Raydium SRM Grant Proposal

I think theres some confusion about how Raydium places orders on Serum here which I should clear up. The tokens put into Raydium pools are converted to orders according to the K=XY equation. This is the same equation that Raydium’s internal swap uses. This means that if Raydium were the only market maker on Serum and Serum charged 0 fees. Users would get the exact same number of tokens whether they performed the swap on Raydium or traded on Serum’s orderbook. The reason we didn’t put more TVL books is because they would end up on the tail end and just end up adding additional overheads to the orderbook. We are not witholding anything from Serum. We’re just placing efficient orders which will generate volume for Serum and not waste on chain resources.

When swapping, the reason that Raydium is often a cheaper route is that there is a level of imprecision on the orderbook when rounding to the nearest price and Serum’s additional fees. An example would be a user who wants to buy 1 SRM. On Raydium the exact price might be 7.80001 but on the orderbook it would be rounded to the nearest point where we can place an order which might be something like 7.801. After tacking the Serum fees ontop, this would be a lot costlier to the end user. There is also an issue with imprecision on Serum. The minimum ordersize for SRM and RAY is 1 token which means that there is no way to buy 0.5 RAY on the orderbook even though that might be what a user wants. Having a precise swap feature gives users the flexibility of swapping exactly how much they want. Raydium believes that the best way to grow the ecosystem is by giving the users a great experience. Having a best price finder and giving them precision in their swaps is a part of this.

I agree that RAY/USDC doesnt need more liquidity. The reason we added it there is because another goal of this liquidity mining should be to reach a large audience and get more users holding SRM and excited about Serum. Since Raydium has close ties to Serum, the users already in RAY would be an easy target audience to loop further into Serum.


I agree with @AlphaRay that there is no point putting 100% of the liquidity on Serum if the volume on Serum does not support it. Although, there might also be a converse relationship here where more liquidity will lead to more volume. I think @picasso’s point of allocating more liquidity has some truth to it.

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One factor I really like is that Raydium does not put fixed % on the serum orderbook, and its own liquidity pool.

@spice asked the wrong question on “percentage of liquidity sent to serum”. I am sure that Raydium does not have a lever they can tweak, sending 50% to Serum and able to adjust it freely from 0 - 100%. Instead, the same liquidity is used to optimise prices on Serum’s CLOB, while also providing an option for a simple LP swap.

I’ve been helping many protocols with managing their communities, so this is my opinion from boots on the ground.

Additionally, the Raydium MM bot is an excellent creation for efficient liquidity. When it breaks, people notice.

Raydium’s MM bot has been working wonders, and this is something other players in the ecosystem can confirm. If Raydium’s MM bot goes down, it creates such a noticeable effect that small market cap tokens like TULIP, LARIX or PORT will start to have such high slippages for people trading, that TULIP’s users are usually the first to notice (thanks to the LYF feature they offer). On the other hand, ORCA/USDC, despite being a large market cap token, still has ridiculously high slippages on the serum orderbook. (Granted, most people will swap for Orca through Orca’s own LPs).

Raydium’s clear goal is that they want 4.5mil tokens and aim to grow serum’s useful/efficient TVL to 500mil. Their own platform has been operating at below-budget, while achieving their liquidity/transaction volume goals (As evident by Alpha’s recent post on RAY emisisons), and we should be willing to give them a shot to do the same for Serum.

Time-gating or some mechanism to allow Raydium some srm (maybe 25% of their initial request?) to let them demostrate how effective their liquidity is, before proposing another grant or hitting another milestone to access the rest of the grant might be an effective way to balance interests of all parties as well.

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Just to let everyone know, we put up our proposal for formal voting here:

To add to this, Raydium is currently putting 65% of its TVL to the Serum orderbook to help Serum with its TVL initiatives. Raydium will continue increasing this in the following days to show its full support for Serum.

@AlphaRay , we have a quick clarification question. Although Liquidity Mining Program refers to “tokens per 30 day period”, this proposal does not make reference to time periods at all. Should we expect that all of the tokens would be used up as emissions in 30 days? (Are you coming back for another request 30 days later?) We aren’t making assumptions that this proposal follows the parameters of Liquidity Mining Program since that proposal itself hasn’t been passed.

Yes, this proposal is intended for the 30 day period. We should have made this more clear and will add an edit to the first post as well to clarify.
If the liquidity mining program works out well for Serum and the community would like to extend it then we would submit another proposal at that time to see where we could bring more value to Serum. We are also open to changing the emissions schedule during this period if the community believes it would be helpful.

Update: Seems that we cannot edit the first post. So we will leave this here.

Thanks for the clarification.

Jump Crypto is opposed to this proposal (and more generally to TVL-oriented grants as discussed in Liquidity Mining Program - #22 by JumpCrypto). We think there is a high possibility for Serum to overpay for TVL, and that, in spite of this large payment, several thorny issues related to getting AMMs to participate aggressively in Serum (e.g. quoting sufficiently tightly, or routing taker flow to Serum) won’t get addressed. We would strongly encourage Raydium (and other AMMs composing on Serum) to focus on volume-oriented rewards (Volume Incentive Program) instead.

Thus, we’re opposed to this proposal.

As an aside, the requested grant size is very large: 4.5M SRM in 30 days annualizes to 432M USD, while Raydium TVL is 1.9B. We feel that even a person who treasures TVL would likely find the current price tag to be very high.


agree with Jump. id rather Serum foundation use its treasury to seed/grow projects that make the CLAAOB the most liquid place to do business

Some more thoughts on the Raydium effort.

We were a bit remiss in the previous post in not mentioning Raydium’s contribution to Serum’s success. Raydium has indeed been a great partner to Serum since its creation, facilitating a lot of volume for Serum both as taker and as maker. It is also unquestionably valuable to have on-chain market-makers maintaining a book all the time so that takers never arrive to an empty book.

So while we don’t agree with the parameters proposed (especially with such a short turnaround to reflect on it), we’re not against Raydium’s proposal specifically. Rather we’re opposed to any of the TVL programs proposed thus far due to reasons discussed above.

Given our mutual goal to grow the Serum ecosystem, we think it would be valuable to brainstorm other ways that Raydium and Serum can get further aligned to grow the Serum ecosystem. We would support SRM emissions (in addition to SRM rewards Raydium users could through the Volume Incentive Program ) if there were some way to:

  • meaningfully improve how tightly Raydium quotes certain pairs on Serum
  • increase the probability that takers coming through an aggregator see Serum as the best price due to Raydium’s quoting activities

We’re in agreement that TVL shouldn’t be the goal of this program for a classic AMM. Placing these tail end orders are actually detrimental to Serum’s orderbook right now. Serum’s orderbook is currently struggling to handle volatile periods right now and we experienced another overflow with the consume events queue on Saturday evening. These issues have been occuring from early summer which is why Raydium has worked hard to optimize it’s order placing strategy and avoiding orders which do not generate volume.

However, we believe that Serum still has a need for a controlled liquidity mining program. The purpose of the liquidity mining program should be to:

  • Increase token/project awareness - The whole point of the TVL program is that its a good marketing tool. Raydium has the marketing network and community to do much more promotion on this than a high TVL would bring. It also has more traffic than DeF iLlama and putting Serum rewards here would bring a lot more attention. With the start of this program, Raydium would bring all it’s marketing resources to push the program and ensure its success.
  • Decentralize the project tokens to a larger user base - There are not enough users holding SRM tokens on chain at the moment. Serum has done very well on CEXs but more users should hold tokens on chain to participate in governance and actually using it on Serum. Raydium has a huge userbase who are proven DeFi users who are acclimated with the environment and would be excited to join in on the Serum community as well.
  • Promote projects to build and trade on Serum - With the completion of Wormhole, many Ethereum projects will be eyeing an entry into Solana. Setting up a program similar to Onsen on Sushi would be a good way to incentivize them to integrate with Serum when building on Solana. Raydium has the network and ability to bring these projects into the Serum ecosystem. We have many ideas for how best to make sure incentives are properly aligned and Serum derives maximum value from this but it should be left to another discussion.

These are the points that we highlighted in our original proposal which would bring in long term users and value for Serum. They might not generate much volume in the short term but it would bring in long term users and holders over time which would create a network effect for Serum. The value of these users are harder to quantify but are no less important than the large traders that would be brought on by a volume incentive program.

Raydium is open to discussion on changing the parameters of this program but we feel that a well thought out liquidity mining program stands to bring long term value to Serum.

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To address the last two points:

Our pairs are all quoted at the same spread right now to ensure that liquidity providers make the same fees when swapping through Raydium as they would on Serum. We do however have an innovative stableswap program which integrates with Serum and are working to push that out in the coming days. We do have some concerns about Serum fees though and will also jump into the discussion on it.

Having more users hold SRM for a reduced fee rate would have a definite impact on the probability of their volume going to Serum. Right now the largest reason why their trades might not end up there is that Serum charges a taker fee. Larger orders usually still end up there due to additional liquidity but a lower fee rate would also lower that bar.

Following Jump’s comment about the liquidity mining program having not been confirmed yet, Raydium has decided to withdraw it’s proposal until proper guidelines have been decided on.

Wow Raydium congratulation on 4 million SRM grant!! But I would have also liked to vote on this


Can you give the community an update on your LM program. the one that slipped through, with close to 0 visibility while we were all getting a cold in Lisbon

How many SRM have you emitted so far?
Do you have any metrics on how successful you think it has been at growing CLAAOB activity?
Anything else to say?
Is it possible for us to see the activity on chain?


@alpharay would really appreciate some insight

For sure!

We’ve emitted about 1.4m tokens so far across 11 pools. 10 of these markets did not exist or had neglibible volume before the start of our program.

In total, these markets have contributed about $150,000,000 in volume to Serum over this period of time and will continue providing value as the number of trading pairs on Serum increase.

This chart (data from coingecko) shows Serum’s volume over time with the blue line being daily volume and orange being 7 day average volume. Its pretty straightforward to see the growth in Serum’s daily trading volume since the beginning of the program as well as volume contributed to serum through our IDOs and NFT drops.

The tokens were recieved by Raydium in this address: Solscan
Each transfer can be tracked to the corresponding farm.


Really appreciate it, thankyou

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Can you give the community another update on your LM program?

How many SRM have you emitted so far, can you show us where on chain to see the disbursements going?
Do you have any metrics on how successful you think it has been at growing CLAAOB activity?
Anything else to say?

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Paging @AlphaRay , paging Dr Ray

@AlphaRay Mc Fly? Are you there McFly?