Serum Newsletter #2

Project Serum
5 min readOct 23, 2020

Welcome back to the Serum Newsletter, where we cover all the latest ecosystem developments and issues that concern Serum + Solana! In this second issue we have some particularly exciting news regarding USDC, NFTs, and Pools. We will also be covering the AMM vs Orderbook debate that’s been going on in the Twittersphere.

USDC on Solana

“ We also launched a partnership with Alameda Research and FTX, and native USDC on Solana is live on Project Serum, in our view one of the most significant DeFi projects happening in crypto today. Thank you Sam and team!” — Jeremy Allaire, co-founder and CEO of Circle

Traders and developers can now use USDC on a fast, scalable, and cost-effective rails provided by Solana. And it’s all available on Serum. USDC withdrawals from FTX to Solana-based wallets will now be sent out in the new native USDC-SPL token, wrapped USDC is no longer needed.

Circle will also be launching USDC-SPL across their entire suite of platform services.

Coin98 Wallet — USDC-SPL support & Chrome extension

Coin98’s wallet now supports the new Solana-native USDC

Coin98 has also teased the release of their Chrome extension on Twitter:

Preview of Coin98’s Chrome extension

Updated Developer Resources

We’ve also added more tools to our Dev resources page, now including code for AMMs, instant messaging, NFTs, nodes/staking, and Wormhole. We’re setting the stage for some big developments in the coming weeks, so keep an eye out!

Solible — NFT Markets on Serum

Bonfida has been leading the charge on innovation as usual and has just launched Solible, the first NFT exchange on Serum and Solana.

Bonfida is currently looking for NFT artists and builders to work with, so if you’re interested don’t hesitate to contact them via Twitter.

Frontier will also be dropping their own NFT soon, so stay tuned!


SAMM — The Serum Automated Market Maker

SAMM is a constant-product market making bot for Serum, targeting a specified Serum market. It will provide post-only orders for both sides of the market (bid and ask) using a constant-product function to calculate price for bids and asks.

  • Before using, please go through the warnings and code. This is strictly for experienced developers for now.

DAOfi AMM Bot Demo

But when AMM trading for Serum?

Very soon.

Serum in the Media

SBF and Anatoly will be appearing on Circle’s The Money Movement podcast
SBF and Anatoly will also be having a 1 on 1 chat for an exhaustive discussion of Solana and Serum
Jeremy Allaire, CEO of Circle, also has an episode of the FTX Podcast discussing USDC on Solana, the story of Circle, and building infrastructure that grows industries
SBF on the Decrypt Daily podcast discussing DEX volumes

The Automated Market Maker vs. Orderbook debate

The Twittersphere has been filled with heated discussions around the design of AMMs and how they stand up to orderbooks — are AMMs just a stepping stone towards on-chain orderbooks or are they the future? In this part of the Serum Newsletter we will attempt to present our side of the argument for the reader to consider rather than to plainly wax lyrical about Serum.

To begin, we’re going to talk about how AMMs first came about and how they got so popular. Then we will have a brief explanation on how they work, go through Impermanent Loss, and cover our argument.

A good exchange is able to provide immediate liquidity when called upon — people should be able to buy and sell shitcoins pretty much instantaneously whenever they please. Market makers provide said liquidity to traders, they ensure that markets are organized and usually get compensated via the bid-ask spread. With orderbooks, liquidity is available as limit orders (passive liquidity) and in TradFi orderbooks are the predominant means of exchange. However the costs of running an orderbook on-chain is extremely taxing on the underlying blockchain — matching logic is complicated and representing passive liquidity (all the limit orders) is difficult. This makes market making, as Vitalik says, “very expensive, as creating an order and removing an order both take gas fees, even if the orders are never ‘finalized’.”

To overcome these challenges, Vitalik proposed the use of AMMs which were previously only popular in prediction markets.

Uniswap is the pioneer of this algorithmic pricing mechanism, and has seen tremendous growth. The magic of Uniswap’s implementation of AMMs is that it provides users an extremely straightforward interface, a significantly cheaper DEX (compared to what was available at the time) to trade on, and democratizes market making.

Pools on Uniswap. (Source)

How do AMMs work?

Here we will cover Uniswap’s variant of AMMs — the constant product market maker where prices are algorithmically determined by the following formula:


‘x’ and ‘y’ represents the quantity of each asset in a pool

‘k’ is the constant product

Prices are adjusted based on the quantity of the assets in the pool as well as the size of trades. Users can deposit their x or y assets into pools to provide liquidity and get compensated for their efforts through a 0.3% fee on trades. This simple process means that anybody can become a market maker, and the market making experience on Uniswap is simpler as you don’t have to worry about managing algorithms or any of that complicated stuff.

AMMs also allow projects to bootstrap liquidity — it’s much easier to convince people to provide liquidity if all they have to do is deposit their assets to get rewards. This is where AMMs have a clear edge over orderbooks, in that they democratize and lower the barriers of entry for market making.

Impermanent Loss

The main concern with AMMs is Impermanent Loss (IL), to better understand IL we’ve collated some select Tweet threads:

Why orderbooks work better

If you have any questions or wish to build in the Serum ecosystem please feel free to reach out to us at We’re always happy to answer questions or aid in anyway we can!



Project Serum

Project Serum is a decentralized liquidity infrastructure protocol. Learn more at