Cypher $SRM Grant Proposal

Hi everyone, Barrett here, I will be detailing an incentive program proposal using $SRM that will be managed by Cypher. We are excited about the open discussion and look forward to continuing to push the Serum ecosystem and community forward!

Protocol overview:
Cypher is a derivatives engine built on top of Serum’s CLOB and the AOB. Through traders’ cross-collateralized margin accounts, Cypher utilizes Serum’s AOB architecture and permissioned markets functionality to provide users the ability to trade dated futures. The protocol will also open up support for spot trading via Serum’s markets next month to provide more opportunities for market makers and traders to customize market exposure and better manage risk.

In addition, Cypher has built vaulted, a vault protocol that composes with both Cypher and Serum. Soon to be released in our V3 upgrade this quarter, Vaulted is a structured products vertical that will offer automated vaults such as leveraged tokens, basis trading, arbitrage, and interest rate products.

V3 highlights:

  • A new paradigm for account architecture, supporting unlimited markets
  • A single margin account will enable trading on up to 552 markets, both spot and derivatives, with 553 forms of collateral (addition of USDC), and full fees paid back to Serum
  • Automated strategies and structured product vaults via vaulted

Cypher has recently open sourced its CPI crate and market making clients/bots (ts & rust). Cypher will soon open source vaulted to demonstrate the ease of composability on Cypher and Serum. As volume on Cypher and its ecosystem of products increases, more fees will accrue back to Serum and its token holders.

The Grant
The purpose of this grant is to increase usage/volume of Cypher’s dated futures markets and structured product vaults. Distribution would be split across all of markets tradable on Cypher as well as the structured product vaults. Rewards will be issued for maker volume on Cypher’s futures markets, boosting liquidity and volume, resulting in greater fee revenue for both Serum and Cypher. Cypher will be boosting yields for structured product vaults, since these are taker orders and would not benefit from maker volume rewards. However, wash-trading prevention mechanisms will be employed to ensure takers do not abuse the rewards. With the product line expansion of both spot markets and vaults on Cypher V3, Serum will benefit from fee collection on all of Cypher’s products. In addition, the Serum grant will incentivize innovative composability with Cypher, enabling other projects and their users to benefit from the incentive program.

Because Cypher will move to support the AOB for V3 derivatives markets, technically, no fees will accrue to Serum on Cypher’s futures markets. However, Cypher will setup its own dedicated fee (1.5 bps) that will accrue back to Serum. All spot markets will pay full fees to Serum.

While Cypher is relatively new to mainnet and does not currently have the volume of other derivatives protocols, this grant will drive adoption of Cypher’s ecosystem of products, ultimately increasing the fee revenue paid back to Serum.

Cypher is proposing a grant of 2M $SRM that would be distributed over 20 weeks. Epochs for the reward distribution will occur every two weeks, with an additional lockup of two weeks before the beneficiary of the rewards will be able to liquidate. The longer duration of the liquidity incentive program is intended to provide more sustainable protocol growth and greater user retention. Both the duration and the lockups can help prevent mass $SRM token unlocks and the associated negative price impact.

In order to scale Cypher’s derivative products, the Serum grant is necessary to incentivize liquidity and protocol interaction. Since spot markets on Cypher benefit from the unified liquidity of Serum, this grant will solely focus on building sustainable trading volume on both the futures markets and vault products on Cypher, which in turn, will accrue fees back to Serum.


Personally I think there should be no more grants until the recently voted on and paassed veSRM and other things are implemented. We should be moving away from grants and insted issuing tokens to offer fee reduced/free trading. This recent swathe of requests to me looks a bit mercenary and bear market things. This is about the Serum ecosystem and its stage of life, not the above project.


MJP, I understand where you are coming from. I will counter by saying that the infrastructure/products Cypher is building/has built can provide more benefit and revenue back to Serum with an incentive program as opposed to a .4 bps reduction in fees.

Vaulted will be directly integrated with Serum and offer unique strats/products to traders that have not been deployed on Solana before. Where we have seen drops in trading volume across traditional style DeFi trading protocols, we have seen a steady hold in volume on structured products and automated strategy vaults.

Our team has been Serum supporters since the beginning and want to provide value back to the Serum eco, this is a major reason why we have proposed a much higher rebate back to Serum on markets that technically do not trade directly through Serum’s CLOB than other protocols applying for grants.

Hi all,

Wanted to amend the amount and time for this grant proposal.

Cypher would like to adjust grant size to 750k $SRM and duration to 8 weeks for the incentive program, keeping all else in the proposal the same.

We are still confident that a trading engine that supports both Serum spot markets and dated futures will be a net positive for Serum. As more institutional firms onboard to the Serum ecosystem, they will want to basis trade without having to suffer from funding rates eating into their strategy.

This ability to support traditional basis trading is unique to the Serum ecosystem and can provide substantial volume for Serum, as well as, more capital efficiency for trading firms.

Happy to explore the nuts and bolts of this proposal and continue to work with the Serum community to design something beneficial to all parties.

Do we know how far are these updates from being deployed? Proposals passed mid-May if I’m not mistaken.

Is DAO going to wait until these are implemented and miss the opportunity to kickstart adoption with projects like Cypher (and others)

Benefits that Barret stated still stand. Basis trading can provide substantial volumes to serum OB, and (if I’m not mistaken) they are the only protocol to enable it and not have traders suffer from funding rates.


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This proposal would greatly expand the addressable market of Solana DeFi volume settling on Serum and would continue to expand the Serum as the global settlement layer. Cypher provides critical infrastructure for this vertical to be composable with Serum. I support this.

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As it currently stands, most projects that have applied for these grants and received them are the only plans people in the community are aware of that are aimed at directly bringing more volume and fees to Serum.

Some of these projects have been building with Serum for 12-18 months and are only finally just coming to market with some of the most innovative extensions of serum to date. IMO it’s not really fair to stop grants completely.

Token dilution should be taken seriously - It’s in the best interests of SRM holders to consider the proposed SRM emission strategy outlined in the proposal. I think most projects over estimate the amount of tokens they will need but token emissions can still be managed closely by the receiving team and they should provide regular updates on their plans to distribute the tokens as plans change.

imo these programs are important for the DeFi ecosystem on Solana. We should be more selective with proposals but to stop them completely could jeopardise future growth when Solana is ready to have its moment.

I support Barrett’s proposal

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Whilst I generally would support this view, I don’t understand why the 01 grant proposal went into voting (despite opposition in the forum), whilst other don’t.

Can anyone ELI5 the governance process for this?

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there is no process, somebody with enough serum can put a proposal in for voting

its then up to the whales and the community to make things happen/not happen

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yeh its a fair point. tbh I want to see as many things using serum as possible. asap.

I just want to know what we are getting for the DAO subsidies and people have good intentions not taking the mick.

Support from me, but lets just get the communication up my peoples

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