Will Sei revolutionise the Web3 world?

Two weeks ago, Binance announced the addition of a new project to its platform, known as Sei.

The new project is a layer 1 blockchain that has features intended to optimise for trading. According to Binance Research, some of these features include front-running prevention, reorganisation resistance, and a quick time to finality.

Why trading?

The Sei litepaper makes a case that “the fundamental use case for blockchains is the ability to exchange digital assets… The success of the most prominent Web3 apps is rooted in asset exchange.”.

In addition, even though not all apps claim to be exchanges, many apps still require a means of exchanging assets between different wallet addresses, and a failure to address this problem can lead to a poor user experience.

Since trading is something that most applications must resolve, therefore, what will bring the greatest utility to the Web3 world is a blockchain that is able to handle a high volume of transactions quickly.

The litepaper also argues that exchanges face a difficulty in creating an exchange that is simultaneously decentralised, scalable, and capital efficient.

How does Sei contribute to the crypto ecosystem?

Sei is choosing to build itself as a new layer 1 blockchain instead of as a scaling solution, as layer 2 solutions still rely on entities to validate and execute transactions.

As such, in order to stay true to the idea of decentralisation, Sei is choosing to launch as a layer 1 blockchain, which will make it censorship resistant. In addition, it allows Sei to control block sizes and allow for applications built on Sei to scale easily.

Sei achieves these objectives using several innovations in blockchain technology.

Firstly, Sei has Twin-Turbo Consensus, which itself includes intelligent block propagation and optimistic block processing.

The first engine of this, intelligent block propagation, means that instead of having to wait for an entire block to be disseminated, validators are able to see proposed blocks and reconstruct them from the mempool. In turn, this cuts down the time required for blocks to be verified and agreed upon, which then reduces the time required for new blocks to be added to the blockchain and for transactions in new blocks to be confirmed.

The second engine of this is optimistic block processing. Traditionally, while validators vote on block proposals only after everyone has received it and verified its validity, optimistic block processing means that validators begin the voting process as soon as they have reconstructed the block.

Once sufficient validators have agreed on a new block, it is then added to the blockchain as the most recent block.

Together, these innovations mean that new blocks can be added as frequently as every 380-400ms.

The Sei Blockchain also features single slot finality. Two thirds of all validators must agree on a new block before the block is approved, and this requirement reduces the chances of disruptive forks happening.

Sei: the blockchain of the future?

Sei clearly has some features that make it incredibly well-suited to trading. Aside from the features already discussed, the Sei blockchain also prevents front-running, a problem long known to be the bane of traders and decentralised finance.

The responsiveness of the blockchain may also result in lower slippage and gas fees for traders, allowing them to keep more of their profits.

The Sei project has also received support from some very prominent investors within the Web3 space, including Jump Crypto, Distributed Global, and Multicoin Capital.

As of now, the Sei project seems poised to challenge some of the more established blockchains in the space- its speed is comparable, if not better than the fastest blockchains in the market, and it adheres to principles cherished by many in the Web3 world.

Ethereum founder Vitalik Buterin once considered this trilemma in blockchain technology: that no blockchain would be able to achieve decentralisation, scalability, and security simultaneously.

Indeed, thus far, the problem has proved quite intractable. Blockchains like Bitcoin are able to achieve decentralisation and security through a proof-of work consensus mechanism, but the limited block size has resulted in not only higher gas fees for users, but also splits in the community between those who want to increase the block size and those who do not.

Meanwhile, private blockchains give up on decentralisation by relying on either a single centralised entity or a small group of validators to ensure security and scalability.

And no blockchain that fails to guarantee security will be able to survive for long because users cannot be confident that their transactions or wallet balances are secure.

The Sei blockchain seems to achieve all three, not by challenging the trilemma directly, but by accommodating the tradeoffs as best as it can. The presence of public validators guarantees censorship resistance and therefore security, a large block size with quick confirmations guarantees scalability, while allowing anyone to participate in the blockchain would also preserve decentralisation.

This is a blockchain that will be interesting to watch in the coming years- crypto exchanges would benefit greatly from the lower gas fees and quick response times, while gamers and NFT collectors would benefit from having up-to-date information and cheaper transactions.

This blockchain may very well prove not only to be a great leap forward into the future for Web3 technology, and a milestone for crypto.