Soak the sabudana with one and half cups water. In another half hour it would have absorbed all the water. Gently fluff up with a fork. Sprinkle the remaining water and fluff it up. Soak for about 4-5 hours.
Heat oil in a pan, add the dried red chilies, slit serrano peppers, and mustard. When mustard splutters add cumin, curry leaf and asafoetida. Fry for a minute. Add the potatoes and half teaspoon salt. Cook for a couple of minutes.
Grind the toasted peanuts to a coarse powder.
Add the soaked tapioca pearls, peanut powder, and salt. Gently mix.
Cover and cook for 5-6 minutes on a low-medium flame. Fluff gently and continue to cook for another three minutes. At this point, they will be translucent and glassy which means they are perfectly cooked.
Switch off the flame. Garnish with cilantro and serve the sabudana khichdi hot.