Automated market makers are being encouraged to interact with the order book through the Solana project.
Using a $100 million liquidity mining program, Project Serum, the decentralized derivatives exchange on the Solana network, is working on attracting users to the ecosystem.
The initial allocation was approved by Serum’s decentralized autonomous organization, or DAO, the project announced Thursday. The sum, paid out in Serum’s native SRM token, will be used as a reward mechanism for automated market makers that work directly with Serum’s on-chain order book.
Liquidity mining is an effective tool for DeFi protocols as it incentivizes automated market makers to supply liquidity and enhances the network’s overall operation. As a broader concept, liquidity mining refers to a process whereby a project offers its tokens to anyone willing to deposit funds into a smart contract.
Serum Protocol is in a unique position, given Solana’s enormous growth over the past year. The smart contract platform has a total market capitalization of nearly $60 billion, making it the sixth-largest blockchain project in the world. As Cointelegraph reported, Solana Labs, the developer studio incubating Solana projects, raised over $314 million in a private token sale that concluded in June.
Related: Solana DEX raises $18M Series A from Three Arrows Capital, Coinbase Ventures
In terms of total value locked, or TVL, Serum Protocol ranks 11th among decentralized exchanges at $1.58 billion, according to industry sources. By comparison, Curve has over $18.8 billion in TVL while SushiSwap, PancakeSwap and Uniswap each have over $5 billion.
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