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Sei Network: can DeFi's native public chain kill it in the L1 market?

Cointime Official

By Cointime.com 237

Derivatives trading plays a crucial role in the crypto space. This financial instrument can be in the form of a contract or covenant that allows investors to trade on price fluctuations of crypto assets in the future. Derivatives markets offer greater flexibility and leverage than traditional spot trading, providing investors with more opportunities and risk management tools.

Currently, derivatives trading in the crypto industry is concentrated on centralized exchanges. However, these exchanges also face a number of problems. First, centralized exchanges carry the risk of a single point of failure, which, in the event of a malfunction or attack, will result in trading halts or loss of funds. Second, regulatory risk is also a concern. As the regulatory environment in the crypto space is not yet perfect, centralized exchanges may face regulatory pressure or restrictions from governments.

In order to address these issues and promote the development of the crypto derivatives market, Sei plans to build an L1 blockchain dedicated to order book infrastructure using Cosmos SDK and Tendermint Core. By leveraging the decentralized nature and security of blockchain technology, Sei aims to provide a more reliable, transparent and robust trading platform.

By utilizing Cosmos SDK and Tendermint Core, Sei will be able to build high-performance DeFi products that provide investors with more options for trading derivatives. This will lead to broader market opportunities and better risk management tools for participants in the crypto industry. And by introducing a decentralized order book infrastructure, Sei is expected to attract more traders and increase market liquidity. This will bring more room for the crypto industry to grow and provide investors with a more reliable, flexible and secure trading environment.

Sei Network: the first order book-based L1 blockchain

Sei Network is the first L1 blockchain project based on an order book, using Cosmos SDK and Tendermint Core technology with a built-in Central Limit Order (CLOB) module. This means that decentralized applications built on Sei will be based on CLOBs, and other Cosmos-based blockchains can use Sei's CLOBs as a shared liquidity hub to create a trading marketplace for different assets.Sei's vision is to be the infrastructure and liquidity hub for the next-generation of DeFi products in the Cosmos ecosystem, and to serve as the connection to the entire ecosystem as the underlying infrastructure for DeFi trading.

The Sei Network has several distinguishing features. First, compared to other L1 blockchains, Sei emphasizes that its biggest competitive advantage is speed. Currently, its transaction latency (Time To Finality (TTF)) is around 600 milliseconds, which makes it one of the fastest options for processing transactions among Web3 products.TTF measures the time it takes from transaction submission to transaction confirmation, and while ensuring the irreversibility of the transaction, Sei is able to provide transaction confirmations at a high speed, thus meeting users' fast transaction execution Sei is able to provide transaction confirmations at high speeds while ensuring that transactions are irreversible, thus meeting user demand for fast transaction execution.

Second, Sei has a centralized validation set that has been rigorously tested for stability and security, and applications on Sei can leverage this validation set as their own validation node without the need to redeploy. This reduces the technical complexity and barriers to migrating to the Cosmos ecosystem and provides developers with easier access.

In addition, Sei employs the Frequent Batch Auctions (FBA) mechanism to prevent Maximum Extractable Value (MEV), which is the act of prioritizing and reordering transactions in a blockchain transaction in order to gain an unfair advantage. By using the FBA mechanism, Sei is able to reduce the impact of MEV as the order of trades within the same batch does not lead to price volatility, thus protecting the interests of users and the fairness of trades.

Sei's innovative features will provide users with a faster, safer and fairer trading environment and developers and project builders with more flexible and convenient access.

Technical Features

Sei is a rather technologically powerful blockchain that aims to provide a robust infrastructure and liquidity hub for Decentralized Finance (DeFi) applications. By using Cosmos SDK and Tendermint core builds with a built-in Central Limit Order Book (CLOB) module, Sei is able to provide developers and users with an efficient and secure trading environment.

First and foremost, Sei's CLOB module is one of its key technological components. An order book is a centralized market mechanism that allows buyers and sellers to submit limit orders on the basis of which trades are aggregated.Sei, through its built-in CLOB module, makes it possible for applications to be built on this order book infrastructure and for other Cosmos-based blockchains to share Sei's liquidity hub. This design makes trading between different assets easier and more efficient.

Second, Sei utilizes CosmWasm smart contract technology. By integrating the wasmd module, it enables developers to build decentralized applications using the Rust-based CosmWasm library, which has been widely used in many blockchain ecosystems for its stability and extensive validation. Compared to other development frameworks, CosmWasm offers a simpler development process and better security guarantees, providing developers with a better development experience.

In addition, Sei has introduced its own DEX module so that smart contracts can access deep liquidity directly from the underlying CLOB. By aggregating all trades into a single order book, Sei enables the centralization of liquidity, greatly reducing the time required to start a new project and eliminating the need to rely on market makers to provide market-specific liquidity commitments.

In addition to this, Sei provides dApp integration templates that allow the application to integrate with other dApps or market maker trading liquidity from organizations that partner with Sei, further improving liquidity and user experience.

These features make Sei a powerful DeFi infrastructure and liquidity hub, providing developers with a wealth of tools and resources that will drive the decentralized financial ecosystem.

Financing

1、August 31, 2022, Sei Labs announced the completion of a $5 million seed round led by Multicoin Capital with Coinbase Ventures, GSR, Flow Traders, Hudson River Trading, Delphi Digital, Tangent and others.

2、April 11, 2023, Sei Network announced that it completed a $30 million financing round at a valuation of $800 million, which was led by IOBC Capital, Distributed Global, Multicoin Capital, Asymmetric Capital Partners, Flow Traders, Hypersphere Ventures, Jump Capital and Bixin Ventures.

3、April 12, 2023, according to Fortune, Sei Labs Eco Fund completed a new round of financing of $50 million, which was participated by Bitget and Foresight Ventures.

Conclusion

Derivatives trading has an important role to play in the crypto space, providing investors with more opportunities and risk management tools. However, traditional centralized exchanges suffer from a number of problems such as single point of failure risks and regulatory pressures.Sei plans to build an orderbook-based L1 blockchain using Cosmos SDK and Tendermint Core to address these issues and advance the crypto derivatives market.

Sei's various technological advantages make it a powerful DeFi infrastructure and liquidity center and provide an efficient and secure trading environment for developers and users.

Sei's financing demonstrates the market's recognition of its promise and potential. Through its seed round and subsequent financing, Sei has successfully attracted the participation of a number of well-known investment institutions and venture capitals, providing sufficient financial support for the project's development.

Overall, the launch of Sei brings new possibilities for crypto derivatives trading. Its technical features and financing suggest that Sei has the potential to become the next-generation DeFi product infrastructure and liquidity center. However, Sei will also need to face challenges from competitors, the regulatory environment and market demand as the project develops. Continuous innovation and delivering a superior user experience will be key factors in Sei's success in this rapidly changing industry.

cosmos DeFi
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