Sei Network is an L1 blockchain built using the Cosmos SDK and Tendermint Core. Sei is focused on the DeFi market and serves as a common liquidity hub for high-performance decentralized protocols. With a dedicated built-in infrastructure, the blockchain is ideal for order book applications.
One of the disadvantages of existing app-chains is that it is difficult to implement different features as the blockchain is only optimized for one particular feature, and the other is that cross-chain compatibility is not completely atomic. On the contrary, the disadvantage of the existing generic L1 is that it was possible to create different DApps and interoperability between DApps, however, it was difficult to create an operating environment optimized for a specific DApp.
Sei Network is an intermediate link between app-chain and universal Layer 1. Since it is built using Cosmos SDK, it optimizes the blockchain for the DeFi function and at the same time provides an environment in which various DeFi services can be implemented, allowing them to easily interact with each other. In addition, Sei Network aims to become a high-performance DeFi hub within the Cosmos ecosystem, allowing DApps to take full advantage of the order book features and engines specialized for blockchain-level DeFi trading.
Listed below are the criteria that differentiate Sei Network from other networks and the various features provided at the blockchain level for DeFi DApps that will run on top of the network:
CosmWasm & IBC
Native order matching engine
Optimistic block production
intelligent block propagation
Parallel order execution
Front running prevention
Oracle pricing
Order bundling
With the above characteristics, Sei Network can achieve high throughput and low latency. As stated on the main site, it is intended to be the base layer that will turn the Nasdaq decentralized exchange into a reality. Now let's look at each technology separately.
CosmWasm and IBC Since the Sei Network is a blockchain based on the Cosmos SDK, it can use the CosmWasm module, virtual machine, and IBC, the communication protocol of the Cosmos ecosystem. Thanks to the CosmWasm module in Sei Network, you can create different dApps consisting of smart contracts, since they are in the same execution environment. Compatibility is achieved naturally, which ensures a seamless, seamless user experience when interacting between dApps. The main reason why the Ethereum DeFi ecosystem has been able to grow is because of the natural interoperability of various DeFi DApps such as Curve Finance, Uniswap, 1inch Protocol, and Compound. Sei Network is also expected to have a synergistic effect through the interaction between different dApps. In addition, Sei Network supports IBC to facilitate asset pooling and information sharing with other app-chains in the Cosmos ecosystem.
Native Order Matching Engine While in the Solana network the order book function was supported by Serum DEX, in the Sei network the order book is provided by the blockchain itself. As a result, various DeFis on the Sei network share the same order book with each other. This provides a great advantage in terms of liquidity. Whereas on the Ethereum network, the various liquidity pools are divided into multiple DeFis, on the Sei network, liquidity is concentrated in one place. The deep liquidity created through order book sharing will provide a very high level of user experience for market makers and users.
Optimistic Block Production Sei Network can reduce block times to 600ms with optimistic block production, which is a slightly modified Tendermint consensus process, greatly improving throughput and latency. The existing Tendermint BFT consensus algorithm is shown in the figure below. When a block is first proposed and then submitted to the validators, the block is voted through the pre-voting and pre-commit process, after the pre-commit process, a state change is performed, and finally the block is committed and produced.