Sei Network: A high-speed public blockchain born for trading

Recently, the crypto industry has faced severe setbacks, with most crypto asset prices plummeting, and the market has once again fallen into a slump. This event has also caused users to lose confidence in centralized exchanges, highlighting the necessity of developing decentralized exchanges. Sei Network, as an emerging public chain built on the Cosmos SDK, is committed to becoming the preferred decentralized exchange in the fields of DeFi, NFTs, and GameFi. Sei has a built-in order book infrastructure, with extremely fast execution speeds, deep liquidity, and fully decentralized matching services, providing a safer, more transparent, efficient, and reliable network environment for decentralized exchanges, as well as bringing new innovative opportunities to the crypto market.

Sei focuses on trading, striving to become the fastest Layer 1 public chain.

Traditional Layer 1 public chains can be roughly divided into two categories: general public chains ( such as Ethereum, Solana, etc. ) and specific application chains ( such as dYdX, Osmosis, etc. ) These public chains each have their own characteristics in terms of technical implementation, but there are certain limitations in transaction scalability.

Sei, as an emerging Layer 1 blockchain, does not choose between a general-purpose chain and a specific application chain. Instead, Sei finds a balance between the two, becoming a public chain specifically designed for trading. Compared to general-purpose public chains, Sei has optimized every layer of its tech stack to provide the best trading infrastructure. In contrast to specific application chains, Sei is more general and can support various trading applications rather than just targeting a specific one. This makes Sei a more flexible and customizable trading infrastructure that can meet the needs of different types of trading applications.

As a trading-exclusive public chain, Sei aims to solve the scalability issues faced by current on-chain exchanges and become the fastest Layer 1 public chain. To achieve this, Sei has implemented several significant improvements to the underlying network architecture, including the Twin Turbo consensus mechanism, which enables a finality time limit of 300 milliseconds, ten times faster than Solana. In addition, Sei has realized a composable architecture for its order matching module, allowing dApps on Sei to have synchronous composability. Through numerous cross-chain collaborations by Sei, the IBC, EVM, and SVM ecosystems will have asynchronous composability, achieving seamless connectivity and interoperability between different blockchain ecosystems.

Sei has also increased throughput by 5-10 times through market-based parallelization technology and supports batch processing of orders, simplifying the process of updating multiple orders across exchanges. These are innovative features implemented by Sei to optimize trading application performance. In addition, Sei’s liquidity center and underlying technology benefit the operation of various dApps. Sei’s liquidity management system helps DeFi, GameFi, and NFT applications provide users with a more in-depth liquidity system and cost-effective trading processes while leveraging the agility and efficiency of the Sei blockchain.

Transactions are the most fundamental application scenario of blockchain technology and an important driving force for the development of blockchain and Web3. Sei, by creating a dedicated trading public chain, provides developers with an extremely attractive platform. The emergence of Sei fills the current gap of dedicated trading public chains, bringing new opportunities for the development of blockchain technology and Web3, while also providing more possibilities for the circulation and trading of digital assets.

The technical advantages of Sei are disrupting the traditional decentralized exchange network environment.

With the rapid development of Web3, exchanges, as centralized hubs for asset trading, are becoming increasingly important. Currently, exchanges are mainly divided into centralized and decentralized categories. In the past, centralized exchanges have dominated the market. However, with a large centralized exchange facing regulatory lawsuits, the higher regulatory pressure on centralized exchanges will push the market towards decentralized exchanges. This requires decentralized exchanges to scale in order to adapt to the massive wave of adoption.

Given the unique requirements for speed, throughput, reliability, and protection against front-running in decentralized exchanges, it is necessary to build specialized infrastructure to address these issues. Sei was born for this purpose, providing solutions for the scalability challenges of decentralized exchanges, enabling exchange applications to scale effectively while maintaining decentralization and capital efficiency. The main technical advantages of Sei include:

Order Matching Engine

Sei is a Layer 1 public blockchain based on the Cosmos ecosystem. Like Ethereum, Sei allows users to transfer assets and deploy smart contracts. However, Sei’s distinguishing feature is that it creates an order placement and matching engine at the chain level. This order matching engine is one of Sei’s core functionalities, allowing developers who want to build exchanges to easily use this engine to create order book-based exchanges. This means developers can skip the step of building an order book from scratch, making it more efficient in terms of both technology and cost.

In addition, Sei’s order matching engine provides a limit order design space similar to that of centralized exchanges. It can create a set of orders at different prices and update asset values based on executed orders. The benefit of using an order book exchange is that it can provide higher liquidity and a better price discovery mechanism. Although technically launching an order book-based exchange and providing liquidity for it is more challenging than on an AMM DEX, Sei aims to offer a cost-effective system for decentralized application developers and users on the network. This way, they can build order book-based exchanges more efficiently without compromising security and reliability.

parallel order execution

The parallel order execution of Sei is a significant improvement. It is capable of processing orders within the same market in sequence while concurrently handling orders from different markets. This approach significantly enhances Sei’s throughput while ensuring deterministic behavior among validators. In traditional blockchains, order processing is done sequentially, meaning that each order must be processed in the exact order it was received, regardless of its interaction with which assets or markets. Sei’s method is different; it allows orders from independent markets to be processed simultaneously, which enables Sei to achieve faster block times, lower latency, and higher throughput at all load levels. This marginal improvement is particularly pronounced under high load.

According to the Sei internal test data, in the case of 10,000 orders/block and 20 different contracts in the market (, parallel execution can reduce the block time from 1.33 seconds to 0.81 seconds, the latency from 371 milliseconds to 48 milliseconds, and the throughput from 7,500 orders/second to 12,200 orders/second. As the load increases, the degree of marginal optimization becomes even more significant.

) Twin-Turbo Consensus Mechanism

The Twin-Turbo consensus mechanism of Sei allows each step of the consensus to be programmable through the optimization and upgrade of Cosmos’s ABCI. This mechanism consists of two parts: smart block propagation and optimistic block processing.

Smart block propagation aims to improve block processing speed and efficiency. On the Sei Network, block proposers can send compressed block proposals that only include transaction hashes instead of detailed block content. During the block broadcasting phase, if a validator has all the transactions in the proposal in its local memory pool, it will reconstruct the entire block from the memory pool without waiting for all block parts to arrive. This significantly reduces the total time validators wait to receive blocks. If a validator’s memory pool does not contain the transactions, the validator can simply revert to waiting for the uncompressed detailed proposal. Tests by Sei have shown that in over 99.9% of cases, due to the network’s propagation mechanism, each validator has the transactions in its local memory pool. Therefore, this smart block propagation method can greatly accelerate Sei’s throughput while still ensuring the validity of transactions.

Optimistic block processing is a blockchain verification method that enables a faster and more efficient verification process. Unlike traditional non-optimistic blockchains, optimistic block processing skips the pre-vote and pre-commit steps, allowing validators to directly invoke the block finalization function, thereby speeding up block verification and voting. On the Sei Network, validators can also initiate parallel processing to optimistically handle any first block proposal they receive at a given height and write state candidates to cache. This greatly reduces the waiting time caused by delays in block production, thus increasing Sei’s throughput.

Through the Twin-Turbo consensus mechanism, Sei has reduced the block confirmation time from 6 seconds on the Cosmos chain to 500 milliseconds, achieving the fastest final block confirmation time across the network and reaching a throughput of 20,000 transactions per second. This efficient consensus mechanism also makes Sei an efficient, scalable, and programmable blockchain system, providing faster and more efficient services for decentralized exchanges.

In addition to the above three main improvements, Sei has also added other functions at the foundational layer, including:

1. Single block order execution: Sei allows placing and executing orders within a single block, while some other platforms require multiple blocks to complete.

2. Order Bundling: Market makers can update the prices of multiple markets in a single transaction, thereby improving efficiency.

3. Frequent batch auctions: market orders can be aggregated at the end of the block and settled at a single price. This method aims to attempt to minimize front-running.

4. Local Price Oracle: The native price oracle is integrated into the base layer of Sei, ensuring reliable price information from on-chain markets.

The introduction of these features can further enhance the efficiency and scalability of Sei, making it a more comprehensive blockchain network that provides better services for decentralized exchanges.

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Sei Network Ecosystem Development Status

The ecological layout has always been a key focus for Sei’s development, especially after 2023. In January and April of this year, Sei received two rounds of ecological investment funds. These include a $20 million crypto ecological fund from a certain trading platform, as well as a $50 million crypto ecological fund from a certain venture capital firm and a certain exchange, in addition to the $50 million investment received from multiple investment institutions and market makers in September of last year. As of now, the total scale of Sei’s ecological funds has reached $120 million.

These ecological investment funds have provided Sei with more resources and support, helping Sei to further expand its influence and market share in the blockchain field. The participation of numerous institutions also reflects the optimism of various parties regarding the prospects of the exclusive trading public chain created by Sei.

Currently, Sei’s mainnet has not yet been launched, but its ecosystem has attracted many well-known projects to join. As of now, over 150 teams are developing projects on the Sei Network, covering various fields such as infrastructure, decentralized exchanges, MEV, cross-chain, NFTs, and collateralized lending. According to the latest funding report, there are already 120 cooperative projects within the Sei Network ecosystem. The official website currently discloses about 70 cooperative projects, focusing on areas such as decentralized exchanges, infrastructure, wallets, and cross-chain bridges. The addition of these cooperative projects injects new vitality into the construction and development of the Sei ecosystem, while also providing users with more options and services.

Key projects of the Sei Network include:

Decentralized Exchange ) DEX (:

• A well-known DEX has launched a decentralized perpetual futures exchange on Sei Network.
• A certain cross-chain protocol provides an on-chain evolution product protocol on the Sei Network.

Infrastructure:

• A cross-chain liquidity protocol provides tools for efficient markets through arbitrage, flash loans, and cross-chain liquidity pools, and will conduct an airdrop event on the Sei Network.
• A certain payment platform supports Sei users to use its non-custodial wallet transfer rules and digital assets.

Wallet:

• A cross-ecosystem wallet supports Sei Network’s tokens and applications.
• A certain validator node operator provided a block explorer for Sei Network

Cross-Chain Bridge:

• A certain cross-chain bridge supports the transfer of assets and messages between Cosmos and Ethereum, providing open access for DeFi projects within the Sei Network ecosystem.
• A certain cross-chain protocol provides services such as multi-chain liquidity pools, enabling cross-chain liquidity to enter Cosmos, and