Despite the fierce competition among old L1s, new L1s, multiple L2s, and the bear market stock game, Sei has never lacked traffic. As a rising star public chain at the same time as Aptos and Sui, Sei Network is not as famous as the former two, but since the release of the white paper at the end of October last year, its test network progress and ecological development speed have also been relatively rapid. And from the current point of view, its development is very worth looking forward to.
Sei is a general-purpose, open-source Layer 1 blockchain dedicated to the trading of digital assets, with the goal of becoming a "decentralized Nasdaq". With its novel consensus and technological breakthroughs, Sei has become one of the fastest-growing blockchains in the industry. In the testnet stage, it has gained over 4 million users, with more than 100 million transactions and can process up to 20,000 coin orders per second.
A common misunderstanding is that Sei is a DeFi chain. However, the transaction of digital assets is common in games, social networking and NFTs, and transactions are general purposes. Therefore, Sei blockchain improves the scalability of blockchain by building a Layer1 (first layer) dedicated to transactions, breaking through the impossible triangle of blockchain. It aims to provide the best infrastructure for all types of trading applications (NFT, GameFi, and DeFi DEX).
Sei Network: A network designed specifically for DeFi
When building blockchains, we usually divide them into two categories: general purpose chains and application chains. General purpose chains are designed to promote innovation without permission, while application chains are used for specific use cases that require permission. However, "application chains" are not black and white, but depend on the characteristics of the chain itself. Sei is an upcoming Cosmos ecosystem chain that aims to be a Layer 1 blockchain designed specifically for DeFi.
"Designed for DeFi" means that fundamental changes (and trade-offs) have been made to the base layer to enable DeFi applications to thrive. Sei has features such as a built-in order matching engine, sub-second settlement speed, parallel processing of orders, and single-block order execution. All of these customized features are integrated into the base layer. It is worth noting that Sei is not a pure application chain, unlike THORChain, a "pure" application chain that only focuses on cross-chain exchanges, but a blockchain developed for the characteristics of products such as DEX, contracts, futures, etc.
To gain a deeper understanding of why these changes are being made to the underlying network, we can focus on the cases of Serum and Solana.
Solana is a general-purpose Layer 1 blockchain, advertised as a "Nasdaq on chain", designed to achieve 400 millisecond block confirmation times and high throughput. Solana's core thesis is that order book trading platforms will eventually replace automated market makers (AMMs), and the metrics on Solana confirm this thesis. Serum is an order book application built on Solana and is one of the most popular applications in the Solana ecosystem, accounting for about one-third of the trading volume on Solana. Serum plays the role of the "order book layer" on Solana and is used by projects such as Mango Markets, Zeta, Atrix, Bonfida, Jupiter, etc. When people talk about Solana, they usually think of Serum.
However, this architecture also has some drawbacks, the most notable of which is that since Solana is a general-purpose chain, Serum (and the applications built on top of it) are constantly competing for resources with other applications. Activities unrelated to Serum, such as gaming and minting NFTs, can cause on-chain congestion, as we have experienced with several previous “outage” events on Solana. In contrast, Sei has adopted a "cut your feet to fit the shoes" strategy and separate all non-DeFi activities from their chain.
In short, Sei is the equivalent of Serum launching its own Layer 1 blockchain: making specific trade-offs to optimize the base layer for DeFi and giving DeFi applications built on it an “unfair advantage” over non-DeFi applications.
In addition to clear positioning differentiation, Sei has also optimized and innovated in terms of performance, efficiency, security and composability.
In terms of performance and efficiency, Sei upgraded Cosmos' ABCI to make each step of the consensus programmable, thereby achieving improvements in three key areas: optimized block production, intelligent block broadcasting, and parallel execution of orders.
In terms of optimizing block production, a standard Cosmos chain has a block confirmation time of about 6 seconds. Sei has shortened it to 500 milliseconds by optimizing consensus. Sei claims this is the fastest final block confirmation time in Web3. In addition to optimizing block production, Sei has also improved smart block broadcasting, allowing proposers to send only the hash value of each transaction in the block instead of all transaction data, and validators can quickly rebuild blocks by using their own local mempool, improving block broadcast efficiency. For the optimization of block production and block broadcasting (these two optimizations are called Twin Turbo consensus by Sei), Sei has increased throughput by more than 80%.
In addition, Sei also allows transactions that originally needed to be executed sequentially to be processed in parallel, that is, independent markets that do not overlap can be processed simultaneously. Through parallel execution, the block time can be reduced by 75-90% compared to sequential processing, with a parallel delay of 40-120ms and a sequential delay of 200-1370ms.
In terms of security, Sei maintains a centralized validator set, so that protocols built on Sei will be able to use Sei's validators without assembling their own validator set, thus reducing one of the biggest obstacles for protocols to migrate to Cosmos. In addition, Sei uses frequent batch auctions to resist MEV, so that the ordering of transactions within the batch will not affect the price.
In terms of composability, Sei, as a Cosmos chain that supports IBC, is inherently asynchronously composable. At the same time, Sei has also created a composable architecture for the on-chain order book, allowing for synchronous composability between CosmWasm applications on Sei and sharing liquidity through the native order matching engine.
SEI's 7 major innovation areas
Smart block propagation: Sei sends transaction hashes in block proposals, allowing validators to reconstruct blocks locally by looking at other mempools, rather than waiting to receive them over the network.
Optimism block processing: Sei starts processing a block after receiving it, rather than waiting for the voting to end.
DeliverTx Parallelization: Sei knows which resources are used by different types of transactions and runs transactions that do not involve the same state simultaneously. Smart contract developers also list the resources being used, which helps ensure that transactions run in parallel.
Endblock Parallelization: Order book related transactions are processed at the end of the block, and all independent markets are processed in parallel.
Local Price Oracle: Requires validators to submit price feeds, incorrect data/non-participation will result in validators being excised.
Frequent Batch Auctions: Sei groups all orders together and fills them at the same price at the end of a block, rather than processing orders sequentially. This helps ensure price fairness and front-running prevention.
Transaction Order Bundling: Sei allows transactions to consist of multiple independent orders. This helps reduce gas costs for market makers submitting transactions and improves block space usage (eliminating the overhead associated with submitting multiple transactions).
As you all know, there are two types of public chains. One is the public chain, such as Ethereum, Solana, and BNB Chain, etc., which we are familiar with. The second is the application chain, such as DYDX. The application chain means one chain and one application. The essence of the application chain is to meet the performance of the public chain.
Sei can be regarded as the third type of emerging force. It is the public chain specifically for transactions that we mentioned earlier. At the bottom layer, through various innovations, the transaction performance on the Sei chain has been greatly improved. Because of this advantage, the transaction performance of projects developed on the Sei ecosystem is much higher than that of other public chains; and Sei's transaction speed, the best result on the test network can reach 2W, directly exceeding Solana.
10 times faster than Solana! What are the characteristics of Sei blockchain?
Sei Labs, the core developer of the Sei network, was founded by Jeff Feng, a former technology investment banker at Goldman Sachs, and Jay Jog, a former software engineer at Robinhood. In April 2023, in two rounds of strategic financing, Sei Labs raised $30 million from venture capital firms such as Jump and Multicoin Capital.
Sei is a proof-of-stake blockchain based on the blockchain architecture "Cosmos SDK". It is tailored to trading needs, specifically meets the needs of decentralized exchanges (DEX), and can process blocks in a very short time.
The development team behind the blockchain said that Sei's focus is to build a chain that allows users to easily exchange assets. Whether it is a social platform, game or NFT asset, Sei hopes to provide the smoothest experience.
According to co-founder Jay Jog, Sei’s transactions are 10 times faster than Solana (one of the fastest and cheapest platforms), with final transactions confirmed in just 250 milliseconds (after which they cannot be changed or reversed), and a 100 millisecond buffer to ensure protocol stability.
Performance comparison of SEI with BTC, ETH, and SOL
Sei Network Ecosystem
There are already 120 cooperative projects in the Sei Network ecosystem. There are currently about 70 cooperative projects disclosed on the official website, with the key areas covered being decentralized exchanges, infrastructure, wallets, and cross-chain bridges.
Decentralized Exchange (DEX):
Sushiswap: A DEX based on automated market making, a decentralized perpetual futures exchange launched on Sei Network in January 2023.
Satori: An on-chain evolving product protocol built on Polkadot, providing an on-chain evolving product protocol on Sei Network.
infrastructure:
White Whale: A cross-chain liquidity protocol that provides tools for efficient markets through arbitrage, flash loans, and cross-chain liquidity pools. It will conduct an airdrop event on Sei Network to reward and incentivize Sei’s validators and token holders.
Kado: Supports basic settings and supports Sei users to transfer rules and digital assets using their non-custodial wallets.
wallet:
Keplr: A cross-blockchain ecosystem wallet that supports Sei Network’s tokens and applications.
Cosmoscan: A validator node operator and wallet provider that provides a block explorer for the Sei Network.
Cross-chain bridge:
Gravity Bridge: A cross-chain bridge that supports the transmission of assets and messages between Cosmos and Ethereum, providing an open access machine for DeFi projects in the Sei Network ecosystem.
Axelar: Being able to provide various services including multi-chain liquidity pools to enable cross-chain liquidity into Cosmos will make it easier for Sei to obtain liquidity outside of Cosmos.
SEI Coin
Sei operates as a decentralized “proof-of-stake” blockchain powered by the SEI token.
SEI tokens have the following functions in the network:
Network Fee: Used to pay transaction fees on the Sei blockchain.
DPoS validator staking: SEI holders can choose to delegate their tokens to validators, or stake SEI to run their own validators to secure the network;
Governance: SEI holders can participate in the future governance of the protocol;
Local Collateral: SEI can be used as local asset liquidity or collateral for applications built on the Sei blockchain;
Fees: Users can pay tips to validators to prioritize their transactions, and these tips can be shared with users who delegate to the validator.
Transaction Fees: SEI can be used to pay for exchanges established on the Sei blockchain.
The total supply of SEI is limited to 10 billion tokens, most of which are allocated to the community and projects deployed on Sei, with the following distribution:
Sei Why is the market so strong?
Technological innovation: Sei, along with Fantom, is an alternative to Solana in the modular blockchain space, with upcoming features such as optimistic parallelization, SeiDB, and EVM support.
Potential for token issuance: The Sei ecosystem is new, but it is growing and newly launched DApps can issue tokens. A rise in SEI prices could increase DApp token valuations.
Compelling Narrative: Sei emphasizes the parallelized narrative that the next Solana is beginning to emerge.
Conclusion
Sei Network is known as the decentralized Nasdaq and is committed to building a blockchain ecosystem focused on DeFi infrastructure. To achieve this ambitious goal, Sei has introduced a series of advanced technology applications, including modular order matching, Twin-Turbo consensus, and innovative underlying functions such as parallel order execution and local price oracles.
By synergizing these cutting-edge protocols, systems, and algorithms, Sei provides an excellent infrastructure for trading applications and exchanges. In the fast-paced world of trading and technological innovation, speed, scalability, and affordability have become critical factors. As a high-performance, general-purpose Layer1 public chain, Sei has become the preferred solution for a wide range of users such as traders, developers, and gaming communities.
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