SEI (Layer 1 Blockchain)

What Is Sei?

Sei is a Cosmos-based layer-1 blockchain with a mission to change the world of digital asset trading, especially in the decentralized exchange (DEX) ecosystem.


It aims to import the speed and ease of trading that most centralized exchanges offer customers, without sacrificing the security and decentralization that underlies the blockchain ecosystem.

While centralized exchanges are quite limited in their service offerings, Sei is asset and application-agnostic. This means the network offers access to thousands of tokens across different blockchain applications in its ecosystem.

Given this, users can effortlessly trade across the decentralized finance (DeFi), non-fungible tokens (NFTs), and Game Finance (GameFi) ecosystems on the Sei blockchain. This expansive offering has led the developers to nickname it the ‘Decentralized NASDAQ.’

Since the 2021 crypto boom, digital asset trading has become a major force in the financial markets. The crypto market hit a record high of $2.92 trillion during that period. However, this good tiding also brings its own set of challenges.

More decentralized applications (dApps) are springing up by the day, yet the current layer-1 and layer-2 infrastructures are not optimized and have been unable to meet the explosive demand.

This is apparent as more than 90% of the crypto trading ecosystem is controlled by centralized crypto exchanges. Sei refers to this as the ‘Exchange Trilemma’ in its litepaper. It posits that several dApps cannot enjoy a combination of top-notch security, full decentralization, and capital efficiency.

The absence of a suitable blockchain addressing this challenge has been a fundamental reason why various dApps have fallen prey to malicious actors over the last two years.

Sei’s Solution

This is where Sei steps in to offer its innovative solution. Through its Twin Turbo Consensus mechanism powered by the Cosmos SDK and Tendermint Core, the platform looks to provide decentralized trading apps with the required speed or throughput, security, capital efficiency, and decentralization required for optimal performance.

Under the hood, Sei’s mission is to provide users with the seamless user journey most Web2 applications provide without sacrificing trustless and permissionless transactions for all.

The platform is unlike many general-purpose and sector-specific blockchains. For instance, when placed side-by-side with bitcoin, ethereum, and even the solana blockchains, Sei outpaces all of them.

bitcoin has a transaction finality of 60 minutes, while ethereum boasts six minutes despite its migration to the proof-of-stake (PoS) consensus mechanism.

Solana, on the other hand, has 2.5 seconds in its belt. Sei Network claims to offer a lightning pace in its transactions and offers 500 milliseconds (ms) in transaction finality. This makes it a highly scalable protocol for fast-paced digital asset trading.

Decentralized exchange platforms are also bugged with several challenges. Two of the most popular are front-running and maximal extractable value (MEV), previously called miner extractable value.

Front-running: Front-running involves placing a transaction in a queue in anticipation of a future trade. This system is exploited by miners and full node operators who possess insight into pending transactions. By strategically placing trades, they aim to profit based on a pending trade.

Maximal extractable value (MEV): MEV is a measurement of the potential profit attainable by a miner if they decide to include, exclude, or re-arrange how transactions are validated and included in the blocks they produce.

The Sei blockchain duly addresses these two systems using the Tendermint Core mechanism.

Who’s Behind the Sei Project?

The first thing to know about this project is that Sei Labs, the development team contributing to the ecosystem, initially planned on running it as a scaling solution on Ethereum.

However, issues around a centralized sequencer system and limited throughput caused by Ethereum saw Sei utilize the Cosmos SDK and Tendermint Core mechanisms to launch as a layer-1 protocol. 

The faces behind the Sei blockchain are Jeffrey Feng, Dan Edlebeck, and Jayendra Jog. Edlebeck was the developer behind the well-known Cosmos-based Exidio and Sentinel.

The other co-founders and team members previously held prestigious positions in traditional tech and finance landscapes.

Sei is not alone in its race to engineer a more scalable DEX application ecosystem for decentralized trading. It has attracted some of the biggest names in conventional venture capital tech firms and decentralized ecosystems.

Some popular names are Jump, Distributed Global, Multicoin, Asymmetric, Flow Traders, ForeSight, and others who have come together in two strategic fundraising events to push $30 million into the blockchain.

The blockchain protocol also announced another $50 million investment led by Foresight Ventures to boost its Sei Ecosystem Fund, which now has $120 million in its portfolio.

The Sei Ecosystem Fund is focused on incentivizing dApps to build their trading solutions on the protocol itself.

Other top-notch businesses include Coinbase, Delphi Digital, HRT, STEPN, Yield Guild, Frax, LayerZero, and GSR.

What Does Sei Aim to Solve?

Sei has an edge over its competitors largely due to the issues it aims to tackle. For one, it discovered the following:

  • That general-purpose layer-1 blockchains were not suited for DEX platforms to thrive, hence why their growth has been stunted.
  • It is impossible to build a fast-paced order book model engine on a general-purpose blockchain due to high network congestion from competing needs from dApps.
  • Lastly, a large chunk of general-purpose blockchains has limited throughput, making it impossible for DEX platforms to compete with their centralized counterparts.

Given these issues, Sei set out to resolve them and provided these unique features:

A Scalable Template for Trading of All Types

Sei is not only focused on permissionless value exchange between users in a peer-to-peer (P2P). It goes beyond that. The platform is focused on providing a specific infrastructure for various dApps and DEX platforms to trade.

This makes it a sector-specific layer-1 blockchain. Given its laser focus on trading, it has been able to craft a blockchain network that provides application-specific capabilities. This will meet the unique needs of every DeFi, DEX, NFT, and GameFi protocol.


Prior to the launch of the PoS algorithm, the proof-of-work (PoW) only offered enhanced security with limited throughput and zero interoperability. Sei aims to address this situation and seeks to improve all blockchain throughput without compromising security and interoperability across the entire ecosystem of DeFi tools.

The platform’s focus on boosting blockchain performance has seen it launch on Cosmos blockchain, which is renowned for its scalability and high efficiency.

With its transition to an already efficient PoS system like the Cosmos SDK, Sei boasts a transaction finality score of 500ms. This figure significantly surpasses that of most DEX platforms involved in trading numerous digital assets and is on par with several centralized exchanges in terms of speed.

Moreso, it claims to have 22,000 transactions per second (TPS), which is blazingly fast.

Enhanced Security

Security in the DeFi space has been a cause of concern for many. Several dApps have seen hundreds of millions wiped off their portfolio despite using secured layer-1 protocols like BNB Chain and Ethereum.

Given this, Sei utilizes frequent batch auctioning systems, which tackle the MEV and front-running problems.

Being Interoperable

Interoperability allows multiple blockchains to transfer data and information amongst themselves and allows them to talk and communicate with one another.

Sei brings this concept into reality and has partnered with renowned blockchain protocols like Axelar to maximize this possibility. Due to this, DeFi protocols, DEX, and dApps, efficiently transfer liquidity amongst themselves, bridge, and even facilitate seamless communication with one another.

How Does Sei Work?

Sei’s myriad of unique features sees it operate uniquely. For one, it uses the frequent batch auctioning method to prevent MEV and front-running.

Traditional DEX platforms are often faced with two options. Either they validate transactions off-chain and risk a potential security crisis, or they dump the transactions on the layer-1 protocol, leading to overloading.

This impasse on scalability and security is the blockchain trilemma, where decentralized, scalability, and security cannot be executed together.

Source: Sei Network

Sei resolves this by aggregating orders at the end of each block and validating them together, thereby preventing front-running by miners and full-node operators.

This process is called parallelization. It divides the work into small chunks and processes them simultaneously, thereby increasing the state sync speed and cutting out front-running.

Its Native Oracle price feeds also greatly affect its smooth operation. These decentralized data-feeding mechanisms provide verifiable and real-world information that each node can operate on without relying on external entities.

Also, instead of using dual-block order execution frameworks, Sei relies on the singularity system, which allows it to place and execute orders in just one step.

This way, the platform combines or bundles multiple orders for market makers and liquidity providers (LPs), enabling them to save gas costs. This unique ordering system is dubbed the Centralized Limit Order Book (CLOB).

The Sei Ecosystem

Sei is viewed by many as the next generation of the DeFi trading ecosystem, and many blockchain trading applications are joining its protocol. Some popular names are Bitget, Fable League, Falcon Wallet, Elixir, Entangle Protocol, MEXC Global, Band Protocol, Axelar, and 127 others.

The protocols cut across liquidity providers, gaming apps, DEXes, NFTs, Metaverse, infrastructures, and wallets. A full list can be found on its ecosystem page.

The SEI Token

Like most blockchain protocols, the Sei blockchain is powered by a native token called SEI. The digital asset is fungible (can be exchanged for another) and has a 10 billion total supply. Currently, there are 1.8 billion SEI tokens in open circulation, and the asset has a fully diluted market cap of $2.41 billion, according to CoinMarkeCap.

Despite debuting on August 15, 2023, SEI has already secured listings on high-profile tier-1 exchanges, including Binance, Kraken, Kucoin, Bitfinex, Bithumb, and many others. It experienced a remarkable surge of over 350% on the Binance exchange. Besides being a speculative item, SEI performs several other functions in the Sei ecosystem.

Payment Mechanism

All transactions carried out on the Sei blockchain incur a charge known as a gas fee. This gas fee is payment for block space and transaction validation. The SEI token is the accepted payment method in the Sei blockchain.

Staking Mechanism

Sei runs on a PoS consensus mechanism which requires validators to lock up or stake their funds to secure the network. SEI is also the accepted staking asset and enables the network to be secure from popular attacks like the double-spending attack. In return for securing the network, stakers are often rewarded with newly minted coins by the network.


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Jimmy Aki

A graduate of the University of Virginia and now based in the UK, Jimmy has been following the development of blockchain for several years, optimistic about its potential to democratize the financial system. Jimmy's previously published work can be found on BeInCrypto, Bitcoin Magazine, Decrypt, EconomyWatch,,,,, and a range of other leading media publications. Jimmy has been investing in Bitcoin himself since 2018 and more recently in non-fungible tokens (NFTs) since their boom in 2021, with expertise in trading, crypto mining and personal finance. Alongside writing for Techopedia, Jimmy is also a trained economist, accountant and blockchain…