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]

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 frontrunning issues, a notable security concern in other ecosystems, ensuring the integrity of asset exchanges. ^[1][4]

Main Features

• Security: Sei collaborates with respected global institutions and validators to establish a robust security framework. Its foundational design ensures a secure environment for digital asset transactions.
• Scalability: Sei's architecture addresses the demand for decentralized applications (dApps) with improved scalability. It offers seamless support for leading global applications.
• Adaptive: Sei is engineered with interoperability and language compatibility, allowing it to evolve alongside industry trends. Its modular structure integrates innovations, guided by community governance.
• Speed: Sei aims to ensure swift transactions without compromising security or stability. Its infrastructure delivers rapid processing for an enhanced user experience.
• Eco-Friendly: Leveraging proof of stake, Sei minimizes its environmental impact. The Sei Foundation's commitment to carbon neutrality contributes to a more sustainable digital assets industry.

^[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 precommit step, Sei concurrently processes transactions upon receiving the block proposal. This generates a candidate state in a cache, which is 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 own CLOBs. Through a streamlined process involving smart contract deployment and transaction submission, markets can be created 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 decentralized exchanges flexibility in representing assets. 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 tactics and ensure fair market pricing. By aggregating and executing all market orders at a uniform clearing price, Sei prevents order manipulation and promotes equitable market participation. ^[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 own 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. Once the minimum deposit threshold is met, the proposal transitions to the voting phase. During the deposit period, individuals can contribute deposits to the proposal. To submit a proposal, a transaction containing proposal details and a specified deposit amount is required. 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 by 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. If a proposal fails to garner the minimum deposit, all deposits are burned. ^[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, utilizing the SEI token to fulfill various network functions:

1. Network Fees: SEI tokens are employed to cover transaction fees on the Sei blockchain.
2. DPoS Validator Staking: Holders can delegate or stake SEI with validators to secure the network.
3. Governance: SEI token holders can actively participate in shaping the protocol's future through governance.
4. Native Collateral: SEI serves as native asset liquidity or collateral for Sei blockchain applications.
5. Fee Markets: Users have the option to provide tips to validators to prioritize transactions, which can also benefit delegators.
6. Trading Fees: SEI is used 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:

1. 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.
2. Foundation Treasury (9%): A portion of SEI tokens supports the ongoing operations of the Sei Foundation.
3. 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]