What is Sei? Deep dive into the Layer-1 built for decentralized crypto trading

Introduction

Imagine a blockchain built for speed and designed to overcome the common challenges of decentralized trading — this is what Sei attempts to achieve. Sei aims to process transactions fast, while still being flexible enough to support everything from trades to gaming and NFTs.

On paper, it could merge the best features of existing technologies without the usual bottlenecks or high fees, so let’s dive in to see how it works and how to use it.

TL; DR

• Sei is a Layer-1 blockchain designed for decentralized trading and asset management.

• It’s designed for speed and could theoretically process up to 12,500 transactions per second, with a block finality of 400 milliseconds.

• Sei could stand out with its parallel processing, cutting congestion, and lowering fees compared to Ethereum.

• Developers, traders, and community members could benefit from easy-to-use tools, low fees, and scalable infrastructure.

What is Sei?

Sei is a Layer-1 blockchain designed to improve the trading of digital assets. Built within the Cosmos ecosystem, Sei wants to solve challenges decentralized exchanges (DEXs) face, such as slow transaction speeds and liquidity issues.

Sei could theoretically handle up to 12,500 transactions per second using advanced technology like parallel EVM processing, with a block finality (the time it takes for a block to be completely processed) of just 400 milliseconds.One key highlight of Sei is its ability to process transactions in parallel. This sets it apart from blockchains like Ethereum, where transactions are processed sequentially, which can sometimes lead to bottlenecks and congestion during peak times, potentially leading to higher gas fees.

With its parallel EVM, Sei could combine the strengths of both Ethereum and Solana, enabling faster and more systematic execution of smart contracts. Sei could be well-suited for building decentralized exchanges, gaming platforms, and NFT marketplaces thanks to its built-in order-matching engine and twin-turbo consensus mechanism.The goal of Sei is to let traders trade in real-time while protecting them from problems like front-running, where other traders change the order of transactions to get an advantage. In this sense, Sei aspires to be a high-speed trading platform, kind of like a decentralized version of NASDAQ, optimized for fast, fair, and transparent trading of digital assets. It’s designed to handle large volumes of transactions without the delays seen in older blockchain networks.

What are Sei’s features?

Sei’s blockchain wants to improve performance and scalability — here’s a breakdown of its features.

Twin-turbo consensus

The twin-turbo consensus would put some fire under Sei’s belly by allowing it to achieve transaction finality in under 400 milliseconds. This means the transaction could be confirmed almost instantly, similar to the responsiveness you get when hitting “play” on a music app.

Optimistic Parallelization

Sei uses a parallel processing method to handle transactions more quickly. Developers love this because it doesn’t require any extra work. Ethereum-based applications can run on Sei with better performance without changing any code.

This feature aims to allow Sei to manage transaction conflicts automatically, allowing for smoother, higher-throughput operations.

SeiDB

This advanced storage solution is designed to manage large amounts of data easily. By improving how data is stored and retrieved, SeiDB helps the blockchain support its high transaction throughput while reducing the load on network nodes.

Interoperable EVM integration

Sei’s integration with the Ethereum Virtual Machine (EVM) offers flexibility. It allows for full backward compatibility with Ethereum, allowing Ethereum-based decentralized applications (DApps) to migrate to Sei without any changes.

Sei could improve the performance of these apps, potentially offering up to 100x improvements in throughput compared to standard EVM environments.

Who can use Sei?

Sei is a blockchain designed to have a wide range of use-cases, so here’s a breakdown of who can use Sei:

Developers

If you’re a developer familiar with Ethereum, Sei could be an excellent platform due to its EVM compatibility. Thanks to its backwards-compatible setup, you can easily port your existing dapps without rewriting code.

Devs in the DeFi, NFT, and GameFi spaces might also find Sei’s tools useful, as the platform supports features like smart contracts using CosmWasm. This helps make building applications more seamless, especially for those familiar with Rust or Solidity.

Traders

Sei can be interesting for high-frequency and algorithmic traders. It’s designed with trading in mind, with its order-matching engine and features like frequent batch auctioning, which can help reduce issues like frontrunning.

The platform’s fast block finality time is also a strong feature for traders that might be put off by the challenges faced by some other DEXs.

Community Members

Sei promises community members a fast and low-fee experience when interacting with dapps. Whether you’re staking tokens, trading NFTs, or using DeFi platforms, the alleged low transaction costs and high throughput can make Sei accessible to those looking for a user-friendly blockchain.

How to get started with Sei?

Getting started with Sei is easy, especially if you’re familiar with crypto wallets and staking tokens. Here’s a simple guide:

Create a Sei Wallet

You’ll need a wallet that’s compatible with the Sei blockchain. If it’s an Ethereum wallet, you can link to the Sei blockchain by adding it as a custom network.Compass Wallet, for example, is tailor-made for Sei and offers additional features like in-wallet staking and a portfolio overview. The OKX Wallet is also compatible with Sei, among more than 100 other decentralized networks, making it a great way to manage all your crypto activities in the same place.

Link wallet addresses

One of Sei’s convenient features is that it supports Ethereum (0x) and Sei addresses. This means you can manage assets across multiple chains without hassle.

You’ll need to link your wallet addresses through the Sei dashboard, making cross-chain interactions simple and fluid.

Explore dapps

Once your wallet is set up, you can start exploring Sei’s growing ecosystem of dapps.

Whether you’re into DeFi projects like Jellyverse, or NFTs like Frensei, there could be something for everyone to sink their teeth into.

Staking on Sei

Sei uses a Delegated Proof of Stake (dPoS), where you can delegate your tokens to validators. By doing this, you can help secure the network and, in return, earn staking rewards. You can easily stake SEI tokens directly from wallets like Compass or the OKX Wallet.Getting started with Sei is simple, whether you’re staking, trading, or exploring its dapps. Just set up your wallet, link your addresses, and explore Sei’s ecosystem.

What are SEI’s tokenomics?

Before we dive into SEI’s tokenomics, it’s important to note, we got these details from Sei’s blog written in 2023, before the mainnet launch. If there’s any changes, we’ll update them accordingly, but for now, here’s what we understand.

Sei runs on a decentralized PoS blockchain powered by the SEI token, which plays a few key roles:

• Transaction fees: SEI is used to pay network fees on the blockchain.

• Validator staking: Holders can delegate SEI to validators or stake it to run their own validator, helping secure the network.

• Governance: SEI holders have a say in the future direction of the protocol.

• Collateral: SEI can be used as liquidity or collateral for apps built on Sei.

• Fee markets: Users can tip validators to prioritize their transactions, and delegators can share in these tips.

• Trading fees: SEI can be used to pay for fees for exchanges built on Sei.

The total supply of SEI is capped at 10 billion, mostly allocated to communities and projects being built on Sei:

Community Tokens

51% of SEI tokens are reserved for the community, broken down into:

Ecosystem Reserve (48%)

• Staking rewards: Validators secure the blockchain, propose, and vote on blocks, and add them to the chain. Users can stake SEI to validators in exchange for rewards.

• Ecosystem initiatives: SEI will be distributed through grants and incentives to developers, builders, and network participants contributing to Sei.

Some tokens have already been set aside for projects that reach specific milestones.

Foundation Treasury (9%)

These funds help fund the ongoing operations of the Sei Foundation.

Launch Pool (3%)

Used to support future development.

The blog flagged SEI has no plans for airdrops outside its domain and no SEI ICOs or community sales. Just like with any other token, as the blockchain continues to evolve, there may be changes to the community’s governance.

The governance of the Sei blockchain

Governance on the Sei blockchain is decentralized, meaning stakers — those who lock up their Sei tokens — can propose, discuss, and vote on changes to the network.This can empower the community to participate in important decisions around Sei and keeping the network in check.

Proposal process

• Submit a proposal: Anyone can propose a change by submitting a proposal and paying a deposit.

• Deposit period: The community can add deposits to the proposal. The proposal moves to the next stage if the minimum deposit is met.

• Voting period: The community votes on the proposal.

• Result period: Once voting ends, results are tallied, and the outcome is finalized.

Voting options

When a proposal is up for voting, you have four choices:

• Yes: Agree with the proposal.

• No: Disagree with the proposal.

• No with veto: Strong disagreement — if this passes, the proposal’s deposit is burned.

• Abstain: Participate without taking a side.

What makes a proposal valid?

For a proposal to count, it must hit a quorum, which is a minimum percentage of all staked Sei that needs to participate in the vote.

Types of proposals

Common proposals include:

• Parameter change: Adjust settings in the network modules.

• Community spend: Suggest how to spend funds from the community pool.

• Text proposals: Covering larger decisions or directional shifts.

Voting process breakdown

• Submission: Proposer submits the proposal, and a 2-day deposit period starts.

• Deposit: If the proposal gets 3,500 Sei or more in deposits, it moves forward; otherwise, deposits are burned.

• Voting: The community votes over 5 days, choosing between Yes, No, No with Veto, or Abstain.

• Result: For a proposal to pass:

• 33.4% of all staked Sei must vote (quorum).

• Less than 33.4% vote “No with Veto.”

• More Yes votes than No/No with Veto.

Deposits and spam protection:

Deposits act as spam protection. If a proposal doesn’t meet the deposit threshold, it’s scrapped, and deposits are burned. Proposals that reach the voting stage get their deposits back unless vetoed.

The final word

Sei aims to be a high-speed, Layer-1 blockchain hoping to redefine decentralized trading. Sei could process 12,500 transactions per second and offer almost instantaneously block finality. This could solve the common problems of transaction delays and high fees faced by older blockchains.

Its parallel processing and EVM compatibility could make it a good choice for developers, traders, and community members and could make it easy to use for decentralized exchanges, gaming platforms, and NFTs.