In a previous article a couple of weeks ago, we covered the Sui Network. Since then, many of you asked us to go over the Sei Network, which happens to have a similar name to Sui.
So let's jump right into it!
Today, we will cover the following topics:
- About Sei Network (SEI)
- How Does Sei Network Work?
- The Sei Ecosystem
- Technical Analysis
- Why is SEI The Coin of the Week?
About Sei Network (SEI)
What is Sei Network?
Sei Network, built the Cosmos SDK, operates as a layer-1 blockchain with a novel "Twin Turbo" consensus mechanism tailored specifically for decentralized finance (DeFi) applications. Offering distinctive protocol-level functionalities, it aims to facilitate DeFi activities effectively.
With its high throughput, low latency, and innovative order matching mechanism, Sei endeavors to integrate the most beneficial aspects of both centralized exchanges (CEXs) and decentralized exchanges (DEXs) within a blockchain ecosystem designed for seamless digital asset exchange.
Sei reports that it currently achieves a transaction finalization time of about 500 ms or 0.5 seconds. It makes Sei the fastest Cosmos SDK chain.
Below is a comparison of Sei with other layer 1 blockchains.
What is SEI token?
The native token of Sei Network, SEI, plays pivotal roles within the Sei ecosystem.
Here are some SEI functions:
- Network Fees: It covers transaction fees on the Sei blockchain
- DPoS Validator Staking: SEI holders can choose to delegate their holdings to validators or stake SEI to operate their own validator, thereby contributing to network security
- Governance: SEI holders possess the opportunity to participate in future governance decisions regarding the protocol
- Native Collateral: SEI serves as native asset liquidity or collateral for applications developed on the Sei blockchain
- Fee Markets: Users can offer tips to validators to prioritize their transactions, with the option for these tips to be distributed among users delegating to the validator
- Trading Fees: SEI can be utilized as fees for exchanges built on the Sei blockchain
How Does Sei Network Work?
Architecture of Sei
Sei is the first DeFi-specific blockchain.
Employing a hybrid strategy, Sei merges the advantages of a general-purpose blockchain with those of an app-specific blockchain tailored for DEXes.
In other words, Sei gives DeFi apps an 'unfair advantage' over non-DeFi ones, making specific tradeoffs to the base layer to allow DeFi apps to thrive.
Sei is neither a standalone appchain DEX nor a general purpose and permissionless blockchain; rather, it represents a permissioned blockchain meticulously crafted to cater to the requirements of DeFi protocols such as DEXs and lending platforms, striking a balance between these two extremes.
First, its DeFi-specific nature prevents the network from being overcrowded.
Moreover, it offers unique features like a single-block order, order building, native price oracle, and batch auctioning, all of which encourage building on Sei over the appchain route.
Advantages of Sei
Below are the primary advantages of Sei:
- A trading-specific blockchain: Unlike other similar layer 1 blockchains, Sei is purpose-built for decentralized trading.
- Parallel Order Execution: Sei employs a parallel order-matching mechanism, enabling simultaneous processing of order matches across different markets, thereby enhancing efficiency.
- High speed: Sei boasts high transaction speed, measured by Time to Finality (TFF). Compared to Sui, Sei is twice as fast and approximately 1.5 times faster than Aptos.
- Enhanced security: Sei ensures robust security with its Native Order Matching Engine, empowering users to define trade parameters while providing protection against potential MEV risks.
- Transaction throughput: Transaction throughput refers to the rate at which valid transactions are processed within a specified timeframe. While Solana can handle 10,000 transactions per second (TPS), Sei excels with a capacity of processing 20,000 orders per second (OPS).
The Sei Ecosystem
Projects building on Sei
Numerous Web3 projects across various sectors within DeFi have shown keen interest in the Sei Ecosystem.
Currently, there are over 150 projects actively engaged with Sei, demonstrating significant traction
Even during its testnet phase, Sei has cultivated a vibrant ecosystem, witnessing new projects announced almost every day.
Highlighted below are some notable projects within the Sei network:
Axelar
Axelar is a cross-chain communication protocol built using the Cosmos SDK. Axelar is the gateway for BTC and EVM assets like ETH and USDC into the Cosmos Network. Furthermore, it is the canonical pathway for external assets for Osmosis.
Leap Wallet
Leap Wallet is a non-custodial wallet for IBC chains. It also offers staking, NFT, and Defi services.
Synthr
Synthr is an omni-chain synthetic asset protocol that enables the mint and trade of various financial assets using trustless contracts. It will also host an internal DEX — SYNTHSWAP, where users can swap on-chain assets with zero slippage.
Vortex
Vortex is a decentralized derivatives exchange for the Cosmos ecosystem. It aims to provide CEX-like services and user experience with features like lending and borrowing in a decentralized and permissionless manner.
Sei ecosystem Drawback
The Sei ecosystem, while decentralized, is not entirely permissionless.
To prioritize its focus on decentralized finance (DeFi), the Sei community oversees development permissions to prevent non-DeFi projects from entering.
Additionally, a decentralized voting process is adopted for project selection.
Technical Analysis
From a technical perspective, SEI has been overall bullish trading inside the rising channel highlighted in blue.
This week, SEI rejected the upper bound of the channel and the round number $1.
For the bulls to maintain control and potentially establish dominance from a long-term perspective, a breakout above $1.05 is necessary.
In parallel, for the bears to take over, a break below the last major low at $0.855, highlighted in orange, is required.
In such a scenario, a move towards the lower boundary of the channel and the $0.77 support level is anticipated, where we will be looking for trend-following buy setups.
Why is SEI The Coin of the Week?
In summary, traditional DEX protocols have downsides. Sei Network offers a solution, optimizing network performance.
Sei is vital for Cosmos, targeting interchain DeFi demand. It provides a specialized order book and Native Order Matching Engine for deep liquidity, high throughput, and low latency.
For this week, we've chosen SEI because it's the first DeFi-specific blockchain, marking an exciting chapter in blockchain innovation.
Moreover, from a technical standpoint, it shows promising signs of bullish momentum, especially as it approaches the lower boundary of the rising channel, providing us with a good opportunity to capitalize on the upcoming bullish impulse.
Thanks for tuning in to this week's coin of the week! We appreciate your readership and enthusiasm for exploring the crypto landscape with us.
See you next week for another coin of the week! 🚀
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