Serum is a decentralized exchange (DEX) that offers cross-chain trading at a speed and efficiency that rivals centralized exchanges. It runs on the Solana blockchain but will be fully interoperable with Ethereum as well as Bitcoin.
Learn how to trade on Serum DEX with our video:
There are several factors that make Serum unique. Serum is a protocol that is fully decentralized down to the core, unlike most decentralized finance (DeFi) platforms today. In fact, it does not utilize oracle price feeds at all. Instead of using the traditional automated market maker model, Serum DEX facilitates decentralized automated limit order books. Serum end-users can place orders with fully automated matching through an on-chain order book. This allows traders to have more control over their trades.
Additionally, Serum gives users the opportunity to use the Serum DEX to create their own custom financial products, including decentralized apps (dApps). These dApps can be found by entering the Serum portal. All of these dApps are part of the Serum ecosystem with their own interface, each competing with each other to provide the best user experience.
In this article, we will explore the functions of two of those dApps: Aldrin and Raydium.
Raydium: Simple Swap
Raydium is the first automated market maker (AMM) built on Solana, enabled with lightning-fast trades, shared liquidity, and yield earning. The swap function is the simplest function available and the most user-friendly for beginner traders.
To access this feature, simply click on the ‘Swap’ tab and you will be redirected to the page below.
Next, you will need to connect your wallet. Once your wallet is connected, you can expand each drop-down menu to select the tokens you would like to swap. ‘From’ is the token you will pay and ‘To” is the token you will buy during the trade.
After selecting the tokens, you can input the amount you would like to pay and receive an estimate of the amount you will receive.
Before confirming the trade, you will want to take note of the price impact. Price impact is the difference between the market price and estimated price due to trade size. Typically, you would want minimal price impact so if the amount is 1% or 2%, you might want to reconsider the trade. This is especially important for tokens with a smaller market cap.
To proceed with the trade, simply click on the Swap button and approve the transaction. The transaction will then be processed and completed.
Raydium’s swap feature is simple to use and the speed of the Solana blockchain allows transactions to complete almost instantly. However, the tokens you can swap are limited and because of its simplicity, more experienced traders do not have access to additional features such as limit orders.
To access these more advanced features, we like to use Aldrin.
Aldrin: Order Book
Aldrin is a decentralized exchange (DEX) on Solana that seeks to simplify the process of digital asset trading for both beginners and advanced traders alike. There are many token pairs that can be traded on the exchange. The dashboard for traders is also pretty comprehensive and informative, with an option for users to review important token data before they conduct their trades. Aldrin makes it easier for traders to find the website of a token, its trade analytics, and other pertinent data about it.
To trade on Aldrin, head over to their DEX and make sure you have the Trade tab selected.
Connect your wallet and select the token pair you would like to trade. For this example, we will use SOL/USDC.
Under the Order Book section, you can see all the current buy and sell activities by other traders.
Aldrin’s order book allows both limit orders as well as market orders.
Market orders are transactions meant to execute as quickly as possible at the current market price, which may fluctuate. Limit orders allow you to set the maximum or minimum price at which you are willing to buy or sell, and the transaction will only be executed when the target price is achieved.
Aldrin: How to Place a Market Order
To place a market order, select the ‘Market’ tab and input the amount you would like to buy or sell.
Once you have entered an amount to buy or sell, you will see the amount you will receive for the trade. Then, you can click on the Buy or Sell button to submit the trade. Upon approving the transaction, the trade will be executed.
For first time users, it is important to note that after the trade has been executed, the funds will remain in your trading account and will not return to your wallet until you have settled your balances on the exchange.
Simply click on Settle All and you will be able to see your funds in your wallet.
Aldrin: How to Place a Limit Order
To place a limit order, select the ‘Limit’ tab then input the amount you would like to buy or sell and the price you want to buy or sell it at.
Once you have submitted the trade, you can go into the Open Orders tab to view all your orders.
If you wish to cancel the order before it executes, you can do so by clicking on the Cancel button.
Staking on Aldrin
Staking is a passive way to grow your crypto holdings by securely locking up your selected crypto holding in return for tokenized rewards. The more tokens you stake, the more rewards you can earn. Aldrin allows you to stake RIN and mSOL tokens.
Head over to the Staking tab to access this feature. Make sure your wallet is connected.
Click on View to select the token you would like to stake.
You will be able to see the estimated staking rewards, in this case it is 35.66% APR (Annual Percentage Rate). Below it, you can see the APR amount is split into two. The first APR is calculated based on fixed treasury rewards and the second APR is calculated based on the current token price and the average AMM fees.
Enter the amount of tokens you would like to offer and click on Stake. The entered amount will show up in your Total Staked. Staking rewards are generated hourly and you can see the accumulation in the Rewards section.
Staking lockup lasts for one hour from the time of deposit. You will not be able to withdraw your tokens until the lock is lifted. You may click on Unstake All to enable termination.
Staking rewards are calculated hourly. These are then accumulated and paid out on the 27th of each month along with AMM fee revenue. You can add these new funds to your wallet by clicking the Claim button.
Conclusion: main advantages of Serum
Serum is a very exciting project on the DeFi scene with a lot of promise. It has several advantages over other DeFi-based exchanges at the moment, which include:
- Lightning fast speed
- Low cost fees
- Full decentralization
- Cross-chain support
- Fantastic user interface (UI) and user experience (UX)
It is also more scalable than almost any other DeFi platform in existence, made possible by the Solana blockchain. As more users join the Serum ecosystem, it will be interesting to see where this project can go and the innovations that will arise from it.
To learn more about Serum, check out our Serum DEX guide and review.