Written by Will
Sei: The fastest L1 transaction
Sei Labs has a core thesis: the ability to exchange digital assets is a fundamental application of crypto. The question of how to scale trading applications and exchanges helps unlock the next phase of growth in Web3 adoption. Sei is a general-purpose layer 1 blockchain built for trading, optimized at every layer of the stack to provide the best infrastructure for trading applications and exchanges.
Asset exchanges form the cornerstone of cryptocurrencies
Trading is not limited to the conventional understanding of candlestick charts, technical analysis, and derivatives. It covers a wide range of assets and activities, including trading tokens, NFTs, real-world assets, virtual-world assets, risks, social similarities, and more.
The success of the most famous Web3 applications is rooted in trading and exchanging assets. For example, Bitcoin’s value comes from its ability to be exchanged. MetaMask users end up using trading applications like Uniswap or OpenSea to exchange assets. It’s the exchange functionality that drives their use of the wallet. Similarly, people use Aave to get liquidity to buy things. These and other successful Web3 applications derive their traffic and value from trading and exchanging assets. In this way, trading is the definition of cryptocurrency more than many people expect.
It’s worth noting that many successful Web3 applications are functionally exchanges, whether or not they market themselves as such. Obvious examples of exchanges include Uniswap, OpenSea, and Sushi. However, not all trading applications are so explicit. Axie Infinity and StepN are both games, but trading of in-game assets is critical to the user experience, so they are also trading applications. This is why both gaming projects built their own NFT marketplace and DEX, respectively.
Transactions are expected to grow exponentially
As Web3 continues to grow, the importance of exchanges will only increase. The proliferation of digital assets drives a greater need to exchange these assets, and exchanges will become an integral part of the industry. Additionally, higher regulatory pressure on centralized exchanges (CEXs) will likely drive more on-chain trading volume and activity. This will require trading applications to scale and adapt to the huge wave of usage. Not only will exchanges remain relevant in Web3, but they will grow exponentially along with the industry.
the problem we are facing
Over the past few years, it has become clear that trading assets on-chain has reached deep product-market fit. The next natural step is to scale applications to meet the upcoming demand. The problem is that trading applications face major scaling barriers on existing layer 1 and layer 2 infrastructure. This challenge is known as the “Trading Trilemma” because trading applications cannot achieve decentralization, scalability, and capital efficiency at the same time.
Given the unique requirements of trading applications for speed, throughput, reliability, and MEV, purpose-built infrastructure is needed to address these issues. This is what Sei aims to achieve by providing a solution to the DEX scalability problem and enabling trading applications to scale efficiently while maintaining decentralization and capital efficiency.
If Sei succeeds, trading applications will no longer face the trade-off of decentralization. They will be able to provide the same user experience as any Web2 application while maintaining the non-negotiable benefits of decentralization, namely the ability to transact trustlessly, permissionlessly, and prove ownership without censorship risk.
Sei solved this problem
Sei is an open source layer 1 blockchain designed to solve the transaction scalability problem. Sei is the fastest layer 1 transaction, optimizing every layer of the stack to provide the best infrastructure for transaction applications. Sei's unique value proposition lies in its singular focus on transaction functionality. By optimizing the infrastructure for its transaction application, any gaming economy, NFT marketplace, or DeFi DEX will run better on Sei than on any other Layer 1.
Sei has the fastest finalization time in the industry, with a lower bound of 300 milliseconds and built-in parallelization, making the infrastructure ideal for trading functions. By leveraging two new advances in consensus research, Sei features Twin-Turbo consensus, achieving a level of performance that other Layer 1s cannot achieve. In addition, Sei's built-in matching engine and anti-frontrunning provide trading applications with valuable advantages out of the box. Finally, Sei's automatic order bundling feature increases application throughput and improves the user experience for all trading applications built on Sei.
Why build Sei as Layer 1?
Sei Labs, the development team behind Sei, initially explored building Sei as a layer 2 on Ethereum. Layer 2 rollups have two drawbacks:
Decentralization. Every Layer 2 currently uses a centralized sorter, which means there is one entity responsible for validating and executing user transactions. This leads to serious security, censorship resistance, and liveness issues.
Throughput. The maximum throughput of Layer 2 is limited by the block space of the underlying Layer 1 it writes to. This leads to significant scaling difficulties.
With a focus on transactions, Sei creates a compelling product for developers looking to build on a universal layer 1. Transactions are important for all applications in Web3, including games, social, and NFTs. By meeting this fundamental need, Sei creates a gravity for users to explore any type of application built on Sei because transactions are universal. There are hundreds of promising teams building on the Sei ecosystem, some from the largest layer 1 and layer 2, such as Ethereum, Solana, zkSync, Polygon, and Sui.