Today we are going to talk about a public chain project, the SEI network, which is also on Binance's launchpad today. It is also Binance's 36th launchpad project. On August 15, 2023 at 20:00 (East 8), the total token supply is 10,000,000,000 SEI. Initial circulation: 1,800,000,000 SEI (18% of the total token supply). Total mining: 300,000,000 SEI (3% of the total token supply), 3% of tokens are allocated to Airdrop · 20% of tokens are allocated to investors · 30% of tokens are allocated to the ecosystem · 9% of tokens are allocated to the foundation · 20% of tokens are allocated to early contributors · 15% of tokens are allocated to reward verification nodes.
After reading the rules, let’s first look at its fundamentals, and then finally we will analyze its reasonable range. Of course, those who can mine can go and mine, after all, it is free.
Introduction
The emergence of blockchain technology and its ecosystem has provided many opportunities for innovators, developers, and users. However, so far, issues related to scalability, transaction speed, and front-running have been hindering Web3 from moving towards true mass adaption. Sei was created to address these issues.
Sei: Mechanism Introduction
Sei is a universal Layer1 network designed to solve various problems that are common in layer1. It runs through the Twin-Turbo consensus mechanism and uses transaction parallelization to achieve fast transaction confirmation, high throughput and scalability. This innovative approach makes Sei a versatile and powerful platform that effectively bridges the gap between decentralization and high performance.
Twin-Turbo Consensus
Sei is a high TPS parallel Layer1, which is similar to DyDx's Tendermint mechanism at the consensus level, but different. In order to better understand the mechanism of Sei, we need to understand the traditional block generation model. The generation of blocks is achieved by validators by packaging transactions in their own memory pools and reaching consensus through the entire network. Each network validator has its own memory transaction pool, referred to as mempool. When a transaction occurs, the user will submit information related to the transaction to a full node (full nodes also belong to validators), and the full node will send relevant information to other nodes in the entire network. This process is gossip. After other nodes receive and verify the transaction information, they will add the transaction to their mempool. The proposer, that is, the person who builds the block, will sort the transactions from his own mempool, produce blocks, and broadcast the block information to the entire network, and other validators will verify the block information. After the verification is correct and consensus is reached, other validators will accept the full block information from the proposer.
Sei: Reshaping the product form of Web3, network innovation mechanism and advantage analysis
From the above mechanism, we can find that there are two steps that may have room for optimization:
Since each validator has a mempool, the transaction data in the new block may already exist in their respective mempools. Other validators can generate blocks by themselves without waiting for the proposer to send them detailed block data.
The confirmation of a block requires the following processes: block proposal, validator voting, reaching consensus and broadcasting the block. Since the above steps are performed in series, there is no way to speed up. If these steps are processed in parallel, block performance can be significantly improved
Based on the above two points, Sei has made optimizations at the consensus level. It defines its own consensus mechanism as Twin-Turbo Consensus, which is simply a smarter block propagation method and an optimistic block production mechanism.
The first turbo needs to solve two problems:
Make each validator’s mempool contain as much transaction information as possible
Other validators can quickly know the transaction information packaged by the block proposer
It is an ideal state to have all mempools contain all transactions, but it is difficult to achieve in reality. Therefore, Sei has taken remedial measures. When proposing a block, the block proposer will break the block into pieces and send it to the entire network, and at the same time send a hash of all transactions in the block. Other validators look for corresponding transactions in their own mempools based on the hash. If some transactions are missing, they will look for the missing transactions in the block fragments sent by the block proposer to achieve block reconstruction. In this way, Sei Network reduces the time required for other validators to synchronize block information.
Sei: Reshaping the product form of Web3, network innovation mechanism and advantage analysis
Sei’s second turbo uses an optimistic block generation mechanism. “Optimistic” means that it is assumed that the majority of block proposers will not make mistakes. Under the optimistic assumption, the validator can process block data synchronously while performing prevote and precommit, that is, the block data proposed by the proposer is first written into the cache. If the block is verified, the cache data can be directly imported without serially waiting for prevote and precommit to pass. Sei Network reduces transaction latency and improves blockchain performance through the above Twin-Turbo Consensus.
Sei: Reshaping the product form of Web3, network innovation mechanism and advantage analysis
Parallelization of transactions
Transaction parallelization is a common method used by Layer1 such as Solana and Aptos to increase throughput. However, transaction parallelization has another meaning for Sei Network.
Sei Network, like DyDx's V4 version, places the order book matching engine on the validator node, and each validator needs to maintain a mempool. When any validator is selected as a block proposer, it needs to directly match transactions through the built-in matching engine and propose blocks. For DyDx, the mempool only contains transactions from DyDx; while for Sei Network, due to the nature of its layer1 network, the transactions stored in the mempool come from various protocols on Sei. Most of these transactions from different protocols are unrelated to each other. If serialization is still implemented, Sei's various order book protocols will be in a state of competition for block space, which is not conducive to the development of the overall ecology.
Therefore, in summary, Sei's parallel design is actually to allow projects on Sei to run without interfering with each other, while also increasing the system's throughput.
One of the main problems faced by transaction parallelization is the interconnectedness of transactions. Interrelated transactions can only be implemented through serial transactions. For example, the mint process of NFT needs to ensure that the minted NFT is not fully minted, so it can only be carried out in series. Therefore, how to distinguish independent transactions from related transactions is a problem that the transaction parallel system needs to solve. The UTXO model is one of the common ways to implement parallel transactions, and Sei uses DAG (directed acyclic graph) technology to achieve it. DAG can actually be simply understood as a directional broken line. The connection point of the broken line is each transaction, and the two transactions connected to the transaction are related transactions of this transaction. Sei will set up a DAG for all transactions in the entire network to identify related transactions.
Sei: Reshaping the product form of Web3, network innovation mechanism and advantage analysis
Sei's MEV Prevention function is mainly to prevent block proposers from maliciously extracting MEV when matching transactions and building blocks, and it is implemented through Batch Auction. Batch Auction is Cowswap's solution to the MEV problem faced by AMM transactions. It packages transactions of the same type within a period of time into a batch and executes them uniformly. All transactions in the batch have no execution order and have the same execution price, thus avoiding the occurrence of frontrunning.
Order Bunding is a mechanism designed for market makers. Market makers can update the status of all order books with one transaction, rather than one by one. This means that market makers can quickly adjust their risk exposure in different order books at a low cost.
In terms of oracles, Sei has a built-in oracle system that provides quote services for asset prices within the ecosystem. The main implementation method is to introduce the price quotes of the oracle into the consensus process. When each block is generated, all validators need to give their own quotes for asset prices and reach a consensus on the quotes. Therefore, the asset prices of the entire Sei will be updated within each block time.
Current Development Status of Sei Ecosystem
As of now, Sei’s thriving ecosystem already includes approximately 150 projects across multiple web3 fields, including social, NFT, games, and DeFi.
Sei: Reshaping the product form of Web3, network innovation mechanism and advantage analysis
Sei’s ecosystem
Top projects in the Sei ecosystem include Fable, Dagora, and Fuzio. Starting from Sei's special mechanism, they are exploring gameFi, NFT, and DeFi. Developers choose Sei mainly for the following reasons:
Scalability: Sei’s high-performance architecture can process thousands of transactions per second, making it suitable for dApps that require high throughput and low latency.
Low transaction fees: Sei’s low transaction costs will incentivize developers and users to actively interact on Sei
Ecological resources: Sei provides developers with a wealth of development tools and resources, and opens community forums. At the same time, Sei is also supported by well-known investors and mature blockchain projects.
Interoperability and composability: Sei interacts seamlessly with other networks, enabling the combination of various protocols and applications.
Security: Sei’s consensus mechanism ensures the security of transactions, allowing developers to focus on application development
Community: Sei's growing user base and active community are very attractive to developers
Grants Ecosystem Fund: The 120 million Sei Ecosystem Fund can help projects scale faster
Sei provides developers with a full-featured platform, allowing them to focus on exploring new possibilities for dapps through Sei's special mechanisms. In addition, Sei also guides on-chain liquidity through the "Liquidity Alliance Program" and provides web3 users with exposure to various projects through its huge community. Currently, Sei's on-chain users are relatively active. According to testnet data, more than 100 million transactions have occurred on Sei, and there are more than 5 million wallet addresses. Active on-chain user behavior will provide huge development potential for the Sei ecosystem.
DEX on Sei: High performance and low cost
Speed and scalability are among the characteristics of Sei, and it also has flexibility and adaptability for developers. Developers are free to build a variety of applications on Sei. With its high throughput, low transaction fees, and fast finality, Sei provides an ideal infrastructure for building the next generation of Web3 applications.
One of Sei's strengths lies in decentralized exchanges (DEXs). Generally speaking, DEXs are susceptible to blockchain performance issues. When the number of transactions per unit time surges, the problems faced by DEXs due to blockchain congestion will become more prominent. High transaction fees, long transaction times, and poor scalability tend to damage user experience and reduce profitability.
Sei has proposed a proven approach for the above market. It introduces an on-chain matching engine that makes transactions on-chain more efficient by leveraging its fast finality, high throughput and low transaction costs. This means better performance and lower transaction costs for decentralized exchanges, making them a more competitive alternative to centralized exchanges.
Compared with Serum and DyDx, DEX on Sei has multiple advantages. The problem with DyDx is that the mechanism design of the entire chain only serves one application, lacking the survival soil of other DeFi protocols, and therefore losing the space for liquidity sharing and mutual combination between protocols. It must be connected with DeFi applications outside the chain through some cross-chain means to achieve the so-called DeFi composability; the problem faced by Serum is that even if it has rich liquidity and a huge ecosystem to easily realize the combination between protocols, its stability will be greatly affected due to the interference of non-trading activities on the chain. However, the Layer 1 design of Sei Network can solve the problems faced by DyDx and Serum. In short, Sei Network is characterized by decentralized off-chain matching functions and the composability of DeFi protocols, which gives Sei a strong advantage at the transaction level.
Comparative analysis of Sei and other layer1
The current Layer1 is in a state of flourishing, and each platform has its own unique features, advantages, and limitations. In order to better understand the advantages of Sei, we will compare Sei with well-known platforms such as Sui, Aptos, Solana, and Ethereum.
Be
Sei's key advantage is that its unique network structure design solves the scalability, transaction speed and front-running issues common in other blockchains. Sei uses its original consensus mechanism to achieve high throughput, fast finalization (as fast as 0.5 seconds) and scalability. Sei's transaction parallelization design further enhances these features, allowing Sei to handle a large number of transactions.
Come on
Although Sui has its unique advantages, compared with Sei, its scalability will face bottlenecks as its transaction speed increases. Although Sui also focuses on decentralization, its consensus mechanism is different from Sei in terms of flexibility, and it does not have the freedom of Sei in the selection of validators.
Solana
Solana, like Sei, parallelizes the production of blocks. It achieves high transaction speed and low transaction cost through a unique timestamp system called POH. However, its excessive focus on performance forces it to compromise on the decentralization level. Due to the problem of centralization, Solana's stability will be affected by special circumstances.
Ethereum
Ethereum is currently the layer 1 with the richest dapp ecosystem. Especially in the DeFi field, it ranks first in terms of TVL and combinable attributes between protocols. However, Ethereum currently faces high fees and scalability issues, and its current solution lies in shunting through rollups. But the migration of applications and TVL from layer1 to layer2 still takes a long time. In summary, while Sui, Solana, and Ethereum all bring unique features and benefits, Sei remains in a class of its own due to its novel design and powerful performance. Sei’s blockchain architecture is optimized for speed, scalability, and security without compromising decentralization. In the future, it may even surpass mature platforms such as Solana in terms of performance.
The Future of Sei
The potential of blockchain technology is huge. By providing a highly scalable, secure and user-friendly environment, Sei paves the way for mass adaption of blockchain technology. However, from the perspective of the entire layer 1 and layer 2 competition landscape, Sei still faces fierce competition from other layer 1 and layer 2. Although Sei's mechanism and test network data have allowed Sei to get started, its subsequent prosperity still requires continuous cultivation of talents within the ecosystem and promotion of the community.
Price Prediction
Compared with Sui, which was launched some time ago, Sui also has a total of 10 billion, and the current circulation is 15.4%. The current price of SUI is 0.58, but the price of SUI when it was first launched is around 1. Looking at Aptos, which was launched some time ago, the total amount of APT is 1 billion, and 17% is currently unlocked. The current price is around 7 US dollars. So if APT is diluted 10 times and becomes 10 billion, then the unit price is around 0.7. Looking at L2, which was launched some time ago, the total amount of ARB is also 10 billion, and the current price is stable at 1 US dollar. So at the current order of magnitude of 10 billion, everyone's psychological expectation for a public chain is a valuation of around 10 billion US dollars, and the same is true for SEI. I estimate that it will hit 1 US dollar when it goes online, and then 0.5 US dollars-1 US dollar is a more reasonable range. Of course, those who can mine on the launchpad just now can mine, and those who can't mine can wait for a low point to start.