Sei Network Unpacked: Testing the New Layer 1 Ahead of Its Token Airdrop
- Sei Network is an upcoming DeFi-focused Layer-1 blockchain built on Cosmos.
- It hopes to become a “decentralized Nasdaq” by offering fast transaction execution speeds of 300 to 400 milliseconds.
- Testnet users will receive SEI tokens for their contributions to the network when it goes live on mainnet.
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Sei Network is a DeFi-focused Layer 1 blockchain built on Cosmos. It will include basic primitives such as an order-matching engine and a unified liquidity model, enabling faster and easier application development than on general-purpose blockchains like Ethereum. The project is backed by industry heavyweights like Multicoin Capital, Coinbase Ventures, Delphi Digital, and GSR Ventures.
A New DeFi-Focused Layer 1
A new Layer 1 is coming to Cosmos, and there is still time to test it before its mainnet launch.
Sei’s team says it wants to develop a “decentralized Nasdaq.” The idea is to enable the creation of financial applications that can use the platform’s native order book-based decentralized exchange.
This isn’t the first time crypto projects have experimented with a network-wide order-book exchange. Solana had a similar plan with its flagship DeFi protocol, Serum. The Solana-based order book exchange provides liquidity and token swaps for other DeFi applications in the Solana ecosystem. Projects like Mango Markets, Zeta, Solend, and Raydium use Serum as the base layer for running applications on Solana.
Solana’s DeFi ecosystem topped $10 billion in total value locked in late 2021, but its usage has plummeted thanks to the ongoing crypto winter, frequent outages and hacks, and the collapse of the Solana-affiliated FTX exchange.
However, Sei Network will differ from Solana in multiple ways.
First, it will exclusively facilitate DeFi transactions, meaning other applications in niches like NFTs and gaming won’t clog the network. Second, instead of using a new consensus mechanism to improve throughput, Sei’s team uses the tried and tested Cosmos Software Development Kit, which should result in more stability and less downtime than Solana.
To achieve the transaction speeds required to run a decentralized equivalent of New York’s number two stock exchange, Sei needs to offer swift execution times in the order of microseconds (1 second = 10^6 µs). This requires some trade-offs in decentralization. Most notably, Sei will run a limited number of validators. It plans to launch with just 50 validators on mainnet, making it one of the world’s most centralized blockchains. For comparison, BNB Chain, a Binance-run network widely criticized for its lack of decentralization, has 41 validators.
However, Sei will be the fastest Cosmos SDK chain if it achieves its target of 300 to 400-millisecond transactions. The team has tweaked the basic Cosmos SDK design, which usually provides execution speeds of two to three seconds, by implementing optimistic block production and parallel order execution.
Moreover, ecosystem development on Sei will not be permissionless like on Ethereum because applications that want to build on it need to be approved by governance. This could inhibit innovative projects in the vein of OlympusDAO from appearing on Sei. However, it will enable a more optimized environment for the ecosystem’s managers. It is expected that the founding team will exclusively make governance decisions when it launches but will eventually transition to a decentralized process by handing off decision-making to SEI token holders.
Ways to Earn From Sei Network
The Sei Network mainnet launch is planned for the end of 2022. However, as is typical of development schedules, the launch could be subject to delays. The team has already begun community development initiatives by running an incentivized testnet since July 2022. The Sei team has stated that testnet contributors will receive 1% of the total supply of SEI tokens.
The early testnet missions, such as setting up a Sei validator node, have extensive hardware requirements such as 32GB RAM. However, some of the more recent missions, such as testing Sei’s first futures trading platform, are more accessible. You can find our testnet guide for getting involved in the anticipated SEI token airdrop via SIMETRI.
In conclusion, Sei Network is a promising project with decent backing and technological design. While there are some centralizing factors, these are compromises to ensure stability, speed, and high throughput. It remains to be seen whether Sei will live up to its expectations in terms of performance once it launches. Regardless, Sei’s biggest challenge may turn out to be developing an active DeFi ecosystem outside Ethereum amid a grueling bear market.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other crypto assets.
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