Solana’s decentralized exchange foundation Serum raises $100M from institutional investors to expand its network
In just a few years, Solana has grown to become the fastest blockchain in the world. Solana is also the fastest-growing ecosystem in cryptocurrency, with over 400 projects spanning decentralized finance (DeFi), non-fungible tokens (NFTs), Web3, and more. Now Serum, the underlying protocol on which the Solana DeFi operates, is emerging from the shadow of former parent company FTX.
Today, Incentive Ecosystem Foundation (IEF), the team behind one of Solana’s largest projects, announced it has raised $100 million from 18 institutional investors including Commonwealth Asset Management LP, Tagus, Tiger Global, and executives at Golden Tree Asset Management. The IEF is a community-led foundation that supports development on the Serum network.
IEF said it will use the funding to help expand its network and position it as a core liquidity infrastructure provider. The foundation will also use funding proceeds to support the growth, development and innovation of the Serum ecosystem. Serum is a decentralized exchange and platform that provides the underlying liquidity infrastructure for protocols built on Solana’s fast and censorship-resistant blockchain.
In exchange for the investment, investors get a variety of tokens, which are locked up for six years. For one year, the tokens would be stationary and then, for the next five years, investors get a set number of tokens every day, JHL said.
Serum is a decentralized exchange platform built on the Solana blockchain that brings liquidity services of traditional finance to the decentralized landscape. It offers an on-chain central limit order book (CLOB) that gives developers access to matching services and shared liquidity across all protocols building with Serum. Currently, over 70 projects are participating in its ecosystem including Raydium, Atrix, Vybe Network, Solrise, 01 Protocol, and Zeta Markets amongst others.
Applications on Serum now account for more than $2 billion of the total net value of all assets held by various DeFi applications, according to the IEF statement, citing data from Serum Analytics by Vybe Network. In addition, IEF said that on December 4, 2021, daily trading volume on Serum hit an all-time high of $350mm in a 24-hour period.
According to the news release, about 15% of the $100 million investment, will be allocated to the Serum ecosystem fund, which supports projects utilizing the exchange’s liquidity infrastructure and capabilities, JHL said. The remaining 85% will go to the Serum foundation itself to fund the exchange’s operations.
The fund focuses on several key areas of growth across the Serum network, providing funding and developmental support to up and coming Serum ecosystem projects such as DeFi, NFTs, gaming, metaverse and DAO tooling. The added funds are expected to promote innovation, development, and growth of protocols built on the Solana blockchain that utilize Serum’s decentralized exchange and liquidity infrastructure. In addition, the foundation will offer support services for business development, marketing and ecosystem integration.
JHL, a Serum community contributor, commented on today’s news, “Over the last few months the Serum ecosystem has experienced incredible growth. With over 70 projects built on Serum, each leverages and contributes to its liquidity pool and trade volume. We are excited at this news and look forward to working together with other community members to further position Serum as the core liquidity infrastructure provider in the Solana ecosystem and beyond.”
A decentralized exchange (DEX) is a type of cryptocurrency exchange that allows for direct peer-to-peer cryptocurrency transactions to take place directly between crypto traders. Unlike financial transactions that are supervised or managed by banks, brokers, or any intermediary, decentralized exchange relies on self-executing smart contracts to facilitate trading and clearing.
Decentralized exchanges have grown in popularity in recent years and are part of the fast-growing decentralized finance sector, which facilitates crypto-denominated financial transactions outside of traditional banks. According to DeFi Pulse, the total value held at DeFi sites surged to $94 billion on Friday, compared with just $11 billion in October 2020.