Strengths and Weaknesses
- Twin-Turbo Consensus - It makes blockchain faster
- Finalization time - Transactions can be finalized in 500 ms
- Matching Engine - Helps with price fairness and prevention of frontrunning
- IBC - Connects Sei to other blockchains in the Cosmos ecosystem
- Testnet - Sei Network is not running mainnet
- Competition - There are already projects in the cosmos ecosystem that have been around longer and are running without issue
- Instability - Testnet has been unstable with higher load
- Tokenomics - No official information has been released yet
Sei Network is an open-source L1 blockchain. Its primary focus is trading, for which it optimizes its system to provide infrastructure for trading applications. It is built on the Cosmos SDK and Tendermint core.
Sei Network has the ability to automatically bundle orders, which improves the throughput of dApps and enhances the user experience for all trading applications built on Sei. Sei delivers finality in under a second (~600 ms) thanks to its Twin-Turbo consensus. This allows users to save on gas and bundle multiple orders.
Behind the creation of Sei Network is Sei Labs, which was founded in 2022 by Jeff Feng, a former employee of Goldman Sachs, and Jayendra Jog, a former software engineer at Robinhood.
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Functioning of the Chain
DEXs are currently underutilized due to a lack of suitable infrastructure and specific requirements for reliability, scalability, and speed. Sei Network aims to change this by being a sector-specific L1 blockchain specialized in trading, aiming to bridge the performance gap between CEXs and DEXs.
Sei utilizes a unique Twin-Turbo consensus and multiple levels of parallelization to reduce latency and increase throughput. Additionally, Sei offers a native order matching engine and customized user interface, including native price oracles and transaction batching.
Sei Network is built on the Cosmos SDK with the core of Tendermint, to which special features have been added specifically for Sei Network.
The foundation of Sei Network includes:
- IBC (Inter Blockchain Communication) protocol
- Tendermint core
- Cosmos SDK (software development kit)
The IBC protocol enables communication between two or more blockchain networks. IBC is best conceived as the internet that communicates and connects various servers. IBC links entire blockchain networks together,allowing for the creation of an interchain account that remains the same across all blockchain networks supporting IBC. This connection enables staking, trading, or participating in DeFi protocols across multiple blockchain networks from a single point.
All blockchain networks connected to IBC have the Tendermint core. Together with the Cosmos SDK, they form the foundational building blocks of the network. Thanks to these shared foundations, these blockchain networks can communicate with each other seamlessly because IBC takes data from one blockchain, packages it, and unpacks it on another blockchain in the correct format. This communication is possible even across different programming languages, thanks to the shared core.
Twin-Turbo consensus consists of two elements: Intelligent Block Propagation, and Optimistic Block Processing.
Intelligent Block Propagation
Once a full node receives a transaction from a user, it randomly forwards it to other nodes in the network. The validator then verifies the validity of the transaction and adds it to its local memory pool. Block proposers then propose a block containing transaction identifiers and a reference to this block. The block proposal is spread among validators, and the entire block is broadcasted to the network.
If a validator has all the transactions in its local mempool, it reconstructs the block and does not wait for all parts of the block to be delivered. If it doesn't have all the transactions, it waits until it receives all the block parts from the network and then assembles it.
This process reduces the overall time a validator waits for block acceptance. Once all transactions are obtained, validators agree on the transaction order using the Tendermint BFT consensus. The block and corresponding state changes are then written to the blockchain following the preceding voting and commit steps.
Optimistic Block Processing
In Tendermint consensus, validators receive a block proposal, verify its validity, and proceed with a pre-vote. Instead of waiting for transaction processing until the precommit step, validators start the process in parallel to optimistically process the first block proposal for any height. Optimistic block processing writes the candidate state to the cache.
If the block is accepted by the network, the data from the cache is sent. If the block is rejected, the data from the cache is discarded, and optimistic processing is not used for that height in the future.
The theoretical improvement in latency due to optimistic block processing depends on the Tprevote and Tprecommit times (latency before voting and sending), the number of transactions N, and the average latency of a single transaction T.
During block processing, validators execute the BeginBlock, DeliverTx, and EndBlock logic within the Cosmos SDK framework. Sei has configured the DeliverTx and EndBlock functions to parallelize transaction processing. In the DeliverTx phase, all transactions in the block are processed, resulting in state changes. Transactions related to the central order book undergo basic processing in DeliverTx, and most state changes are applied during the EndBlock logic. Parallelization has been implemented in both DeliverTx and EndBlock to achieve optimal performance.
To prevent race conditions and non-determinism, Sei maintains a mapping of transaction message types to keys they need access to. Transactions with different keys can be executed in parallel, while transactions with the same key are executed sequentially in a deterministic order. Before executing transactions, dependencies between them are identified using a directed acyclic graph (DAG).
Sei allows defining dependency mappings as templates that are filled at runtime, providing flexibility for parallel processing. Smart contracts can define their own dependencies on resources, enabling their parallel processing and reducing gas fees. Improperly defined dependencies may result in message failures for a given smart contract but won't affect the overall network.
Sei Network ensures the valuation of assets and exchange rates through price oracles using validator voting. Validators provide their proposals for exchange rates during a specific voting window, and at the end of the voting period, a weighted median of the votes is calculated, determining the actual exchange rate. Penalties are imposed for non-participation and participation with incorrect data. Validators are monitored, and if they have a high number of missing data, their position is reduced as a punishment.
Order Matching Tool
Sei Network provides an order comparison and matching tool called a "matching engine," which is utilized by exchanges built on Sei. This engine allows decentralized exchanges to deploy their own order books and provides functionality for market creation and trading. Creating a new order book requires two transactions: deploying a smart contract into the Sei system and sending a transaction to add a new order book with specified parameters.
The matching engine supports various order types, including limit orders, market orders, fill-or-kill orders, stop-loss orders, and order cancellations. Partial execution of an order is possible for limit, market, and stop-loss orders if there is insufficient liquidity to execute the entire order.
The order lifecycle in the Sei Network is atomic and involves transactions related to the Central Limit Order Book (CLOB) and the matching mechanism. All transactions related to the CLOB are executed atomically within a block. The matching mechanism processes orders and adds them to the internal state, called MemState, of the dex module. After block processing, the EndBlocker hook is used to aggregate orders and invoke the smart contract for the specific market. The smart contract implements its own logic and calls the matching engine.
The matching engine first processes limit orders and then market orders, ensuring maximum liquidity. Limit orders are filled at the best price, and if there is insufficient liquidity, orders with a larger slippage are prioritized. Finally, all unfilled orders expire. The entire process is governed by smart contracts, which ensure the settlement of assets.
Sei Network provides order aggregation layers that improve user convenience and performance. Transactions on the Sei platform can contain orders targeting multiple trading markets. During block processing, these orders are correctly routed to the respective smart contracts, reducing gas costs associated with updating market maker positions. Sei also aggregates orders across transactions at the chain level, allowing for the operation of a single instance of a virtual machine and reducing latency by up to 1 ms per order.
Sei Network and its Matching Engine for order comparison utilize frequent batch auctions to execute trades. This approach brings several advantages for users.
The first advantage is ensuring price fairness. Sei's Matching Engine collects orders and conducts an auction where orders are filled based on a specified time interval. This minimizes information asymmetry among market participants and ensures that trades are executed fairly at reasonable prices.
The second advantage is the prevention of frontrunning. Frontrunning is an unfair practice where someone exploits information about another participant's planned trades and executes their own trades to influence the market price in their favor. The use of batch auctions reduces the risk of frontrunning because orders are executed simultaneously within the auction, and participants do not have advance access to information about individual trades.
Participation in the Sei Network testnet needs only a wallet supportive of the network. We recommend using the Keplr wallet, which you can download here. Next, visit the faucet page, where you can request an initial supply of tokens to operate on the Sei Network. For further useful information about the Sei Network ecosystem, please visit this site. This page represents an exhaustive list of all projects already running on the Sei Network.
- Spring: the Alexar bridge connected with the Sei Network and 5 million USD was secured in a financing round
- May: the Sei Network Vision was introduced
- June: the Seinami Incentivized Testnet was launched
- September: the Sei Network partnered with Leap, White Whale, and Kyve
- October: a 50 million USD fund to support ecosystem and liquidity was launched
- October: the Sei Network partnered with Multichain, SKP, and Kado
- November: the Sei Network, in collaboration with Alpha Venture DAO, launched the Alfa Incubate Batch 2 incubation program
- November: partnerships were formed with Frontier, Coin98, and Kargo
- December: the Sei Network merged with Gravity Bridge and Kryptonit
- February: the company announced the acquisition of the Vortex protocol by Sushi, which will be launched as a decentralized perpetuals exchange after the mainnet launch of the Sei Network
- April: 30 million USD were raised in strategic financing round and additional 50 million USD were recieved from Foresight Ventures for the ecosystem fund
- May: the Litepaper was released
To support greater participation of testers on the testnet, Sei Labs has created missions that will reward testers with a future airdrop. This project is called Seinami Testnet Missions. You can find the rules and conditions that you need to fulfill during the testing period to be eligible for the future airdrop by visiting the following link.
The Sei Network blockchain is operated by Sei Labs, which has over 52 employees and is still growing.
Jeffrey Feng - Co-Founder
Jayendra Jog - Co-Founder
The Sei Labs team is composed of prominent individuals and former veterans from leading companies such as Google, Goldman Sachs, Robinhood, Nvidia, and Databricks. These unique individuals bring rich experiences and expertise from their previous positions.
Sei Labs is thus becoming a strong and promising force, leveraging the expertise of its members to transform the way users interact with financial and technological applications. Their goal is to create a global ecosystem that brings new opportunities, delivers value, and contributes to the development of the entire app market.
The native coin for Sei Network will be SEI, and its utilization includes:
- Paying for transactions
The governance system in Sei Network will be similar to that of all blockchains built on CosmosSDK. The exact amounts of SEI required for proposal submission are not yet known. During the deposit period, anyone within the Sei Network can create a governance proposal. The proposal enters the deposit period, and once the minimum deposit amount is reached, it proceeds to the voting period.
To submit a new proposal, individuals can send a transaction containing the proposal details and the specified deposit amount. It's important to note that the deposit amount may not necessarily exceed the minimum required amount for entry into the voting period. However, until the total required deposit amount for the proposal is reached, it remains in the deposit period.
Revenue & Tokenomics
Sei Network is currently in the testnet phase, but it is expected to launch its mainnet soon, hopefully in Q2 2023. Currently, the network's income comes solely from financing rounds, through which a total of 135 million USD has been raised. These funds will be used for ecosystem development.
Sei Network has launched a program to support the ecosystem called the Ecosystem Fund. You can find more information here. This program is designed for new developers interested in building dApps on the Sei blockchain.
The Ecosystem Fund aims to provide not only financial support but also expert guidance and technical assistance to new developers. Sei Network recognizes that new ideas and innovative applications are crucial for the ecosystem's development. Therefore, it seeks to support and encourage developers to contribute to the network's growth and prosperity.
The Uniqueness of the Chain
Sei Network aspires to become the fastest L1 blockchain on the market, boasting a lower bound of 500 ms and an upper bound of 20,000 OPS (Orders per Second). This speed is achieved through the optimization of Sei's infrastructure, designed to provide traders with unparalleled speed and efficiency, focusing specifically on exchanges and trading applications.
The speed of the Sei Network is largely attributed to the innovative Twin Turbo consensus mechanism. This mechanism combines intelligent block propagation and optimistic block processing, leading to an 83% improvement in throughput. This improvement allows the Sei Network to provide faster block times, lower latency, and higher finality, which is highly advantageous for orderbook-based exchanges.
Intelligent block propagation allows the Sei system to speed up throughput where it can, and slow down where it must. The result is an approximately 40% increase in overall throughput. Optimistic block processing can save up to 33% of block time, with reported block times around 500 ms.
Sei also utilizes market-based parallelization, which increases throughput 5-10 times more than most other high-performance ecosystems. The chain has a frontrunning prevention mechanism that prevents malicious frontrunning, a widespread issue in other ecosystems. Sei also supports order batching, simplifying the process of updating multiple orders across different exchanges.
Sei on-chain order-matching module creates a composable architecture, allowing the dApps on Sei to have synchronous composability. Furthermore, with Sei numerous bridging partners, there will be async composability for the IBC and EVM ecosystem.
Sei liquidity hub and its underlying technology can be beneficial for a range of dApps on the network. With the Sei liquidity management system, DeFi, GameFi, and NFT apps can offer their users a deeper liquidity system and cost-effective exchange process while leveraging the agility and efficiency of the Sei blockchain.
How the Network is Secured
Currently (May 21, 2023), there are 50 active validators responsible for the Sei Network's testnet blockchain.
Sei Network employs the Slashing function to monitor the proper behavior of validators, discouraging fraudulent activities. In the event of proven misconduct, the Slashing function burns a portion of the validator's staked assets based on the severity of the misconduct.
- Inactivity: If a validator fails to execute orders for an extended period, they are considered inactive, imprisoned, and removed from the active set. They can then submit a transaction to lift the imprisonment (thus confirming their activity) and rejoin the validation process
- Failure to participate in exchange rate voting: During the voting phase for an exchange rate window, validators provide their proposed exchange rates for that window. At the end of the voting period, all votes for the exchange rate are tallied, and a weighted median (weighted by the validators' voting power) is calculated to determine the actual exchange rate for each asset. Penalties are imposed for non-participation and participation with incorrect data
- Double block signing: This behavior is highly detrimental to the chain and is penalized. If double block signing is proven, a certain amount of the validator's total staked deposit is burned, and they are permanently removed from the active validator set (becoming a "tombstone")
When selecting a validator, it is important to ensure their honesty, as dishonest behavior could result in the loss of a portion of your assets. A decrease in a validator's assets will also reduce the assets of their delegates. If a validator is removed from the active set and becomes a "tombstone," all delegated coins will be returned to their original wallets.
As of now (May 21, 2023), Sei Network does not have an active bug bounty program.
Validators in the Sei Blockchain play a crucial role by approving new blocks through a voting process. Their stake can be reduced if they are unavailable or simultaneously sign blocks. Validators are responsible for operating full nodes, participating in consensus, delivering blocks, and engaging in governance.
To run a validator node, you need a certain number of SEI and hardware:
- CPU - 16 cores
- RAM - 64 GB
- Disk - 1 TB
- Network - 24/7 online
Exact instructions and configuration of the validator node.
- Network Voting
- Rewards for new blocks
- Fees from delegates
Currently, you can become a delegator on the testnet.
When selecting a validator, be mindful of the Annual Percentage Rate (APR) they offer as rewards and also consider the fees they charge. Each validator node sets its own fee structure.
- Reward from validators
- No hardware required
The roadmap for 2023 is currently not available. Sei Labs is currently focused on the primary endeavor of launching mainnet. Originally planned for the first quarter of 2023, unfortunately, there has been a delay, and it is now scheduled for the second quarter of 2023.
The project is expected to launch within this planned timeframe; there may be further delays to the following quarter.
So far, the Sei network ecosystem looks like this:
These protocols are awaiting the launch of the mainnet to start functioning and contribute to the development and improvement of the Sei Network ecosystem. After the mainnet is launched, an increase in new protocols within the Sei Network ecosystem is expected.
Sei Discord, the popular communication platform, experienced a surge in user traffic during the time of writing this article (May 2023), which caused connectivity issues for approximately 14 days. During this period, new users were unable to join. However, the developers wasted no time and resolved this problem by increasing server capacity. Sei Discord is now fully functional again and accepting new members.
Thanks to its massive user base and ongoing testing phase of Sei Network, Discord has become an incredibly lively and active platform. Users can communicate with each other, exchange information, and share ideas and experiences. This applies not only to regular users but especially to developer teams who utilize this valuable communication platform for effective collaboration and sharing of crucial information. Sei Discord has thus become an integral part of their workflow, providing a space for creativity and idea exchange.
Twitter is an important source of current information. It regularly publishes announcements about new strategic partnerships that strengthen the Sei ecosystem and bring new opportunities. It also informs about successful fundraising rounds and investments that support the growth and development of the Sei Network. In addition, on Twitter, it shares important updates regarding the testnet, informing about new missions that provide testing opportunities for our community and pave the way for future airdrops.
Sei Network partners include: ChainIDE, MexcGlobal, CoinSender, SEER, Hana, Rapid innovation, Utorg, Unofarm, Wonderstruck, Sola-X, Nitro, Alexar, Vortex, Kyve, Pharaon, White Whale, Multichain.
Where to Buy
SEI can't be bought anywhere yet.
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Keplr - SW
Frontier - SW
Sei Network appears to be an intriguing project, but since the mainnet has not been launched yet, the portrait of its place within the ecosystem remains incomplete. The planned launch of the mainnet in the second quarter is expected to provide more insights into how this system will function as a whole. While there exists reason to be excited about the twin-turbo consensus, which promises an extremely fast process, there remain severe concerns regarding network congestion and how this mechanism will operate in practice. More details are likely to emerge during the next bull run when the true hype for all cryptocurrency projects emerges.
In the past, Solana was similarly considered a rapid-fire blockchain, but during the peak interest in NFTs, it struggled to handle high loads and became unusable, necessitating its shutdown multiple times.
Another formidable player is the Injective blockchain, which has gained significant popularity and achieved excellent statistics. Its success could pose a significant obstacle for Sei Network when entering the IBC ecosystem. Despite the technological advancements and innovative solutions that SEI brings, it's crucial to acknowledge the strong position of the Injective blockchain.
Nevertheless, Sei still offers its own unique advantages and potential that could attract users and contribute to the development of the IBC ecosystem.
Sei has the support of major investors who are interested in ecosystemic development. This support is highly beneficial for a project in its early stages. At this point, however, it's important to recognize that the Sei economy, tokenomics, and other details remain unknown; as a result, coins are gradually unlocked for these investors and subsequently sold. While early adopters may see obvious advantages and the economic uncertainty brings its own disadvantages, the environment around Sei is surely capable of facilitating a bedrock foundation of support and development for the future growth of this upcoming protocol.