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Sei Network: Based on Cosmos' first L1 blockchain built for order book infrastructure

2022-09-01 09:30

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Original title: "Sei Network: Based on Cosmos' first L1 blockchain built for order book infrastructure"

Original author: iCosmosDAO (research team 0xhani)

One: Project scenario

Whether it is traditional finance or the encryption circle, the order book model is dominant in all large trading platforms. Especially in the crypto industry, the likes of FTX, Binance and Coinbase have proven that the order book model is reliable, fast and capital efficient in terms of transactions. However, centralized trading platforms also have their disadvantages: centralization issues and regulatory risk issues.

On the other hand, derivatives trading is undoubtedly the largest market in the encryption field. At present, dYdX has grown to nearly 25,000 traders, with an annual trading volume of more than 800 billion US dollars . Some people have made statistics. At present, the market penetration rate of DEX and on-chain derivatives transactions in the encryption industry is not high: the spot DEX is about 12%, and the derivatives market is even smaller about <1%. This also shows that the market space is still very large. big. Plus, the Cosmos SDK has been proven and battle-tested at scale.

Based on the above background, Sei hopes to use the Cosmos SDK and Tendermint Core to build an L1 blockchain dedicated to order book infrastructure, on which high-level Performance DeFi products.

Two: team situation

The Sei team released less information, the official introduction is as follows: The Sei team is composed of people with three backgrounds: the first category is senior engineers from traditional Internet companies such as Robinhood, Databricks, and Airbnb, who know the complexity of building an L1 chain. The second category is a group of Cosmos OGs who have been navigating the crypto ecosystem for years. The third category is traders from Goldman Sachs and other investment firms with extensive TradFi experience who will work to bridge the gap between DeFi, institutions, and the general public.

After listening to the team's first issue of Twitter Space, I learned that the team is a distributed office and relatively dispersed. Most of the engineers are in San Francisco.

Confirmed Sei team members (to be added later)

deedle (@deeeedle)

Jay (@jayendra_jog) graduated from UCLA and worked for Robinhood

psu (@philipsu522)

han-wei (@0xIsekai) is responsible for the user growth of sei and ecology?

Three: Token and airdrop

1: Project white paper and Token Economics is yet to be announced.

2: Airdrop situation

At present, you can participate in the test of the incentive network, and there will be more in the future Token airdrop( Token 1% of the total)

For the Chinese tutorial of the incentive test, you can refer to the articles of the two big guys in the community

1) Silent: ****SEI Act-2 Incentive Testnet Chinese Tutorial

2) ericet: Running Sei Incentive Testnet Node

In addition, I learned on its official Twitter:

SEI will airdrop to Atom stakers

LUNA

Other project pledgers are expected to be announced one after another

There is no information about the minimum number of pledges

Snapshot date: to be determined

Four: Competitors

Sei aims to build an L1 blockchain dedicated to order book infrastructure. According to the current development direction of each public chain, it is mainly based on defi.

In addition to the traditional centralized trading platform, Sei's competitors also compete with the current dex on various public chains.

Among them: It may compete more directly with SOL. Solana's original vision was to provide a fast blockchain that uniquely enables DeFi and order book transactions via Serum, one of the first applications Sam Bankman-Fried built on the entire ecosystem. At present, Solana puts more emphasis on NFT and games, which has caused some DeFi and order book development teams to leave Solana and move to other places such as Sei, Aptos, and Sui.

In addition, Sei's focus at the beginning was to develop the Cosmos ecosystem, so is there more competition or cooperation with Crescent in the current Cosmos ecosystem? Still need to look at the follow-up development.

Five: Product Roadmap

Sand Testnet**: **launched from May 2022 (closed)

Seinami Incentivized Testnet: Seinami launches on July 11, 2022, and it will run for approximately 8 weeks.

For the Incentivized Testnet tutorial, see the Chinese tutorial above or refer to the official tutorial: Seinami Incentivized Testnet

Six: Technical Analysis

GitHub: https://github.com/sei-protocol

Sei uses Cosmos SDK and Tendermint core build with built-in Central Limit Order Book (CLOB) module. Decentralized applications built on Sei can be built on top of CLOB, and other Cosmos-based blockchains can leverage Sei's CLOB as a shared liquidity center and create a market for any asset. Applications can easily plug and play to trade on the Sei order book infrastructure and access pooled liquidity from other applications. To prioritize developer experience, Sei Network has integrated the wasmd module to support CosmWasm smart contracts.

Developers can use the Rust-based CosmWasm library to create decentralized applications. This provides developers with several advantages:

CosmWasm is mature and used by many blockchains. As such, it's a very stable, bug-free library with a huge developer ecosystem. CosmWasm aims to solve many of the development problems faced by other ecosystems. It is simpler than developing on Solana and offers better security guarantees than Solidity.

Additionally, Sei has created a new dex module that allows Cosmwasm smart contracts to use the underlying CLOB for deep liquidity.

All trades that occur on Sei will be aggregated by market into the same order book. Pooling liquidity is important because it reduces the time it takes for new projects to launch, since they don’t require market makers to commit to providing liquidity for a particular market. Sei also provides templates for dApp integration, more details can be found here (https://docs.seinetwork.io/smart-contracts-and-local-development/deploy-an-exchange-contract). By integrating with the Sei order book module, dApps can benefit from the liquidity traded by other dApps or institutional market makers that partner with Sei.

Seven: Summary

Sei has a good vision and a huge market space. I believe that there is no big problem in the technical realization of the product.

However, in addition to the market space and technical realization, the success of a product is also a test of the team's operational capabilities, including but not limited to the design of the Token economic model , the incentives for market makers, and the acquisition of C-end users, etc.

In addition, for the beginning, the focus is on the development of the Cosmos ecosystem. Currently, the main DEX in the Cosmos ecosystem:

@osmosiszone Cosmos ecological head asset

@junoswapdex CW20 asset, Juno chain early project

@EvmosOrg DEX: Ethereum chain asset and its exchange with IBC asset

@CrescentHub Leverage/contract trading, new sovereign chain assets in 2020

@InjectiveLabs contract trading

@sifchain multi-chain DEX

The above DEXs already have their own market share in the ecology. How can Sei break the situation? Is it direct competition? Or cooperative development?

These may be issues that lie ahead of Sei's development.