The rise of decentralized finance protocols (DeFi) continues with its meteoric rise, as evidenced by the latest launches of projects such as Serum, a future decentralized exchange whose token increased in price by 1,600% in a few hours.
The Serum (SRM) token price rose sharply on Tuesday, hours after launch when it jumped from $ 0.10 to hit $ 1.98. In the next 24 hours after issuance, the asset’s value had soared 1,600%, while the trading volume exceeded $ 500 million, as Coingecko data shows. At the time of writing this article, the asset is trading at $ 1.77.
Binance listed Serum with four trading pairs within hours of its launch, which may have contributed to the token’s price increase. Serum is also available to operate on DeFi protocols such as Uniswap, BitMax, HBTC, Balancer, TomoDEX, 1Inch, and FTX.
Serum: functional medicine for DeFi
Serum has three tokens: a “wrapped” utility token, SerumBTC, which has a price pegged to its underlying asset; a stablecoin, SerumUSD, which is a trackable, ERC20 token to enable physically-settled, cross-chain contracts, and a governance token, which provides trading discounts on Serum, and with revenue earned from transactions on the network. Staking for SRM on the Serum platform also went live today, enabling holders to make a yield on their tokens for the first time. One million SRM—dubbed “MSRM,”— is needed to participate in operating a staking node.
The Serum team is led by co-founder and CEO Sam Bankman-Fried, who is becoming well-known in the decentralized finance (DeFi) space after launching the FTX trading platform, and quantitative trading startup Alameda Research. As well as Binance and Uniswap, SRM is listed on several other exchanges, including BitMax, HBTC, Mesa.Eth, Balancer, TomoDEX, 1Inch, and, of course, FTX.
How DeFi Platforms Work
The operation of DeFi is possible thanks to blockchain technology and smart contracts as they are derived tools from blockchain. The concept of smart contracts or intelligent contracts was created by the cypherpunk Nick Szabo, in the year 1994. Szabo conceptualized them as a free program capable of executing a series of instructions or clauses according to whether a set of preparations came fulfilled. It was the equivalent of a legal contract, but brought to the computer world, and enhanced with the ability to be autonomous and completely anti-cheat.
Nick Szabo’s vision was ahead of its time. He had to wait until the emergence of Ethereum when he could finally see a smart contract at work. It was not perfect, but it was enough to start building new things. Dapps or Decentralized Applications were born this way, programs that ran directly on the Ethereum blockchain, and with which we could interact using tokens, and a browser. This is a second advance that finally opened the doors for the construction of DeFi.
By Jenson Nuñez
