Understanding Sei Network (SEI), a Specialized Trading Project

Sei Network, a Layer 1 blockchain, has garnered attention in the crypto world after experiencing a price surge of over 100% in a month.

As a blockchain optimized for crypto asset exchange, Sei brings forth standout features such as high transaction speed, supported by sophisticated consensus mechanisms. This article delves into the details of Sei Network, covering explanations, features, and the SEI tokenomics.

What is Sei Network?

Sei is a Layer 1 blockchain optimized for the exchange of digital assets, encompassing various applications, including DeFi, gaming, and NFTs. Its standout feature is high transaction speed with a sophisticated consensus mechanism.

Sei's major innovation lies in its ability to address the Blockchain Trilemma, maintaining a balance between decentralization, scalability, and network security.

Unique Features of Sei

Sei's primary differentiator from other blockchains is its parallelized Ethereum Virtual Machine (EVM) capability, allowing for high throughput and fast finality.

This feature is complemented by the twin-turbo consensus, positioning Sei as the preferred choice for developers and users seeking a fast, secure, and scalable blockchain platform for digital asset transactions.

Features of Sei Network

Sei marks a significant milestone as the first parallelized EVM blockchain. This enhancement integrates Solana and Ethereum, offering a fully compatible execution layer with the existing EVM ecosystem.

Image : Parallelized EVM Sei Network.

The features offered by Sei include:

1. Optimistic Parallelization: Enables concurrent transaction processing, significantly improving transaction speed and efficiency.
2. Backwards Compatibility: Allows developers to launch existing EVM smart contracts on Sei without code changes.
3. SeiDB: Enhanced storage layer reducing state bloat and improving read/write performance, facilitating synchronization for new nodes, and supporting scalability.
4. Interoperability: Integrated with EVM and other execution environments in Sei, offering a unified and user-friendly experience.
5. High Transaction Speed: Achieves fast transaction processing with a block time of 390 ms and high throughput of 28,300 transactions per second at lower transaction costs.

The combination of these features presents Sei as a powerful, scalable, and developer-friendly blockchain platform, ready to enhance user experiences and support interactive applications at lower costs.

How Sei Works

As a specialized Layer 1 blockchain, Sei enhances trading experiences through the Order Matching module, Twin-Turbo consensus, Parallel Order Execution, Native Price Oracles, and FBA.

Order Matching Module

Sei serves as a versatile Layer 1 blockchain, facilitating asset transfers and smart contracts. One notable feature is the Order Matching Engine operating at the chain level, empowering developers to easily build order book-based exchanges similar to traditional centralized platforms like Binance and Coinbase.

Sei's system also offers flexibility, allowing developers to choose between order book-based designs and decentralized exchange (DEX) and Automated Market Maker (AMM) designs catering to various trading types.

Twin-Turbo Consensus

Addressing the specific needs of order book-based exchanges, Sei employs the Twin-Turbo consensus mechanism. This sophisticated mechanism combines Intelligent Block Propagation and Optimistic Block Processing.

Intelligent Block Propagation achieves a 40% throughput increase by efficiently delivering block proposals, while Optimistic Block Processing achieves 33% faster block validation.
This combination ensures Sei's ability to provide faster block times, lower latency, and increased finality, all crucial for market makers requiring quick and accurate updates.

Parallel Order Execution

Sei introduces a modification to its block production process called Parallel Order Execution. This innovative approach allows simultaneous order processing from independent markets, ensuring deterministic behavior among validators, resulting in faster block times, lower latency, and higher throughput.

Native Order-Matching Engine

Sei's Native Order-Matching Engine is a comprehensive tool that incorporates multiple features to optimize trading. This includes block-wise order execution, allowing users to place and execute orders within a single block, eliminating the need for multi-block execution.

Other Features

Order Bundling: Allows market makers to update prices across multiple markets in a single transaction, simplifying the trading process and reducing costs.

Frequent Batch Auctioning (FBA): Minimizes frontrunning, ensuring a fair market, while original price oracles guarantee reliable on-chain price supply through validator consensus.

Sei Ecosystem

As of the writing of this article (3/1/24), Sei's total locked value (TVL) is $5.63 million with seven active dApps, according to DefiLlama data. When compared to other Layer 1 networks like Ethereum and Solana, Sei's TVL still lags behind. Given that Sei's mainnet was launched in August 2023, the network still requires time to mature.

Two dApps on Sei have successfully surpassed $1 million in TVL: Astroport, a DEX platform with a TVL of $4.22 million, and Kryptonite, a liquid staking derivatives (LSD) platform with a TVL of $1.18 million.

Image : dApps on the Sei network Source : Defilama

Sei Network Team and Investors

Sei Network was founded in 2022 by Dan Edlebeck and Jayendra Jog. Dan Edlebeck, as the Head of Ecosystem at Sei Labs, brings a background in business development, marketing, and operations with a focus on leveraging blockchain technology.

Jayendra Jog, founder at Sei Labs, has a strong technological background with previous roles at Robinhood, contributing significantly to their software engineering projects. His expertise has played a crucial role in developing Sei's technical infrastructure and strategy.

Sei Funding

Sei has received funding support through funding rounds to facilitate the development of its Layer 1 trading-focused network. Sei announced it has raised $120 million from various VCs and investors, including Multicoin Capital, Coinbase Ventures, Delphi Digital, Hudson River Trading, GSR, Hypersphere, Flow Traders, and Kronos Research.

SEI Functions and Tokenomics

The Sei blockchain utilizes the SEI token, playing several roles in the network's ecosystem. These roles facilitate network operations, incentivize participation, and support platform governance.

Key aspects of SEI tokenomics include:

1. Gas Fee: SEI is used for transaction fees on the Sei blockchain.
2. Staking Validator DPoS: SEI holders can stake for network security.
3. Governance: SEI holders have governance rights influencing the protocol's future.
4. Transaction Priority: Users can pay tips to validators with SEI to prioritize transactions.

Image : Tokenomics SEI Source : Token Unlock

The total supply of SEI coins is capped at 10 billion. The allocation of SEI coins is
as follows:

1. Ecosystem Reserve: 4.8 billion coins (48% of total supply) allocated for staking rewards and supporting network contributors.
2. Private Sale: 2 billion coins (20% of total supply) earmarked for private sale.
3. Team: 2 billion coins (20% of total supply) allocated to the Sei Network team.
4. Foundation: 900 million coins (9% of total supply) allocated to the Sei Foundation.
5. Binance Launchpool: 300 million coins (3% of total supply) allocated for Binance Launchpool.

*Disclaimer:

This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.