The Incentive Ecosystem Foundation (IEF) said on Friday it has raised $100 million for Serum, a decentralized exchange and platform, to help expand its network and position it as a core liquidity infrastructure provider.
As a decentralized exchange, Serum provides the underlying liquidity infrastructure for applications built on the Solana blockchain. IEF, meanwhile, supports development and applications on Serum.
A decentralized exchange, or DEX, is a peer-to-peer marketplace where transactions occur directly between crypto traders. Financial transactions on these exchanges are not supervised or managed by banks, brokers, or any intermediary. Instead it relies on self-executing smart contracts to facilitate trading and clearing.
Decentralized exchanges 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.
In a statement, Serum’s community-led foundation said it has received investments from 18 institutional investors including Commonwealth Asset Management LP, Tagus Capital, Tiger Global, and executives at GoldenTree Asset Management.
All four confirmed their investment in Serum’s foundation through communications and messages seen by Reuters.
“We want to grow the decentralized exchange by bringing in new developers to fill applications on top of it, and…bring users to trade on it so volume can increase over time,” said a member of the Serum community who goes by the initials JHL in a phone interview with Reuters.
He declined to disclose his full name.
“We want to be one of the largest decentralized exchanges,” JHL added.
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.
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.
Applications on Serum now account for more than $2 billion of total net value of all assets held by various DeFi networks, according to the IEF statement.
Editing by Jacqueline Wong