[Tokenomics] The elephant in the room - Serum's FDV

I would wait until after Lisbon, its very busy there.

Appreciate you responding and taking part in the discourse!

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@Defi_Degen, Atrix would definitely support this program to help distribute SRM to the community! Atrix is already a fully Serum based AMM like you said, and we educate our users on the benefits that this provides for the community and their projects every single day. I’m sure we could work in collaboration with Raydium to leverage each of our protocols’ unique strengths to distribute the SRM token much more widely to the broader community than it is currently. I’m not sure we can discuss exact amounts at this point, but your distribution suggestion seems to be in the right direction.

To add, I’ve been watching this thread for a while, as I assume many community members have been, and I think a lot of points being raised are very fair. Lots of difficult problems, but I think we can solve them and become more decentralized! Let me know if there’s any place I can be helpful to provide more feedback.

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Glad to see stakeholders taking interest and giving their valuable input.

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Unfortunately, there doesn’t seem to be an alternative. We’ll most likely be forced to do massive liquidity incentive programs, like what @Defi_Degen said above, so that community owns at least as much as the team/VC’s. This leaves Serum with a total supply of about 5B.

Only way out is for Serum to have massive trading volume, so that the burns becomes meaningful.

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Why does anyone here think Serum will burn or redistribute tokens? How could VCs show their face saying they lost 70% on a coin Alameda shilled them? The Serum team also said they’re proud of their tokenomics! Really? What a spit in the face of the community. “All major contributors” - “community” nowhere to be found: SRM Unlock. Serum has come a long way since its… | by Project Serum | Medium

For funsies, we can calculate how volume we need for a decent burn. Let’s say we want 20% of the supply to be burned in 5 years time. That seems like a good number for this insane FDV, and still leaves nice exit liquidity for the team. So with a $80B FDV, we’ll need $16B worth of burns. Let’s also assume fee reduction [Serum Fee Reduction Proposal] passes, and that all trades are using Mango’s MSRM. If we’re honest, there’s no reason for any trading project to use Serum if this fee proposal doesn’t pass. That leaves us with a 0.05% fee on every trade going to SRM burns. Counting reduced fees on stable pools, let’s say this fee averages to be 0.04%. Edit: This fee doesn’t even count the GUI rebate, but the community can do the math on that one.

$16B / 0.0004 = $40T in volume required over 5 years.
$153.8B volume per week.
$22B volume per day.

There was $45M of volume in the past 24hrs on Serum, so reaching required volume levels requires a 488x increase from today. Don’t forget that Raydium does 5x Serum’s volume right now too, and who do you think will capture more volume in the future? You know something is wrong when Shibaswap has more volume than your DEX. Oh, and burns do nothing for decentralization, because team and VC tokens aren’t burned.

shiba.jpeg

Where’s Serum’s founder, SBF? He went to math camp, so he can double check all of this. Can you also please explain why you copy pasted FTX’s cap table and fee structure for the Serum DAO? While you’re at it, please add us to the real Serum DAO. You know, the private Telegram group with the Serum team and VCs where 90% of the SRM is actually held?

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This paints a really gloomy picture ngl

Why is nobody from the team/foundation/vcs responding? if you’re preparing something or having meetings just say we will come back to this or something. It seems like you’re just ignoring the community at this point.

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I think they are busy having fun party in Lisbon. But if takes too long I and community may not be here awaiting response.

We should give them a few days after the event in Lisbon ends. And if they still keep silent, we definitely know what to do next.

I think SBF talked in Lisbon. Has anyone watched? Has he mentioned Serum at all? If someone has a link I’d be interested.

Got the chance to meet the Serum team IRL over the past few days in Lisbon (@adrian is a genuinely, good dude so let’s not jump to conclusions and pls let’s give everyone the benefit of the doubt :orange_heart:)

There is a desire to want to shift towards proper decentralized governance, and the team does recognize the current problems. They even mentioned Mango as an example to look towards and learn from. At the same time, they are super swamped here. Edward from the team did ~5 talks today and there is a lot of important IRL stuff that just takes time.

All this is just to say that I believe in the intention to do the right thing. Let’s definitely make sure all of us here in the community hold each other accountable, but Rome wasn’t built in a day either. After meeting the team members, I feel confident that if we give them the ability to do the important job of soldifying IRL relationships this week, the team will be much more responsive next week.

Building a project is hard. Building decentralized communities is even harder! It won’t be easy, but let’s just give the team some time to respond. I think if we were in their shoes we’d like the community to do the same.

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Thank you for the considerate viewpoint, I’m happy to hear the Serum team is hard at work IRL!

When the team views this thread after the event, can they explain Raydium’s grant mentioned earlier? I dug deeper, and there was no mention by Serum of the proposal and there now seems to be a significant partnership being announced between Raydium and Serum. Who voted on this, and is Serum following a governance where a centralized Serum foundation owns its own SRM to distribute and some other SRM is available for the DAO? Puzzled at how such a big partnership could pass without any community notice.

I researched Mango since it’s been mentioned so many times here, and I’m honestly blown away by their unique launch, tokenomics and their amazingly active DAO. Curious to hear how Serum will learn from them.

Reviewing all the data available it looks like credible decentralization is extremely difficult with current tokenomics, but I’m sure the team has detailed answers for every question being asked once they have time.

Thank you, yamalyama.

Yes, the active contributors working on behalf of Serum care immensely about the project and the concerns highlighted by everyone, including these issues about tokenomics, governance, and the recent proposals.

The delayed response here is due in part to everyone actively working to appropriately address all concerns and to make sure we can provide the necessary insight. There may be times where responses can be delayed past 24 hours, even if we try to avoid it. Thank you everyone for your patience here and your understanding. These are critically important topics and, in my personal opinion, choosing expediency over reflection is not always optimal.

Lastly, we hear you, the community, and we want to continue working together (respectfully) alongside you to continue cultivating the best experience possible for the Serum community. There’s a lot of lessons to be learned and inspiration to be taken from past models, including Mango’s. We look forward to maintaining the Serum DAO along the right track. In my view at least, that involves patience, composure, and exploring potential solutions together, on top of transparency and openness.

Thank you for your response. You can take your time but as mentioned above just writing this message is enough for now. Please do note that the core issues are the following (1) the Serum Community as a whole owns a maximum of 1% of the total supply. The rest is in hands of the VCs, foundation, team etc. This means that there are probably multiple VCs/team members owning more than the whole community. I.e. they own hundreds of millions or billions of USD worth of tokens. (2) Besides owning an insane amount of money that is centralised with a few people, the power/control is also centralised and the DAO with the current tokenomics will never work.

Please do not go in the direction of delaying unlocking. This is just a ticking time bomb. In my opinion, the only solution is to decrease the FDV and heavily decrease the amount of tokens. Let’s be honest, for any other project that would have similar tokenomics it would be considered a ‘scam’. Its because of your reputation and trust people have we think your intention is not to scam anyone. We think its incompetence in designing the right tokenomics for such a powerful DeFi product. I suggest you not to talk about any side issues and create narratives around it while ignoring the main issues above which is main bottleneck here. If you cannot change the FDV due to contracts/VCs pressing you etc. than so be it. Then you can inform us and we ourselves can make a decision based on that information.

People will respect you if you admit you made a mistake and try to solve it. Please do not try to shift narratives.

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I am glad there is this discussion on the forum. I first noticed about SRM tokenomic problem when one day market cap of SRM jumped from $300M to $1B, and even after that massive unlock, circulating supply accounted for only 1.3% of max supply.
Then I visited SRM trading group on Telegram, they all talked about this problem, and I have never seen any trading group feels so doom and gloom.

There are defenses for current tokenomic here and there.
But all they say is “you will be fine since SBF and VCs and their partners want this project to succeed”. Of course they do, but why do we have to rely so heavily on those people’s goodwill, why do we have to accept so much uncertainty, code should be law not Team and VCs are law. Do you think Bitcoin or Ethereum would be where they are today with a tokenomic like SRM?

Good that team is here. But remember saying “show don’t tell”. Reminder that all questions in entire thread (especially question about tokenomic/deals that is hidden from community) should be responded. You have mentioned “transparency and openness”, so please allow to be full transparency with all questions when team has response, hiding full truth will be clear to community. Serum team had 1 year plus to think about tokenomics, and we are awaiting response.

People complaining about tokenomics are revealing a lot about what they focus on. If we’re airing things out here then its time to say that project serum has a lot of problems. But tokenomics ain’t one of them. The product is difficult to use. There is no official front end so people don’t know where to go. It’s tradfi people who like CLOBs but they aren’t in the market yet. People are coming to Solana for NFTs and not defi. These reasons plus countless others add up to Serum not being a top 20 dex. Playing games with tokenomics is a solution for people who aren’t looking at the product or the market and it won’t help here.

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In the last month people have shifted from purchasing NFTs back to purchasing meme doge coins. However this liquidity is going to Orca’s AMMs, because the GUI / ease of use is unmatched.

In addition, the Orca team handles adding markets (pools) to their product. In contrast, Serum doesn’t have a team that proactively creates markets. Anyone can create a Serum market, but the costs are prohibitive to the long tail of assets including meme tokens and the many tokens that could go through wormhole (4 SOL currently). For example, LRC (Loopring) is hot right now, why is there no liquidity on Serum?

Perhaps a refund program / bounty program could be implemented (costs of bridging + creating a market), but this discussion is derailing the discussion around Serum’s FDV. Which, I fully disagree with your stance that the tokenomics are not an issue.

Project Serum right now seems to be a public good for the Solana ecosystem and has contributed to the rise in price of SOL. For those that chose to invest in SRM, instead of SOL are obviously disappointed that the rising tide hasn’t lifted important boats, such as SRM.

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As mentioned before, we can address multiple issues at the same time. This post is focused on tokenomics. There are other posts focused on liquidity mining, fees, grants, etc. You are free to make a new post to discuss your concerns as well.

If Serum is trying to move to a DAO with 2.4B tokens controlled by team and VCs and only 100M tokens controlled by community, then tokenomics will obviously be a big issue for the community.

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