SEI Network explained for beginners
Sei, also known by the market ticker, SEI, is a blockchain built on the Cosmos network designed to be the hub for all decentralized exchanges.
Presently, there are individual DEXs for DeFi trading, NFTs, and gaming, but no hub through which they can all operate and exchange data. This is where Sei comes in.
Sei doesn’t want to be labelled as a “DeFi chain”, because they believe the trading of assets is universal across gaming, social, NFTs, and even traditional investing.
You might not have heard of Sei yet, because it’s still to officially deploy its mainnet.
But don’t worry, I’ve got you covered as today we’re talking about Sei, what it is, how it works, and what makes it unique. Let’s dive right in.
What is Sei Network?
Sei is a layer-1 blockchain that wants to become the superhighway through which trading can occur. On their website, they talk about a vision of becoming the connection point through which platforms like Steam, Amazon, and even Nasdaq can all transfer assets quickly and efficiently.
Sei was founded by Jeffrey Feng and Jayendra Jog in 2022, with Sei’s mainnet still to go live, planned for later in 2023.
So, why are we talking about Sei if it’s yet to go live?
Simply put, the testnet results are impressive, and if replicated on the live mainnet, could lead to Sei becoming an interesting platform for developers and end users.
On their testnet, Sei can support up to 20,000 orders a second, with only 500 milliseconds needed for transaction completion. Making it a very fast blockchain indeed.
For comparison, this is roughly the same speed as most centralized exchanges, making it potentially faster than all other decentralized exchanges on the market.
How does Sei work?
Sei was built using the Cosmos SDK.
Long-time readers might be able to recognize already why Sei chose the Cosmos SDK to build their blockchain but to make sure we’re all on the same page, we’ll have a quick recap of what the Cosmos SDK is, and why it makes sense for an interoperable trading app like Sei.
To recap quickly, all platforms and products on the Cosmos network are built using the Cosmos Software Development Kit, or SDK, for short.
Platforms built using the SDK will use Tendermint Core as their consensus mechanism to confirm their transactions and will have the option for the Inter-Blockchain Protocol to be enabled which makes the platform interoperable with all other IBC-enabled platforms.
However, unlike platforms built on blockchains like Ethereum, which become apps on the parent’s blockchain, platforms built on the Cosmos network remain their own individual blockchains.
The Cosmos SDK can be thought of as a framework for building decentralized applications and custom blockchain networks.
It is designed to simplify the development process by providing developers with a set of modular tools, libraries, and pre-built components to create their blockchain applications.
All SDK-built blockchains will have a “hub-and-spoke” relationship with the Cosmos Hub. The Hub acts as a secure and scalable communication layer for interoperability between blockchains, enabling them to exchange assets and data.
All SDK-built platforms will run some version of Tendermint Core as their consensus mechanism to verify their transactions, though the beauty of the Cosmos SDK is it allows developers to customize the rules, consensus mechanisms, and governance structures of their blockchain applications.
Meaning, while they are all a variation of Proof-of-Stake, the specifics can differ from blockchain to blockchain, which makes the network more secure overall as one exploit, bug, hack, or attack can’t ruin the entire ecosystem.
We’ve also talked about Proof-of-Stake and Byzantine Fault Tolerances many times before, but to keep it brief, Proof-of-Stake, unlike Proof-of-Work, relies on a few validators, rather than making half the network compete to solve a puzzle, to confirm their transactions.
This allows the network to scale bigger without massively increasing its energy consumption.
Those with the most staked, meaning deposited, to the network are most likely to be chosen to validate the transactions.
The logic goes, those with the most invested have the most to lose by cheating the system.
Of course, no system relies only on one individual entirely, and there are those who check the validator to ensure honesty.
What makes Sei unique?
Twin-turbo consensus.
Twin-turbo consensus is what gives Sei its speed. In short, Sei doesn’t store all previous transactions as transactions.
As these have already been verified, and all blockchains built using the SDK use the same memory pool of transactions, instead it can simply store a hash of these transactions which proves its authenticity but massively reduces the size of the data.
Ultimately, this allows more transactions to fit on each block, which allows more transactions to be processed per block, resulting in increased completed transactions per second.
SEI Tokenomics
Well, here is where it gets dicey.
We all know projects live and die by their tokenomics, but as Sei is still in the testnet stage we are unable to say for certain what their tokenomics will be.
Meaning, this is the first article where we won’t have a tokenomics section.
All we know so far is that, potentially, 1% of its supply will be airdropped to those who participated in its testnet stage.
Sei has big ambitions, and promising testnet results.
It hopes to become the hub through which all digital assets are traded, and we’re not just talking about crypto.
However, at such an early stage, its future is incredibly hard to predict.
While Sei is very promising, and certainly interesting until it has been released into the wild, it is worth remembering that anything could still happen to this platform.
But, should it manage to replicate its testnet results in the wild, it would certainly seem reasonable to imagine there would be a place for Sei within the crypto landscape.