With a sudden increase of 19 million in circulation, will SRM crash the market?
Author | Qin Xiaofeng
Editor | Mandy Wang Mengdie
Produced | Odaily
Author | Qin Xiaofeng
Editor | Mandy Wang Mengdie
Produced | Odaily
Last night, the news that the soaring Serum (SRM) will increase circulation by 19 million circulated in the community, sparking heated discussions.
According to the Binance market, after the news spread, SRM still increased by 2%, reaching 2.23 USDT at one point; in the early morning of this morning, SRM fell back by 7% for a short time, falling 2 USDT. As of press time, SRM has rebounded to around 2.1 USDT, which is 1800% higher than the IEO issue price (0.11 USDT).
Although the currency price is still strong, the "temporary" increase in circulation is still criticized. Many people ridiculed: The final interpretation right belongs to the project party.
Why did SRM suddenly increase its circulation, and what are the considerations behind it? Odaily also got in touch with the team as soon as possible.
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Serum supported by FTX is popular
SRM is the platform currency of the decentralized exchange Serum. Serum is built based on the high-performance public chain Solana, which has strong compatibility, runs fast, and supports cross-chain, stable coins, packaged tokens, order books, and futures transactions.
The role of SRM is: transaction fee income is repurchased and destroyed; holders can obtain transaction fee discounts; SRM can be used to pay transaction fees; nodes pledge SRM to provide cross-chain services and obtain income; in addition, it will also include some governance functions, including setting some important parameters (such as cost).
Thanks to the blessing of the young talent Sam Bankman-Fried, the founder of FTX, Serum has been favored by many investment institutions since its launch.
However, the enthusiasm of these investment institutions was quickly poured cold water: the investment lock-up period was as high as 7 years.
According to the "Serum White Paper", the total amount of SRM issued is 10 billion, 90% of which are locked and unlocked linearly in 7 years. In the first year of listing, there will be no unlocking of SRM in the seed round or private placement round. As follows:
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(Schematic diagram of SRM lock and unlock)
The official explanation: The long lock-up period is intentional and directly scares away many venture capitalists who value short-term returns, but it leaves us with those venture capitalists who really help the ecosystem develop. This means that core players, including all seed investors, are committed to the long-term success of the project.
SRM unlocked 1 billion this year. According to the official data given during the IEO period, there were only 31 million SRMs in circulation at that time, of which 6 million will be used for FTX and BitMax IEO pre-sales. In other words, FTX will only add 25 million SRMs to the market. It is undoubtedly good news for currency holders that the selling pressure is small.
On the evening of August 11, SRM was launched simultaneously on the three major exchanges of FTX, Binance, and BitMax. Among them, Binance once surged to 5 USDT during the intraday session, and then quickly fell back to around 1.3 USDT, which is 10 times higher than the IEO issue price.
In the following two days, the price of SRM never fell below $1, and rose steadily to close to $2.
Investors who bought SRM in the secondary market began to hope that SRM has the potential of a hundred times currency; some investors who participated in the SRM IEO and got off early regretted it and planned to call back and continue to buy and hold.
Overall, this is a time when investors are quite optimistic about SRM's long-term future.
secondary titleA sudden increase of 19 million circulationBut soon, the long-term vision was called into question.
On the evening of August 13th, from the media"Zheli Blockchain"Released a message that FTX will increase the circulation of SRM from 31 million to 50 million.
"There are too many pickers. In order to enhance market liquidity, we unlocked them in advance. Now the harvest is less and less about the basic law."
"Zheli Blockchain"
Slightly sarcastic.
The news quickly fermented in the community, and some holders who bought SRM in the secondary market began to panic, worried about smashing the market. Users who did not get in the car were once again fortunate to have escaped.
"Today we can increase circulation by 19 million, and tomorrow we can increase another 20 million, and the day after tomorrow we will even unlock all the locked positions of investment institutions." Some investors told Odaily.
However, unexpectedly, SRM did not collapse as everyone expected. After the news was sent out, the price of SRM continued to rise by 2%, reaching 2.23 USDT at one point, a 1920% increase from the IEO issue price.
FTX said that investors do not need to panic, all unlocking will be strictly in accordance with the linear unlocking stipulated in the white paper, and will not be unlocked in advance.
In addition, FTX also gave a response to the circulation issue of this debate.
According to the latest official announcement, SRM originally planned to have an initial circulation of 175 million, and the remaining 825 million will be used as ecological rewards, including node pledge rewards and weekly airdrops of FTT holdings on FTX; but for the long-term healthy development of the Serum ecosystem, the original 175 million The holders decided to further reduce the circulation to 50 million, and the remaining 125 million will be used for reserve circulation. Among them, 6 million will be given to IEO participants, and another 44 million will be given to project contributors and liquidity providers. In other words, the 44 million will be put into the market according to the transaction buying demand.
(SRM Circulation Announcement)
"The incremental (19 million new) demand stems from the market's demand for SRM purchases, and there is a very strong buyer's market. These incrementals are strictly controlled and only provided to the buyer's market, helping the market get more SRMs and allowing more People participate in the construction of the Serum community and ecology.” FTX told Odaily. "Increasing to 5000w is the initial circulation, and in the later stage, according to the extremely exhausted liquidity of sellers in the market (the buyer's demand is too strong), it will be slowly supplied to buyers."
FTX also revealed that the decentralized exchange Serum will be launched this month, which will truly support the value of SRM.
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Will it increase in the future?
The established fact cannot be changed. For investors, the most concerned thing is whether the remaining 125 million SRM will be put into the market at any time in the future?
"We will adjust this part according to the extreme demand of the market, and it will be released slowly only when the market has extreme buying demand." FTX said, "The circulation of 181 million is a hard cap, and it will never exceed this part of the circulation to the market. inside."
