Sei Network in-depth analysis: a fast Layer1 public chain designed for trading, can it become a decentralized “NASDAQ”?

Author: Daniel Li

The SEC’s lawsuit against Binance has been the biggest event in the crypto industry over the past month. As a result, the vast majority of cryptocurrencies have experienced significant price drops in the past few weeks. The crypto market, which had just entered a bull market, is once again in a bearish state due to this event. This event has also caused crypto users to lose trust in centralized exchanges (CEX), further emphasizing the need for decentralized exchanges (DEX) to develop. Sei Network, a Layer1 public chain built using Cosmos SDK, aims to become the preferred chain for DEX in DeFi, NFT, and GameFi. Sei’s built-in order book infrastructure, extremely fast execution speed, deep liquidity, and fully decentralized matching service provide DEX with a more secure, transparent, efficient, and reliable network, and also bring new innovation and development opportunities to the crypto market.

Sei is designed for trading and aims to be the fastest layer1 public chain

Traditional Layer 1 public chains can generally be divided into two categories: general-purpose chains such as Ethereum and Solana, and chains specific to applications such as dYdX and Osmosis. These public chains have their unique advantages and characteristics in terms of technological implementation, but they have certain limitations in terms of transaction scalability.

As a new Layer 1 public chain, Sei did not choose between general-purpose chains and chains specific to applications. Instead, Sei found a middle ground between the two and became a public chain designed specifically for trading. Compared to general-purpose chains, Sei has optimized every aspect of its technology stack to provide the best trading infrastructure. Compared to chains specific to applications, Sei is a relatively general-purpose public chain that can support various trading applications instead of just targeting a specific application. This makes Sei a more flexible and customizable trading infrastructure that can meet the needs of different types of trading applications.

As a public chain focused on trading, Sei aims to solve the scalability problems faced by current on-chain exchanges and become the fastest Layer 1 public chain. To achieve this, Sei has implemented several important improvements to its underlying network architecture, including the Twin Turbo consensus mechanism that achieves industry-leading performance levels. Twin Turbo consensus is a big part of Sei’s technical success, helping Sei achieve a minimum finality time of 300 milliseconds, which is 10 times faster than Solana. In addition, Sei has implemented a composable architecture order matching module, which means that dApps on Sei have synchronous composability. Through Sei’s many bridging partners, the IBC, EVM, and SVM ecosystems will all have asynchronous composability, allowing for seamless connections and interoperability between different blockchain ecosystems, and developers can more flexibly choose the technology stack that suits their needs.

Sei has also improved throughput by 5-10x through market-based parallelization techniques, and supports batch processing of orders, simplifying the process of updating multiple orders across different exchanges. These are innovative features implemented by Sei to optimize trading application performance. In addition, Sei’s liquidity center and underlying technology are also highly conducive to various dApps. Sei’s liquidity management system can help DeFi, GameFi, and NFT applications provide users with deeper liquidity systems and cost-effective transaction processes while taking advantage of Sei blockchain’s agility and efficiency.

Trading is the most basic application scenario and use case of blockchain technology, and is also an important driving force for the development of blockchain and Web3. Sei provides a compelling product for developers who want to build applications on a general layer 1 by creating a dedicated trading public chain. Sei’s emergence fills the gap in current trading-exclusive public chains, bringing new opportunities and challenges to the development of blockchain technology and Web3, and also providing more possibilities for the circulation and trading of digital assets.

Sei’s technical advantages are disrupting the traditional DEX network environment

As Web3 develops rapidly, exchanges, as places where assets are traded, become increasingly important. Currently, exchanges are mainly divided into centralized exchanges and decentralized exchanges. In the past, centralized exchanges have always dominated. However, with the regulatory pressure on centralized exchanges increasing as leading centralized exchange Binance faces prosecution by regulatory authorities, the market will shift towards decentralized exchanges. This requires DEX to expand and adapt to a huge wave of adoption.

Given DEX’s unique requirements for speed, throughput, reliability, and front-running, dedicated infrastructure needs to be built to address these issues. This is exactly what Sei was born for, it provides a solution to the scalability issues of DEX and enables exchange applications to scale effectively while maintaining decentralization and capital efficiency. Sei’s technical advantages mainly include the following:

Order Matching Engine

Sei is a Layer1 public chain based on the Cosmos ecosystem. Like Ethereum, Sei also allows users to transfer assets and deploy smart contracts. However, Sei’s feature is that it also creates an order placement and matching engine at the chain level. This order matching engine is one of Sei’s core features because it allows anyone who wants to build an exchange to easily use this engine to create an order book-based exchange. This means that builders can skip the step of building an order book from scratch, making it more efficient in terms of technology and cost.

In addition, Sei’s order matching engine provides a limit order design space similar to conventional centralized exchanges such as Binance and Coinbase. It creates a set of orders at different prices and allows asset values to be updated based on executed orders. The advantage of using an order book exchange is that it can provide higher liquidity and better price discovery mechanisms. Although technically more challenging to launch a liquidity-providing order book-based exchange than an AMM DEX, Sei aims to provide a cost-effective system for developers and users building decentralized applications on the network. This enables them to build order book-based exchanges more efficiently without sacrificing security and reliability.

Parallel Order Execution

Sei’s parallel order execution is a major improvement. It can process orders in the same market in sequence while simultaneously processing orders from different markets. This approach significantly improves Sei’s throughput while ensuring deterministic behavior among validators. In traditional blockchains, order processing order matters, which means that each order must be processed in the exact order it was received, regardless of the assets or markets it interacts with. Sei’s approach allows orders from independent markets to be processed simultaneously, resulting in faster block times, lower latency, and higher throughput for Sei at all load levels. This marginal improvement is particularly significant at high loads.

According to Sei’s internal testing data, parallel processing can reduce block time from 1.33 seconds to 0.81 seconds, latency from 371 milliseconds to 48 milliseconds, and increase throughput from 7,500 orders per second to 12,200 orders per second in the case of 10,000 orders per block and 20 different contracts (markets). As the load increases, the degree of marginal optimization becomes more significant.

Twin-Turbo Consensus Mechanism

Sei’s Twin-Turbo consensus mechanism optimizes and upgrades ABCI of Cosmos so that every step of consensus can be programmed. This consensus mechanism consists of two parts: intelligent block propagation and optimistic block processing.

Intelligent block propagation aims to improve block processing speed and efficiency. On Sei Network, block proposers can send compressed block proposals containing only transaction hashes instead of detailed block contents. During the block broadcasting phase, if a validator has all the transactions in the proposal in its local memory pool, it will reconstruct the entire block from its memory pool without waiting for all block parts to arrive. This process significantly reduces the total time validators wait to receive blocks. If a validator does not have any transactions in its memory pool, it can simply revert to waiting for the uncompressed detailed proposal. According to Sei’s tests, in over 99.9% of cases, each validator already has the transactions in its local memory pool due to the gossip mechanism of the network. Therefore, this intelligent block propagation method can greatly increase Sei’s throughput while still ensuring the validity of transactions.

Optimistic rollup is a blockchain validation method that enables faster and more efficient validation processes. Unlike traditional non-optimistic blockchains, optimistic rollup skips the pre-vote and pre-submit steps, allowing validators to directly call the block-ending function, thereby speeding up block validation and voting. On Sei Network, validators can also optimistically process the first block proposal they receive at any height by initiating a parallel processing process and writing the candidate state to cache. This greatly reduces the waiting time caused by delays in block production, thereby increasing Sei’s throughput.

Through the Twin-Turbo consensus mechanism, Sei has reduced the block confirmation time from 6 seconds on the Cosmos chain to 500 milliseconds, achieving the fastest final block confirmation time on the network and a throughput of 20,000 transactions per second. This efficient consensus mechanism also makes Sei a high-performance, scalable, and programmable blockchain system that provides faster and more efficient services for DEXs.

In addition to the three main improvements mentioned above, Sei has added other features at the base layer, including:

1. Single-block order execution: In Sei, it is allowed to place and execute orders in a single block, while in Serum, it takes multiple blocks to complete.

2. Order bundling: Market makers can update prices for multiple markets in a single transaction, thereby improving efficiency.

3. Frequent batch auctions: Market orders can be aggregated at the end of a block and settled at a single price. This approach aims to try and minimize front-running.

4. Native price oracle: A native price oracle is integrated into the base layer of Sei to ensure reliable price information from on-chain markets.

The introduction of these features can further improve Sei’s efficiency and scalability, making it a more comprehensive blockchain network that provides better services for DEXs.

Sei Network Ecological Development

Ecological layout has always been a focus of Sei’s development, especially after entering 2023. In January and April, Sei received two ecological investment funds. Among them, MEXC, a cryptocurrency trading platform, provided a $20 million cryptocurrency ecological fund, while Foresight Ventures and cryptocurrency exchange Bitget provided a $50 million cryptocurrency ecological fund. In addition, last September, Sei received a $50 million investment from Multicoin Capital, DelphiDigital, Hypersphere, and many other investment institutions and market makers. As of now, the total size of Sei’s ecological fund has soared to $120 million.

These ecological investment funds provide Sei with more resources and support, helping Sei further expand its influence and market share in the blockchain field. The participation of numerous institutions also demonstrates the widespread optimism about the prospects of the exclusive trading public chain built by Sei.

Currently, although Sei’s mainnet has not yet been launched, its ecosystem has already attracted the participation of many well-known projects. As of now, over 150 teams have gathered on the Sei Network to develop projects, covering multiple domains such as infrastructure, DEX, MEV, cross-chain, NFT, and mortgage lending. In terms of ecological projects, according to the latest funding report disclosure, there are already 120 cooperative projects in Sei Network’s ecosystem. Currently, about 70 cooperative projects are disclosed on the official website, with a focus on decentralized exchanges, infrastructure, wallets, and cross-chain bridges. The addition of these cooperative projects injects new vitality and momentum into the construction and development of Sei’s ecosystem, while also providing users with more choices and services.

Key projects of Sei Network

Decentralized Exchanges (DEX):

  • Sushiswap: an automated market-making DEX that launched a decentralized perpetual futures exchange on Sei Network in January 2023.
  • Satori: a chain-based evolutionary product protocol built on Polkadot, offering evolutionary product protocols on Sei Network.


  • White Whale: a cross-chain liquidity protocol that provides efficient market tools through arbitrage, flash loans, and cross-chain liquidity pools, and will conduct airdrop activities on Sei Network to incentivize validators and token holders.
  • Kado: supports basic settings and enables Sei users to use its non-custodial wallet transfer rules and digital assets.


  • Keplr: a wallet for cross-blockchain ecosystems that supports Sei Network’s tokens and applications.
  • Cosmoscan: a verification node operator and wallet provider that provides a block browser for Sei Network.

Cross-chain Bridges:

  • Gravity Bridge: a cross-chain bridge that supports the transfer of assets and messages between Cosmos and Ethereum, providing an open access mechanism for DeFi projects in Sei Network’s ecosystem.
  • Axelar: can provide various services including multi-chain flow capital pools, making cross-chain liquidity enter Cosmos, which will make it easier for Sei to obtain liquidity outside of Cosmos.

The Sei Network is hailed as the decentralized Nasdaq and aims to create a blockchain focused on DeFi infrastructure. To achieve this goal, Sei has introduced a number of technological applications to improve the trading experience, including modular order matching, Twin-Turbo consensus, and parallel order execution and local price oracle, among other basic layer functions. By collaborating these protocols, systems, and algorithms, Sei provides the best infrastructure for trading applications and exchanges. In the fast-paced trading and innovative technology world, speed, scalability, and affordability are crucial factors. As a high-performance, general-purpose Layer1 public chain, Sei has become the preferred solution for traders, developers, and gaming communities.

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