Sei is an open-source Layer 1 blockchain designed for efficient digital asset exchange across gaming, social interactions, and non-fungible tokens (NFTs). It addresses the challenges posed by the need for secure and scalable on-chain trading, offering a tailored infrastructure optimized for this purpose. ^[1][2]

Jayendra Jog, Jeff Feng, and Dan Edlebeck are Sei's co-founders.

Overview

Launched in 2022, Sei's fundamental goal is to provide a solution for the exchange of digital assets in diverse contexts as a response to the Exchange Trilemma faced by exchanges, aiming to create a balance between decentralization, scalability, and capital efficiency. By specializing in trading, Sei aims to offer a streamlined platform that facilitates secure and seamless asset exchange. ^[1][3]

Driven by the escalating demand for on-chain trading due to regulatory changes and increased tokenization, Sei's architecture optimizes every layer to achieve efficient and secure digital asset exchange. Its notable features include rapid transaction finality, a unique Twin-Turbo Consensus mechanism, market-based parallelization, and a native matching engine. Sei also addresses front-running issues, a notable security concern in other ecosystems, ensuring the integrity of asset exchanges. ^[1][4]

Main Features

Sei incorporates several essential features to enhance its functionality. Security is key, with Sei collaborating with global institutions and validators to ensure robust security measures for digital asset transactions. Its architecture prioritizes scalability, catering to the growing demand for decentralized applications (dApps) and supporting major global applications seamlessly. The platform's adaptability allows it to evolve alongside industry trends, with community governance guiding innovations. Speed is emphasized to enable swift transactions while maintaining security and stability. Sei also focuses on eco-friendliness by leveraging proof of stake consensus to minimize its environmental impact, contributing to a more sustainable digital assets industry through carbon neutrality initiatives by the Sei Foundation. ^[4]

Built-in Mechanisms

Twin-Turbo Consensus

Sei employs the Twin-Turbo Consensus mechanism to enhance transaction efficiency. This method optimizes the process of transaction propagation, disseminating user-initiated transactions across the network. Validators integrate these transactions into their local mempools, and block proposers create block proposals with unique transaction identifiers and full block references. This approach reduces latency, expedites validator wait times, and contributes to Sei's overall operational efficiency. ^[5]

Optimistic Block Processing

Sei introduces Optimistic Block Processing, a distinctive feature that improves transaction efficiency. Unlike conventional methods where transaction processing is deferred until the pre-commit step, Sei concurrently processes transactions upon receiving the block proposal. This generates a candidate state in a cache committed upon successful block acceptance. This parallel process reduces latency and accelerates data processing, enhancing Sei's block processing efficiency. ^[5]

Parallelization

Parallelization is a fundamental strategy in Sei's block processing optimization. During the DeliverTx phase, transactions are processed in parallel, increasing transaction throughput. Sei also implements Market-Based Parallelization, allowing the simultaneous processing of independent Central Limit Order Book (CLOB) orders through its native order matching engine. This approach enhances transaction efficiency by enabling the parallel handling of orders that don't impact the same market within a block. Sei's tailored parallelization approach ensures efficient management of diverse transaction types. ^[5][7]

Native Price Oracles

Sei's native price oracles provide accurate asset exchange rate pricing by engaging validators as oracles. They propose exchange rates within short voting windows, with aggregated proposals resulting in weighted median exchange rates. Validators' voting power influences the weighting, ensuring reliable pricing. Short windows enable timely asset pricing updates, and penalties deter non-participation and erroneous data, enhancing Sei's ability to facilitate precise asset valuations. ^[5][8]

Native Order Matching Engine

The Native Order Matching Engine is a tool for decentralized exchanges building on the Sei blockchain. This engine enables the creation and management of Central Limit Order Books (CLOBs) within the Sei ecosystem. By maintaining order books at the chain level, decentralized exchanges can efficiently deploy and manage markets, offering users an enhanced trading experience. ^[5]

Deploying CLOBs

Sei's matching engine empowers decentralized exchanges to establish their CLOBs. A streamlined process involving smart contract deployment and transaction submission can create markets with defined assets, base denominations, and minimum price intervals. The engine supports various order types, including limit, market, fill-or-kill, stop-loss, and cancel orders, facilitating a comprehensive trading environment. ^[5]

Asset Agnostic Order Book

The matching engine presents an asset-agnostic order book system, allowing flexibility in representing assets in decentralized exchanges. Rather than tokenizing positions, exchanges can track positions as lists within their smart contract states, providing a versatile approach to asset management. ^[5]

Frequent Batch Auctioning

Sei employs Frequent Batch Auctioning to mitigate the influence of front-running fair market pricing. Sei prevents order manipulation and promotes equitable market participation by aggregating and executing all market orders at a uniform clearing price. ^[5]

Transaction Order Bundling

Sei optimizes trading efficiency through multiple layers of order bundling. Transactions can include orders spanning various trading markets, and Sei's Chain Level Order Bundling reduces latency by bundling orders per market, resulting in improved performance during periods of high throughput. ^[5]

Trading Fees and Middleware

At its launch, the matching engine does not charge trading fees at the chain level, with the potential for governance to implement them in the future. Decentralized exchanges can incorporate their trading fees at the smart contract level. Additionally, the engine's flexibility encourages the development of decentralized exchange middleware, enabling innovative functionalities such as non-fully provisioned offers and unique DEX experiences. ^[5]

Governance

Creating a New Proposal

Sei's governance system enables any participant to initiate a governance proposal, commencing with a deposit period. The proposal transitions to the voting phase once the minimum deposit threshold is met. During the deposit period, individuals can contribute deposits to the proposal. A transaction containing proposal details and a specified deposit amount is required to submit a proposal. The proposal remains in the deposit period until the total deposit meets the threshold, with the deposit amount being denominated in the deposit token. Expedited proposals are possible using the --is-expedited flag, which reduces the proposal time at the cost of increased deposit requirements. Existing proposal details and states can be queried using the proposal ID. Proposers of pending proposals can add to their deposits to advance to the voting phase. All deposits are burned if a proposal fails to garner the minimum deposit. ^[6]

Voting on Proposals

Addresses can cast votes on proposals, choosing from four voting options: "yes," "no," "abstain," and "no_with_veto." Weighted voting is supported, allowing voters to allocate voting power across options based on their preferences. This is particularly valuable when representing diverse stakeholders with distinct voting preferences. Weighted votes are expressed as a comma-separated string of options and corresponding weights, summing up to 1 for validity. Query commands provide information about specific proposals, vote tallies, and individual votes for a proposal. These querying capabilities enable transparency and access to proposal-related data. ^[6]

SEI Token

Sei operates on a decentralized Proof of Stake blockchain, with the SEI token serving multiple network functions. Firstly, SEI tokens cover transaction fees on the Sei blockchain. Additionally, holders can delegate or stake SEI with validators to contribute to network security through DPoS Validator Staking. SEI token holders can also actively participate in the protocol's governance, shaping its future trajectory. Furthermore, SEI serves as native asset liquidity or collateral for various Sei blockchain applications. Users can provide tips to validators on prioritizing transactions in free markets, which can also benefit delegators. Finally, SEI is utilized as trading fees for exchanges operating on the Sei blockchain. ^[9]

Token Distribution

The SEI token's total supply is capped at 10 billion tokens. The community receives the majority (51%) of SEI tokens, divided as follows:

• Ecosystem Reserve (48%): This sizeable allocation encompasses Staking Rewards, where users stake SEI to validators and receive rewards. Ecosystem Initiatives involve distributing SEI to contributors, builders, validators, and other meaningful participants.
• Foundation Treasury (9%): A portion of SEI tokens supports the Sei Foundation's ongoing operations.
• Launchpool (3%): Reserved for specific purposes in Sei's ecosystem.

Additionally, SEI tokens are allocated for Sei Airdrops and Incentives intended to reward active participants. Notably, there is no airdrop of SEI outside the Sei domain and no ICO or community sale of SEI tokens. ^[9]