In today's 3V Insights, our research collective presents the SEI Network.
Sei Network is the first order book-specific L1 blockchain, custom-built for DeFi applications. Features a built-in order-matching engine, frontrunning protection, and the fastest finality of any chain (400-600 ms).
New investment opportunity - SEI Labs - Seed round - $5 Million
Homepage: https://www.seinetwork.io/, Whitepaper, https://github.com/sei-protocol https://github.com/sei-protocol/sei-chain.
Explorer: Test-net https://sei.explorers.guru/; https://testnet-explorer.brocha.in/sei/ Product: Sei Network is the first orderbook-specific L1 blockchain, custom-built for DeFi applications. Features a built-in order-matching engine, frontrunning protection, and the fastest finality of any chain (600 ms).
Language: Go
Protocol Consensus: ⚛️ Tendermint +
Stats: Twitter: 143K, Discord: 215k , Telegram: 10k; Since launch in July → 58 Active Validators (2000 Test-net validators); more than 25k Test-net users.
Investors: $5 million funding round led by Multicoin Capital with participation from Coinbase Ventures, Delphi Digital, Hudson River Trading, GSR, Hypersphere, Flow Traders, Kronos Research and the founders of Anchorage, Frax, Yield Guild Games, and Tangent.
Competitors: Injective, Serum, DyDx v4, Maverick Protocol.
Roadmap: Testing Dev-net. Target Main-net Q1 2023
Pros:
DeFi-specific environment build on Cosmos SDK ⚛️
Cross-chain integration with deep liquidity (IBC and Solana through Nitro L2)
Plug-and-play into the Sei order matching engine and access pooled liquidity from other apps. As seen by the number of DeFi apps building on top (UDX, Alpha Ventures, Cypher, Vortex, Sushi Swap, etc)
Cons:
The first mover, Injective, has great traction and stats, this could lead to a high barrier to entry into the IBC ecosystem, despite SEI tech advancements.
No Tokenomics info out yet.
Users experienced an unstable Test-net due to the high traffic, specifically with the NFT mint (Dusk).
Target: DEX Exchanges, Market Makers, RWA, TradFi.
Thanks to its built-in central limit orderbook (CLOB) module, decentralized apps can build on top of it, and other Cosmos-based blockchains can leverage Sei’s CLOB as a shared liquidity hub and create markets for any asset. Sei will act as an infrastructure and liquidity center for the Cosmos ecosystem’s next generation of DeFi products.
Ecosystem
Collab announced - @Nitro_Labs will deploy its scaling solution on Sei serving as a portal for the Cosmos and Solana Ecosystems. Nitro allows developers to deploy existing Solana smart contracts on top of Sei and users can seamlessly access these apps with Solana wallets. Incubated by Sei Labs investors, Nitro provides a platform for Solana developers looking to expand to the IBC markets.
50 Million Ecosystem and liquidity fund to support new decentralized finance (DeFi) applications on its platform.
Sei secured an additional $20 million in ecosystem funding from MEXC.
SEI Ecosystem by @SeiNetworkEco
Latency & Throughput
Overloading Tendermint: Sei is the fastest chain to finality (450ms, as per Test-net)
Defi-specific parallelization: massively increases throughput and order processing
Optimistic block processing: heavily decreases block latency
Mev Protection
Frequent batch auctioning: FBA can aggregate every single market order at the end of the block, then execute all orders at the same uniform clearing price, rather than executing each order one by one (as would happen on Ethereum or Solana).
Developer and User Experience
Native price oracles: are built into the chain, meaning that all validators are required to propose their prices when committing to a block. Blocks are created only if all validators agree on a common price. If validators miss some voting windows or provide prices diverging too much from the median, they get slashed (punished).
Single block order execution: on Serum, apps need 1 transaction to place an order (adding it to a queue) and then another transaction (in another block) to “turn the crank” for order execution. Sei collapses that into 1 block for faster order execution.
Multiple levels of order bundling: to minimize gas costs, market makers and pro traders can update their orders by submitting only 1 transaction (i.e. all orders for a BTC perpetual will be combined into one smart contract call for that particular market).
Multi-Token Gas: gas can get paid with multiple token options. Initially, the trading fees will be set to zero, leaving space for new apps to set their own trading fees.
Native Order Matching
Twin-Turbo Consensus
Market-based parallelization
Cosmoverse Medellin Pitch
Unique Value proposition:
Sei combines the advantages of general-purpose Layer 1's with those of app-specific chains.
General purpose advantages:
Atomic composability - all apps are built on 1 blockchain so can easily work with each other
Social coordination - Single core community with a single sharing point
App-specific advantages:
Customizability - if you're building a chain around a single app, you can customize things.
Native, multi-chain interoperability - the power of IBC.
SEI is Based on Cosmos SDK and Tendermint core optimized (Tendermint +)
Let's Focus on the Twin-turbo consensus
Regular Tendermint Block Proposal:
The Block proposer (Jay) and Validator (Dan) have 2 mempools and have the following block proposal Flow:
Validator (DAN) receives the Block proposal from JAY (with the Hash - Block ID) → Waits → receives the 1st chunk (Part of the txn of the Block)→ Waits → receives the 2nd chunk.
While Txn A→E are what is getting sent, DAN has already all the block content (From SEI research: 99.9% of the txn are already in the Mempool)
This is inefficient - Validators due to network latency have to wait for data that they already have.
Regular Tendermint Block Proposal
SEI Consensus - Change the block proposal for increased throughput
The first part remains the same (Block proposer Jay looks for txn in his mempool, forms a block, and proposes it to the network)
Then Block proposal has all the transaction hashes, and the Validator already has this txn in his mempool. Rather than waiting for the block chunks (network latency), sei came up with:
Optimal Solution (99.9% of the cases): Hashes of Txn from TXN A→E are included in the block proposal, so the validator can construct the block locally (from the mempool data).
In the remaining 0.01% case: The Validator will fallback to the same mechanism previously used (as Normal Tendermint).
SEI Optimal Solution
Block Proposal with Transaction identifiers
⚡ Sei observed nearly a 40% increase in throughput
Regular Tendermint Block Processing:
Regular Block Processing
Block Proposal JAY Sends the block to the Validator DEN
DEN will run some sanity checks on it (Holding on to the block) → vote on the block through prevote and pre-commit → then starts processing the block.
The validators hold to the block, without doing anything with it, during the whole length of the Prevote and Pre-commit (around 150ms each).
This is inefficient - Validators are waiting for the entire length of prevote and pre-commit without starting to process the block.
In the case of lots of adverse byzantine nodes on the network is better to not do anything (stick to the regular block processing).
Sei noticed that most of the time the 1st block is the one that ends up being processed (with the most votes on it)
SEI Consensus - Change the block processing for lower latency and faster block time
Optimal Solution: Optimistic Processing→ While the prevote and pre-commit are happening, at the same time the Validator is processing the block →Block is processed faster and the state updates are faster. Overall latency goes down.
In case of a malicious node or a validator makes a mistake: Validators are taking the proposal, and updating a candidate state, if the proposal is successful they will commit that state, if not the state will be discarded. Next round, at any given height, the block will be processed the normal way as after pre-commit.
SEI Optimistic Block Processing
⚡ Sei observed nearly a 33% increase in throughput.
⚛️ Performance achieved: 22,000 orders per second with 450 ms block times.
CORE TEAM
Jayendra Jog - Co-founder. Prev. Software Engineer at Robinhood
**Jeff Feng **- Co-founder. Prev. Venture investor (Crypto Hedge Fund), IB Goldman Sachs.
Dan Edlebeck - Head of Ecosystem. Prev. 4yrs Founder deedle connects - Blockchain Marketing agency.
SEI Team pitch at Cosmoverse.
Test-Net - Useful links
All Seinami missions:🐙All Seinami Testnet Missions
Guides:
New challenge - Stake it till you make it.
Rewards
The Seinami incentivized testnet will be open to the public on June 1st, 2022, and will run for a duration of 2 months. After the event period is over token rewards will be allocated according to points accrued (1% allocation)
Token rewards will be distributed to all winners following the mainnet launch. There will be a 1 year lockup period.
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📌 Analysis by Macr0Mark. Disclaimer: This analysis is based on personal opinion only. This is not intended as investment advice. Do your own research. All company data is owned by the respective owners.