Sei Blockchain – An exchange focused blockchain
While our group has been primarily zeroed in on Bitcoin and EVM ecosystems, I feel compelled to shed light on a technology poised to redefine the digital asset landscape: The Sei Blockchain. Sei is a new blockchain platform that is designed to be more scalable, secure, and energy-efficient than existing blockchains. It is also designed to be interoperable with other blockchains, rather than a siloed Layer 1.
Why Should You Listen?
We're on the cusp of a digital asset revolution. Although conventional blockchains like Bitcoin and Ethereum have laid the foundation, they suffer from inherent limitations such as transaction speed, security concerns, and scalability issues. Enter Sei, a game-changer with capabilities that could catalyze the mass adoption of digital assets and their underlying infrastructures. One salient critique of traditional blockchains has been their sluggish transaction speeds, especially when pitted against centralized alternatives. Sei addresses this bottleneck, paving the way for blockchain technologies to not just compete with but potentially eclipse centralized services.
While the core premise behind the Sei blockchain was to build a distributed ledger focused on the most popular use case in crypto, the exchange of assets, the potential use cases for Sei blockchain are vast. Some of the most promising use cases include:
Decentralized finance (DeFi): Sei could be used to build decentralized financial applications, such as lending, trading, and insurance.
Gaming: Sei could be used to build decentralized games that are more secure and fair than traditional games.
Supply chain management: Sei could be used to track the movement of goods and materials in a supply chain at transaction speeds that rival traditional centralized systems.
Internet of Things (IoT): Sei could be used to connect devices in the IoT and create a secure, reliable, and transparent network.
Key Metrics and Backers
Before we dive deep, let's quickly glance at Sei's impressive stats:
Transaction Finality: 380ms
Orders per Second: 20,000
Total Testnet Transactions: 100M+
Testnet ‘Users’: 4M
Strategic Backers:
Multicoin Capital
Coinbase
Jump Crypto
Delphi Digital
The Sei Difference
Speed and Scalability
In the digital age, speed isn’t a luxury; it's a necessity. Sei offers a transactional throughput of 20,000 orders per second with a finality of 500ms. This goes beyond incremental improvement; it's a generational leap that positions Sei to lead the blockchain industry. Sei’s focus is to build a sector specific blockchain targeting cryptos most popular use case at the moment..exchanges.
Twin-Turbo Consensus
Sei uses a special technique called Twin-Turbo Consensus to make transactions faster and more efficient. In simple terms, when someone initiates a transaction, this system quickly spreads the information across the network. Special nodes, known as validators, then add this transaction data to their local pools. Blocks containing these transactions are then proposed, speeding up the overall process and reducing waiting times for validation.
Optimistic Block Processing
Sei has another unique feature called Optimistic Block Processing that also boosts transaction speed. In many traditional systems, transactions have to wait until a certain stage (known as the precommit step) for processing. Sei changes this by immediately starting the processing of transactions as soon as a new block is proposed. This means that data gets processed faster, as it doesn't have to wait for block acceptance to begin processing.
Parallelization
Sei employs a strategy called Parallelization to further optimize how blocks are processed. Instead of processing transactions one after another, Sei can process multiple transactions at the same time during a specific phase known as the DeliverTx phase. It also has a feature called Market-Based Parallelization that allows it to simultaneously handle multiple trading orders that don't interfere with each other. This ability to process multiple transactions and orders at the same time makes Sei highly efficient in managing a variety of transaction types.
User-Centric Approach
Sei has taken the path less traveled by focusing on user-centric features like native front running protection, seamless interoperability, and multiple transaction bundling options.
One of the key decisions the team has made is to vertically integrate components that have typically been handled by third-party applications in other ecosystems including a oracles, tools for maintaining order books at the chain-level and order manipulation prevention.
The Competitive Landscape
Here’s how Sei measures up against other major blockchains as it relates to transactions per second.
Ethereum: 20 tps, 6-minute finality
Solana: 10,000 tps, 2.5-second finality
Sei: 20,000 ops, 500ms finality
The numbers speak for themselves. Sei isn’t just competing; it's dominating when it comes to transactions per second due its singular focus and architecture. In addition to its speed and scalability, Sei is also designed to be very secure. It uses a variety of security features, including sharding, proof-of-stake consensus, and encrypted data storage.
From a developer standpoint the blockchain supports both Solidity (the most popular language on the EVM) and Rust, a common language used by systems programmers and the language used within the competing Solana ecosystem. Sei is also fully open-source, which means that anyone can review its code and contribute to its development.
Whats yet to be proven out is if the architectural improvement’s and incetives can attract actual users and assets onto main-net.
Functions of the SEI Token
Sei uses a decentralized, Proof of Stake blockchain system, where the SEI token plays multiple roles:
Network Fees: The SEI token is used to pay for transactions within the Sei network.
Validator Staking: Token holders can stake or delegate their SEI tokens to validators, who help secure the network.
Governance: If you hold SEI tokens, you can participate in decision-making processes to influence the network's future.
Collateral: SEI tokens can also be used as collateral in applications built on the Sei blockchain.
Transaction Prioritization: Users can tip validators with SEI tokens to have their transactions processed more quickly.
Trading Fees: Exchanges operating on the Sei blockchain use SEI tokens as trading fees.
SEI Tokens Distribution
The total supply of SEI tokens is limited to 10 billion. The distribution is as follows:
Community Allocation (51%): The majority of SEI tokens are given to the community. This includes staking rewards for users who stake their tokens and other initiatives that distribute tokens to valuable contributors like developers and validators.
Foundation Treasury (9%): A smaller portion is set aside to fund the ongoing activities of the Sei Foundation.
Launchpool (3%): A specific amount is reserved for special projects within the Sei ecosystem.
Moreover, there are SEI tokens allocated for airdrops and incentives designed to reward active community members. It's important to note that there are no SEI airdrops outside of the Sei network and no initial coin offering (ICO) or public sale of SEI tokens.
Valuation
At a recent valuation of $1.3 billion, Sei seems to valued fairly given its peers and perhaps undervalued given its disruptive potential. The platform could serve as the backbone for an alternative global asset exchange, potentially capturing value that far exceeds its current valuation.
