Decentralized Exchanges (DEX) often face challenges related to decentralization, scalability, and capital efficiency or liquidity simultaneously.
In this regard, Sei Network is here as an innovative solution to overcome the scalability challenges faced by DEX and presents a sophisticated approach to overcome these obstacles.
Sei Network is an abbreviation for “Stellar Expertise and Innovation Network,” which is a network that focuses on expertise and innovation in the Stellar ecosystem.
Stellar itself is a payment and digital asset exchange platform designed to facilitate global value transfer at low costs.
Built on blockchain technology, Stellar enables cross-border transactions without involving third parties, such as banks or other traditional financial institutions.
So, to understand what Sei Network (SEI) is, how it works, and its functions, see the full review below!
What is Sei Network (SEI)?
Sei is the fastest Layer 1 blockchain. Unique optimizations at the Sei chain level enable decentralized exchanges and trading applications in NFT, gaming, social, and DeFi to offer the best user experience.
There are over 150 teams moving to mainnet from Ethereum, zkSync, Solana, Avax, Polygon, and Sui. The team comprises Google, Goldman Sachs, Robinhood, Nvidia, and Databricks veterans.
Sei has raised over $30,000,000 from investors, including Multicoin, Jump, Coinbase Ventures, Flow Traders, Hudson River Trading, and leaders at Anchorage, LayerZero, and StepN.
Who is the Founder of Sei Network (SEI)?
Sei Network was designed by a team with extensive expertise in finance and technology. The people behind the development of Sei Network are Jeffrey Feng, Jayendra Jog, and Dan Edlebeck.
Jeffrey Feng brings strong investment experience from his role at Goldman Sachs. On the other hand, before becoming a co-founder of Sei, Jayendra Jog had a background as a software engineer at Robinhood.
Meanwhile, Dan Edlebeck previously served as CEO at Exidio, a decentralized VPN application in the Cosmos ecosystem.
In April 2023, Sei Network succeeded in securing investment funds of 30 million US dollars through two rounds of strategic funding.
This funding was obtained from well-known investors, such as Jump Crypto, Distributed Global, Multicoin, Asymmetric, Flow Traders, Hypersphere, and Bixin Ventures.
How does Sei Network work?
It is important to note that Sei was developed using the Cosmos SDK and Tendermint Core. Using the Cosmos SDK, Sei can become the preeminent DeFi hub in the Cosmos ecosystem, leveraging the advanced technology built into it.
Here’s how Sei Network works that you need to know, including:
1. Intelligent Block Propagation and Optimistic Block Processing
Intelligent Block Propagation speeds up transaction processing times by providing validators with all relevant transaction hashes.
On the other hand, Optimistic Block Processing has the potential to reduce delays and increase capacity significantly. Therefore, with a block time of 1 second, we can observe a decrease in latency of about 30% and an increase in throughput of about 43%.
2. Native Order Matching Engine
Unlike the Automated Market Maker (AMM) systems commonly used in DeFi applications today, Sei utilizes an internal on-chain order book to align buy and sell orders at certain price levels.
This approach allows DeFi applications to leverage Sei’s built-in central limit order book (CLOB) to access deeper liquidity.
Serum DEX powers the unique features of the order book in the Solana network, while the order book in the Sei network is served via Sei’s blockchain. All dApps on Cosmos can access Sei’s order book and liquidity.
3. Frequent Batch Auctions (FBA)
Sei also uses Frequent Batch Auctioning (FBA) to avoid front-running and MEV. Through FBA, transactions are aggregated in batches on each block, and orders are executed simultaneously at a uniform clearing price.
This approach ensures that executing trade orders in batches does not affect prices.
4. Oracle Modules
To determine the price of asset exchange rates, Sei provides an Oracle module that functions as a token price reference.
Validators also participate by voting or informing the token price when they commit to creating a block during the consensus process. The block cannot be created if the token price input is not implemented.
Sei Network (SEI) Ecosystem
Many projects have shown interest in developing their protocols on the Sei blockchain. Additionally, with the ecosystem funding reaching $120,000,000, we can only expect more developments in this ecosystem.
The following are the main projects currently being built in Sei:
1. SparrowSwap
SparrowSwap is a DEX with an AMM model that operates natively on the Sei blockchain. As the first of its kind on the network, SparrowSwap allows users to swap and stake digital assets on the Sei blockchain. Apart from DEX, SparrowSwap also introduced its native token called RUM.
2. Astroport
Astroport is another decentralized exchange that operates based on the AMM model. Their goal is to establish themselves as a major liquidity center within the Cosmos Ecosystem which explains their recent integration with Sei Network.
3. Levana
Levana is a promising DEX focusing on perpetual trading and allows traders to open long/short positions with up to 30 times leverage. Their goal is to provide the best trading experience in the Cosmos Ecosystem.
To achieve that, they have entered into interesting partnerships with leading companies, such as Delphi Digital, Dragonfly Capital, and Parafi Capital.
Sei Network (SEI) Smart Contract
Sei uses the wasmd module to make it easier for developers to build on top of Sei. Developers can use the Rust-based CosmWasm library to create decentralized applications. This provides some benefits for developers, namely:
- CosmWasm is mature and used by many blockchains. As a result, it is a very stable, bug-free library with a large developer ecosystem.
- CosmWasm was built to solve many development problems faced by other ecosystems. It is simpler than development on Solana and offers better security guarantees than Solidity.
Sei Network Advantages
As a pioneer in the blockchain ecosystem, Sei Network has emerged as a pioneer with several advantages that set it apart. Built with a special focus on decentralized trading, Sei Network stands out with the following advantages among them:
1. Blockchain specifically for trading
Sei is designed to facilitate high-volume decentralized trading, unlike other layer-1 blockchains with various uses.
2. High speed
Sei stands out for its high transaction speed, measured by Time to Finality (TFF). Sei is twice as fast as Sui and about 1.5 times faster than Aptos.
3. Transaction throughput
Transaction throughput measures the rate at which valid transactions are approved for blockchain entry within a certain period. In comparison, Solana can process 10,000 transactions per second (TPS), while Sei can process 20,000 orders per second (OPS).
4. High security
Sei Network uses the Tendermint Core consensus mechanism to avoid MEV risks through Frequent Batch Auctioning (FBA). Sei is creating a new standard in the DeFi ecosystem by prioritizing security, bandwidth, and reliability. The Native Order Matching Engine allows users to determine the price, size, and direction of their trades while providing protection against potential MEV risks.
5. Parallel Order Execution
In general, in blockchain, orders are executed sequentially. However, Sei adopts a parallel order-matching system, allowing the order-matching process for various markets (trading pairs) to run simultaneously.
SEI Token Function
Sei is a decentralized “Proof of Stake” blockchain backed by SEI tokens. The SEI token has several functions on the network, including:
- Network Fees: Used to pay transaction fees on the Sei blockchain.
- DPoS Validator Staking: SEI holders can delegate their holdings with a validator or stake SEI to run their validator to secure the network.
- Governance: SEI holders can be involved in future governance of the protocol.
- Native Collateral: SEI can be used as native asset liquidity or collateral for applications built on the Sei blockchain.
- Fee Markets: Users can tip validators to prioritize their transactions, which can be shared with users who delegate to those validators.
- Trading Fees: SEI can be used as a fee for exchanges built on the Sei blockchain.
Conclusion
As the fastest Layer 1 blockchain, unique optimizations at the Sei chain level enable decentralized exchanges and trading applications in NFT, gaming, social, and DeFi to offer the best user experience.
Sei Network was designed by a team with extensive expertise in finance and technology. The people behind the development of Sei Network are Jeffrey Feng, Jayendra Jog, and Dan Edlebeck.
Meanwhile, some of the advantages of Sei Network include a special trading blockchain, high speed, transaction throughput, high security, and Parallel Order Execution.
It needs to be understood, that Sei Network is present as an innovative force in advancing the blockchain ecosystem. Its main role is to facilitate decentralized trading with high transaction speeds. That makes it a top choice for users who want a responsive and efficient trading experience.
Through the SEI token, Sei Network allows users to pay transaction fees on its blockchain and provides staking opportunities to secure the network and participate in future protocol governance.
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