What is Sei Network
Sei is a Layer 1 blockchain built for the exchange of digital assets. It launched its token $SEI recently and generated quite some buzz. So, what exactly is Sei Network? This guide covers all you need to know about Sei in 5 minutes.
The Sei team believes that exchanges are the most fundamental infrastructure in crypto. Most applications in crypto are some form of exchange, either explicitly or implicitly. Exchanges are essential not only in DeFi but also in gaming, NFTs, etc. For example, games like StepN and Axie Infinity rely on in-game exchanges to provide a Play-to-Earn experience.
Everything in crypto comes back to exchanges. However, the existing Layer 1 blockchains lack the throughput and time-to-finality features required for efficient on-chain trading. At the same time, centralized exchanges compromise on decentralization, one of the core tenets of crypto. Sei aims to solve the exchange trilemma.
Sei designs every layer of its tech stack to optimize for performing exchange functionalities. According to Sei, they have only one value proposition: any exchange, whether a DeFi DEX, NFT marketplace, or gaming DEX, will perform better on Sei than on any other Layer 1 network. Sei is built with the Cosmos SDK. However, unlike app-specific Cosmos chains like Osmosis, Sei is a general-purpose blockchain for any trading or exchange application.
Sei stands out in five aspects:
One of the Fastest
Sei claims to be the fastest chain to finality, ranging between 300ms to 600ms and processes up to 22,000 orders per second. This makes Sei 5x faster than Solana and 720x faster than Ethereum, which puts Sei on par with centralized exchanges in order execution and much better than current DEX offerings in the market.
Sei's proprietary twin-turbo consensus mechanism combines optimistic block processing with intelligent block propagation, resulting in an 83% improvement in throughput. This improvement enables Sei to provide faster block times, lower latency, and increased finality, which is highly desirable for developing on-chain, orderbook-based exchanges.
There are two parts to the Twin-Turbo consensus:
Intelligent Block Propagation
Intelligent block propagation improves the efficiency of block processing and allows Sei to speed up when necessary, netting a 40% increase in overall throughput.
Intelligent block propagation allows block proposers to send compressed block proposals containing only transaction hashes instead of detailed block content. Sei's testing showed that in over 99.9% of cases, each validator already had the transactions in their local mempool, thanks to the network's gossip mechanism. Validators receiving the compressed proposals can reconstruct the original block using transactions from their local mempool. If a transaction does not exist within the mempool of a validator, that validator can wait for the uncompressed detailed proposal to arrive. This approach allows Sei to speed up throughput while still ensuring transaction validity.
Optimistic Block Processing
Sei's development team developed a new block processing algorithm known as optimistic block processing, designed to enhance block time and overall processing speed significantly. Optimistic block processing is a method validators use to process block proposals, allowing for a faster and more efficient validation process.
The algorithm skips the pre-voting and pre-commit steps, allowing validators to call the block finalization function directly, resulting in faster block validation and voting. This approach differs from non-optimistic blockchains, where block proposals must be processed sequentially, leading to slower processing speed and lower throughput. With optimistic block processing, Sei can start processing block proposals concurrently with the pre-vote and pre-commit steps, resulting in a 33% increase in throughput.
Market-Based Parallel Execution
Market-based parallel execution increases Sei's throughput to 5-10 times greater than most high-performance blockchains.
A typical blockchain processes transactions sequentially. Transactions must be processed in the same order that they are received.
Sei's approach is different. Orders from independent markets can be processed simultaneously, while those within the same market are still processed sequentially. Load tests conducted by Sei have demonstrated that this modification results in faster block times, lower latency, and higher throughput across all load levels. The marginal improvements are particularly significant at higher loads.
Native Order-Matching Engine
Sei builds an order placement and matching engine at the chain level. Developers building on top of Sei can utilize the engine to easily create an orderbook-based exchange that resembles the central limit order book (CLOB) systems seen on centralized exchanges and trading platforms. Sei's orderbook based exchanges will be faster and more efficient than traditional automated market maker (AMM) based decentralized exchanges, the most common type of DEX today.
Sei's native order-matching engine offers several unique features.
Single Block Order Execution
Sei's single-block order execution allows users to place and execute orders within a single block. In contrast, traditional orderbook platforms like Serum require users to place and execute orders in separate blocks. As a result, trading on Sei is faster and more efficient. This feature is handy for high-frequency traders who need to execute orders quickly.
With order bundling, Sei allows market makers to update prices on multiple markets in a single transaction. This helps to simplify and streamline the trading process, enabling market makers to provide liquidity more efficiently. By bundling orders, Sei provides market makers with a more cost-effective solution to manage their trades, reducing transaction fees and overhead costs.
Native Price Oracle
Native price oracle is integrated into Sei's base layer, which ensures reliable price feeds from on-chain markets. Sei's oracle requires validators to agree on prices before committing to a block. In other words, a block will not be built until all validators agree on the price, ensuring consensus and accuracy. This feature benefits the price oracle module and enables other modules to access reliable price feeds.
Sei eliminates front-running by executing orders with frequent batch auctioning. By aggregating market orders at the end of each block and clearing them at a single price, Sei eliminates the opportunity for traders (MEV bots) to place orders ahead of others, improving the overall fairness of the market. This feature also helps to prevent slippage by reducing the impact of large orders on the market. Frequent batch auctioning ensures that Sei provides users a secure, reliable, and fair trading experience.
What else do you want to learn?