I. What is Sei Network?
Sei Network is an L1 blockchain built on Cosmos technology. The team behind SEI is developing an order matching engine so that any application building on the network can take advantage of its IBC capabilities by building atop Cosmos, with the aim of being layer 1 for DeFi apps.
AMM (Automated Market Maker) technology, an automatic liquidity generator for exchanges, is used by the majority of current DEX exchanges. AMM is thought to be less efficient than CLOB (Central Limit Order Book), which is used on CEX exchanges and is thought to give more benefits, lower slippage, and tighter spreads.
II. Striking Features of Sei Network
The fact that SEI is a licensed blockchain is one way in which it differs. This indicates that before suggestions can be used as smart contracts, they must be accepted and go through the governance process.
The design of Sei Network differs from that of other L1 projects, particularly given that it is based on Cosmos thanks to the addition of CosmWasm, the IBC module, and an order book module that is also constructed on Sei’s network.
1. Book of Central Limit Orders
Central limit order book, or CLOB. CLOB is essentially an exchange-style execution method in the conventional exchange market where bid and ask prices are matched based on price and time priority. As a result, this paradigm eliminates the need for an intermediary agent to facilitate transactions between users. This function is by its very nature decentralized.
The CLOB system will serve as the basis for Sei’s technology. Currently, the majority of CLOB transactions take place on centralized exchanges (CEX), but Sei Network intends to introduce the well-liked CLOB model into DeFi to improve slippage trades.
2. Why CLOB is not popular on DeFi
Problems with the technology when putting Orderbook on blockchainDue to its ease of deployment, AMM is used by the majority of DEXs today.
It is challenging for projects who wish to build and develop the CLOB module because the L1 blockchain does not support it, and the dApps on the development ecosystems depend on the scalability of the L1 blockchain.
3. Sei Network’s solution
Sei’s order matching engine is entirely online, unlike tools on Dydx and Injective, making it secure and decentralized while also providing the speed and efficiency that an off-chain order book offers.
Additionally, DEXs frequently experience MEV problems, in which traders reshuffle transactions within a specific block in order to pre-run orders. By employing a “Frequent Batch Auction” process, which matches orders to a consistent settlement price in a block, Sei was able to prevent MEVs.
III. Core Technology of Sei Network
1. Block propagation
Previously, when the block proposer wanted to propose a block to other validators to vote and from there the whole network would have a common consensus base, they would have to go through the following steps:
- Block proposer and validators have both seen the transactions sent to the network in their own mempool (mempool, in short, where “pending” transactions are waiting to be processed); However, the list of transactions may be slightly different because the speed at which transactions are updated to the mempool of each validator will vary depending on the network structure (topology, roughly short distance). between devices also affects the speed at which information is transmitted).
- Next, validator A will aggregate transactions from his mempool into a complete block.
- Then, according to the traditional operation of Tendermint, validator A will in turn send a block proposal – a message that includes the block ID (hash of a block) and the transactions in that block into individual parts. (chunks) to validator B; This means validator B has to wait for all these messages, including the block proposal and each group of transactions, to be sent to be able to reconstruct a complete block and then vote for approval, while he already has You can see these transactions in your own mempool!
- The solution that Sei offers is that, instead of sending each part of the transaction as above, validator A will send a message including the block ID and hash functions of the transactions that need to be agreed to to validator B and then from With these hash functions, validator B can easily reconstruct a complete block.
- In case validator B compares and finds that all transactions sent by validator A have not been received yet, B can still wait until he receives all chunks including all transactions of that block according to the traditional method mentioned above.
Thanks to this new communication method, the throughput on Sei Network has been improved by 40% compared to the traditional method of Tendermint Core!
2. Block processing
Steps in Tendermint consensus mechanism:
- Propose: A proposed block for validators to vote on.
- Prevote: validators will evaluate the validity of this block and then send a message stating their rating to the network.
- Precommit: After a certain period of time, if more than 2/3 of the prevote messages agree with the data in the block, the validators send an approval/disagree message to the network; if there are still more than 2/3 of precommit messages expressing consensus, this block will begin to be processed and committed (ie added to the blockchain).
Note: There must be 2 steps prevote and precommit although the mechanism is similar to ensure the security of the system; if there is only 1 precommit step, bad validators can still cheat successfully
Thus, with the consensus mechanism of Tendermint, for a block to be added to the blockchain, it will take us about 1 second.
According to Jayendra Jog, co-founder of Sei Network, this process can be shortened even further if we implicitly assume the validity of a block and process it in parallel with the time it takes for validators to exchange messages. prevote and pre commit mentioned above. If a block is confirmed as valid, it will be added to the blockchain, and if not, the block will be ignored.
Note: At a given height (which is the position of a block in the blockchain), only the first proposed block will be processed by this optimistic processing (because there will be multiple proposed blocks for each block). height) to prevent overloading validators when performing many different tasks at the same time.
After conducting research and testing, the Sei Network team said that the results were very positive when the throughput increased by 33%.
In summary, with the new Twin Turbo consensus mechanism, Sei Network’s network is confirmed to be able to process 22,000 instructions/sec with the processing speed per block reduced to 450ms (but now this number has increased) around 600ms), only about half that of Tendermint’s native consensus mechanism.
3. Parallel transaction processing and order aggregation
Another improvement of Sei Network is the processing of unrelated transactions, not using the same resources separately & independently, instead of processing all transactions, even though they are related. to each other or not, sequentially. Besides, Sei Network is also designed to process transactions of different markets in parallel, saving time, thereby reducing risk for market makers (market makers). ).
If the orders in a block belong to the same market, they will be aggregated to be processed at the same time. Sei Network also allows traders to aggregate multiple independent orders into a single transaction and execute them to save on gas fees.
Besides helping to improve the user experience, shortening the time through this method of transaction aggregation and parallel processing also helps prevent front-running, thereby ensuring transparency. and fair to individuals participating in the market.
iV. Teams, Funds & Partners of (Project Token)
The founding team of SEI, led by Jeffrey Feng and Jayendra Jog, includes individuals with broad backgrounds in the TRADI and tech sectors, including, among others, Goldman Sachs and Airbnb.
2. Investment Funds & Partners
Jayendra Jog stated that in order to provide the ideal environment for financial applications:
“To further the same aim, we have worked with some of the most renowned financial institutions in the world.”
along with other “extremely popular VCs” in the cryptocurrency field like Coinbase Ventures, Delphi Digital, etc., recently announced a $5 million investment round lead by Multicoin Capital.
Sei Network only raised $5 million, but on September 29, 2022, the company announced the opening of a $50 million fund to expand its ecosystem. This demonstrates the team’s willingness to invest money to show the project’s long-term commitment.
V. Where can Sei Network information be updated?
Currently, Crypto users can fully consult, research, and analyze information about Sei Network through famous media newspapers such as Nasdaq, Bloomberg, Forbes, AP News, Yahoo!Finance, CoinTelegraph, Coindesk, etc.
These media are constantly updated with useful information, new activities, outstanding events of Sei Network and all the topics surrounding it. Accordingly, Meta Lion Ventures continuously updates the topic of outstanding projects in Blockchain and hot events organized between Meta Lion & partners.
Above is the information about Sei Network that I want to provide to you. As can be seen, it would be suitable for DEX exchanges dealing with spot (spot), derivatives (derivatives), or even an option because it allows parallel and slip-free trading and can handle 18k orders per second.
It is uncertain whether CLOB will have a larger market share than AMM, but if Sei is successful in implementing Clob on blockchain, this network will become a leader in luring customers into the DeFi market. Sei Network is now generating a lot of interest because they stated they would pay 1% for user airdrops. As a result, it can occasionally be challenging to use the testnet due to network congestion. The most recent information on this L1 blockchain will continue to be added by CoinF.
The above is Meta Lion’s comment on the Sei Network project which is our personal opinion, this is not investment advice at all. Investors should be responsible for their own decisions.