Let’s start this article off with the tweet that sent me down this particular rabbit hole..
The level of disrespect and cognitive dissonance in the Solana community around Serum is alarming. Should've spent the past year building scam AMM farms and launching NFTs instead of public goods everyone uses.— Armani Ferrante 💧 (@armaniferrante) January 2, 2022
Here the founder of Serum laments on the negativity his project has been facing for the past year, stating he probably should have used that energy on creating scams instead of public goods. The fact that Mr. Ferrante blocks NFTs in with scams is a different issue for a different day. After reading this post and the other following posts in the chain I decided that it would be in this writer’s best interests to find out more about this situation( I will admit to not following Serum closely at all before).
What is Serum?
According to its website Project Serum is “a protocol and ecosystem that brings unprecedented speed and low transaction costs to decentralized finance. It is built on Solana and is completely permissionless. Ecosystem partners can compose with Serum’s on-chain central limit orderbook to share liquidity and power markets-based features for institutional and retail users.
More specifically, Serum’s on-chain central limit order book and matching engine provides liquidity and price-time-priority matching to traders and composing projects. Users benefit from this exchange model through the ability to choose the price, size and direction of their trades. Composing projects benefit from Serum’s existing architecture, bootstrapped liquidity, and matching service.”
On the surface the project brings a lot of power to the Solana blockchain and allows for projects to be made much quicker and with more opportunities than other platforms- or so it would seem.
The fact remains that Serum has been very potent in creating a thriving Solana ecosystem to this day enpowering defi’s growth inside solana by reducing bootstrap liquidity friction thus allowing for more movement on the blockchain by developers. Solana itself owes a lot of credit to Serum for its massive growth with some even stating that if Solana lost Serum it would lose itself in the process.
The issue it would seem is the supposed “lie” in some of the practices of the developers and team at Project Serum that have left the nasty taste of distrust in the mouths of many early adopters or would be new investors, with the vitriol about the tokenomics of $SRM being so prevalent that it is almost a joke at this point. At the time of this writing there are active groups that want to see $SRM fail and are lobbying for it to reach $0 early 2022 claiming “ Shorting $SRM is the right play.”
The initial uproar seems to be on the amount of coins
The FDV of Serum is $98B:— 𝕯𝖆𝖓𝖌𝖊𝖗 (@safetyth1rd) April 26, 2021
4 times the FDV of Solana, the chain it runs on. pic.twitter.com/9BEGI0yGIL
and the fact that this amount seemed to benefit early investors and VC more than the actual holders of the coin at this point. The tokenomics of the project have been the only complaint thus far, but this complaint has caused so much FUD that even the founder felt he had to speak on it. Most retail investors look at the FDV of the project and decide that there are too many tokens for it to even make sense to invest in with many claiming that 90% of the token should be burned and a DAO should be correctly formed.
Serum is being compared to Mango with the latter being more transparent with their tokens and the use, this does not mean that the team at Serum are untrustworthy more than it just means they need to work on their communication skills. Right on the Serum website is a forum that lays out all of the pain points of the project, all of which go back to the tokenomics of the project.
Serum is a wonderful project with many implementations and projects. Solana has definitely benefitted from the work the team at Serum has done and so have many developers, VCs, and early adopters. There is no question that Project Serum is tantamount to the success of many projects, but the question of transparency and communication has yet to be fully addressed. At the time of this writing there is still so much disallusion with the project yet,for those that are wanting to get started on a project for the Solana blockchain, well, there is a Serum for that.