL rent fee for new market pairs.
Q: What makes Serum different from Uniswap or PancakeSwap?
A: Uniswap uses AMMs with liquidity pools; Serum uses an on-chain order book for precise price control—offering a CEX-like experience in a decentralized environment.
Q: Is my money safe using Serum-based DEXs?
A: Funds remain in your wallet at all times (non-custodial). However, always verify smart contracts and use trusted frontends to avoid phishing risks.
Q: Will Serum Core improve DeFi on Solana?
A: Absolutely. By enabling asset-agnostic order books and complex derivatives without tokenization, Serum Core unlocks new possibilities for institutional-grade DeFi applications.
Final Thoughts
Serum stands as one of Solana’s most influential DeFi innovations—a robust, scalable foundation that empowers developers to build sophisticated financial tools with shared liquidity and true composability.
While it faces challenges in documentation and user support, its core architecture remains strong. With the upcoming rollout of Serum Core, the protocol is poised to further solidify its role as Solana’s go-to infrastructure for decentralized trading.
For developers and traders alike, Serum represents not just a tool—but a vision of what DeFi can become when speed, efficiency, and openness converge.
Keywords: Serum, Solana DeFi, decentralized exchange, SRM token, order book DEX, Solana blockchain, DeFi protocol