Explain in detail the first order book-based DeFi underlying protocol Sei Network

2022-09-30 16:45

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Sei plans to become the infrastructure and liquidity center for the next generation of DeFi products in the Cosmos ecosystem, and will become the underlying infrastructure for DeFi transactions connecting the entire ecosystem in the future.

Original title: "A detailed explanation of the first order book-based DeFi underlying protocol Sei Network"

Original author: 0xMoonda, WAGMi Ventures

What is Sei Network

Sei Network is the first L1 block based on order book Chain, using Cosmos SDK and Tendermint Core technology, built-in central limit order (CLOB, Central Limit Orderbook) module. Decentralized applications built on Sei are based on CLOB, and other Cosmos-based blockchains can also use Sei's CLOB as a shared liquidity center to create trading markets for different assets. Sei plans to become the infrastructure and liquidity center for the next generation of DeFi products in the Cosmos ecosystem, and will become the underlying infrastructure for DeFi transactions connecting the entire ecosystem in the future.

What are the characteristics of Sei Network

First of all, compared with other L1, Sei thinks its Its biggest competitive advantage is speed. Currently, its Time To Finality (TTF, transaction delay) time is about 600 milliseconds, which is the fastest among Web3 products. Under the premise of ensuring that the transaction is irreversible, TTF measures the time it takes from transaction submission to transaction confirmation.

Secondly, Sei has a centralized validation set that is rigorously tested in the Seinami Incentivized Testnet. Applications on Sei can use it as their own verification node without redeployment, which reduces the obstacles to migrating to the Cosmos ecosystem. In addition, Sei uses the FBA (Frequent Batch Auctions) mechanism to prevent the occurrence of MEV (Maximal Extractable Value, maximum extractable value). Batch auctions are not susceptible to MEV because the order of transactions within the same batch does not cause price fluctuations.

Sei Network’s team and investment institutions

At the end of August, Sei announced the completion of US$5 million in financing. Participating institutions include Multicoin Capital, Coinbase Ventures, Delphi Digital, Hudson River Trading, GSR, etc. Sei was founded by Jeffrey Feng and Jayendra Jog. The team members have backgrounds in technology and traditional finance. Most of them come from companies such as Robinhood, Databricks, Airbnb and Goldman Sachs.

The latest progress of Sei Network

Testnet launch

Sei Network launched the Seinami Incentivized Testnet event in early July, which lasted about 8 weeks. 1% of the total token supply is used as an incentive to participate in the test network. Participants can earn points by completing testnet tasks. After the testing period, the points earned by all participants are calculated and distributed according to the points.

Nitro --- a bridge connecting Solana and Cosmos

Half a month after the financing information was released , Sei announced to the outside world the first product Nitro that is in preparation. Nitro is Solana's first L2 scaling solution, serving as a bridge between Solana and Cosmos. The concept of Sealevel VM (SVM) similar to EVM is proposed in the product for the first time, which means that Solana developers in the future can deploy applications on Nitro and extend them to the Cosmos ecosystem. Nitro’s mainnet is expected to launch in early 2023.

Sei Network’s Cooperation Ecological Map

Axelar Network --- Heterogeneous Cross-chain Communication Protocol

Axelar is a general-purpose cross-chain basic protocol that can support information transmission between any two public chains. Through the decentralized network protocol and SDK, Developers can create applications and integrate applications with any blockchain ecosystem. Users can interact with all applications across the ecosystem directly from the wallet.

Axelar has three rounds of financing in 2020, 2021 and 2022. It was valued at $1 billion in its latest funding round, bringing the total of three rounds to about $63 million. Among them, two rounds were led by Polychain Capital, and other participating institutions included Dragonfly Capital, Coinbase Ventures, Binance, Collab+Currency, Galaxy Digital, and individual investor 0xMaki.

What advantages does the integration with Axelar bring to Sei< /h4>

Information between IBC chain and EVM chain Intercommunication

Solve the cross-chain information transfer between DeFi and EVM chains on Cosmos. Open up new possibilities for bridging, messaging, and execution across chains, programming languages, and virtual machines, such as multi-chain liquidity pools, cross-chain lending, cross-chain transactions, and cross-chain arbitrage:

1. Users will no longer be limited to interacting with the internal protocols of the ecology, and do not need to deal with the inconvenience of using other ecological protocols;

2. It is convenient for developers to query the data of other blockchains and use their operating logic and smart contracts;

3. The ecosystem can attract the liquidity of other chains and maintain interoperability with them through back-end integration.

Application of DeFi strategy in cross-chain capital pool
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Users can deposit assets into the protocol of the cross-chain fund pool, and use the DeFi strategy on the chain that cooperates with Axelar. Users on the Ethereum chain can use the emerging derivatives trading strategies on Sei, eliminating the inconvenience of cross-chain assets and creating new wallets.

Cross-chain and popularization of synthetic assets
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The application on Sei can query the price and market conditions of different cross-chain assets without risk. In other words, synthetic assets on Sei are not only IBC assets, but also include all asset types in the Web2 and Web3 worlds. Minting and anchoring new types of synthetic assets will greatly popularize crypto trading.

White Whale --- Cross-chain Liquidity Protocol

White Whale is a cross-chain liquidity protocol that improves the efficiency of market operations through arbitrage, flash loans and cross-chain liquidity pools. White Whale v2 will provide cross-chain infrastructure for the Cosmos ecosystem, provide services for individual liquidity providers on the chain, reduce liquidity dispersion and price differences, improve capital utilization, and realize decentralized market making. In addition, White Whale v2 plans to provide flash loan fund pools and open source arbitrage robot services in the future.

White Whale completed its first seed round of financing worth $2.9 million in December 2021, with a project valuation of $35 million , this round of financing is mainly participated by Terra, SkyVision Capital, Node Capital and other institutions. Before the Luna incident, White Whale's product focus was mainly on the Terra ecology. After proper handling, the project team decided to shift the product focus to the Cosmos ecology and launched White Whale v2.

KYVE - -- Arweave-based decentralized data verification protocol

Web3 data lake solution KYVE is a data provider to achieve standardization, verifiability and permanent storage A protocol for blockchain data streams. By using the Arweave data storage solution, permanent backups can be created on KYVE's Cosmos SDK chain, ensuring that resources remain scalable, immutable, and available over time. In 2021, KYVE will complete two rounds of financing in June and October respectively, raising a total of US$3.875 million. Participating institutions include Permanent Ventures, Volt Capital, Solana Foundation, Coinbase Ventures, CMS Holding, etc.

What advantages does the integration with KYVE bring to Sei

The operation of Sei will inevitably generate a large amount of data on the chain. KYVE, as a Cosmos-SDK chain using Ignite CLI, helps Sei store and scale data in a decentralized manner. Ensure the security and efficiency of subsequent data query, sorting, counting and access. KYVE nodes will obtain publicly available data generated on the Sei blockchain and upload the data to Arweave for permanent storage. KYVE's validator node verifies the uploaded data to ensure that for Sei users and developers, untrustworthy stored information is untamperable and verified, and easy to retrieve, specifically reflected in:

1. Scalability

KYVE will verify and store public data from the Sei blockchain. This partnership enables Sei to have a scalable data lake that can securely and efficiently query and access raw data as needed.

2. Immutable modification

KYVE verification node can provide the validity of key data. As data flows from Sei to KYVE to Arweave, Sei needs to ensure data validity and availability. Therefore, Sei sees KYVE and Arweave as complementary: KYVE provides reliable data validity, while Arweave focuses on data availability (i.e. replicability). In this way it is ensured that the data cannot be tampered with.

3. Availability

KYVE stores the collected data in Arweave, and Arweave's Features enable users and developers to store data uninterrupted and persistent. Among the core protocols of Arweave is Permaweb, which includes a global and persistent network of web pages and applications. Therefore, data through the KYVE data lake can be easily obtained, and developers can access the data directly through Arweave or KYVE's own indexing solution WARP.

Leap Wallet --- Cosmos-based non-custodial wallet

As a non-custodial wallet in the Cosmos ecosystem, users can access different functions such as DApp, DeFi, and NFT through browser extensions and future mobile terminals. It is also possible to connect Ledger with Leap wallet to increase its security. In April 2022, Leap completed a US$3.2 million private placement financing, with a valuation of US$40 million in this round of financing. Participating institutions include Pantera Capital, CoinFund, Arrington Capital, Accel, etc.

What advantages does the integration with Leap Wallet bring to Sei

The Sei chain will integrate with Leap's native integration simplifies the wallet setup process for new users on Sei. Users can directly select Sei from Leap's list of available chains to use it. Leap will be deployed on the Seinami Incentivized Testnet, providing participants with testnet tasks and simplifying the asset management process for Sei and Cosmos.

Written at the end

From Ethereum After the DeFi Summer, the DeFi 2.0 bubble burst, and the chain effect caused by the thunderstorm of the Luna incident severely damaged the development of the DeFi track. Insufficient liquidity within the ecology and fragmentation of global liquidity greatly limit the life cycle of the project. The emergence of Sei is slightly different from previous DeFi projects, as reflected in:

1. Open up the liquidity of multi-chain ecology through integration and development

In addition to being built on the Cosmos ecology, the first product launched after its establishment bridges the Solana ecology, and through the integration of Axelar, it connects with the EVM The association between chains lays the foundation for obtaining global liquidity.

2. Acquire multi-chain ecological users through integration

Among the multiple integrated products, there are many projects that previously served the Terra ecology. They have more high-quality DeFi users. After the integration, users can seamlessly transfer to the Sei chain ecology. It is easier to accumulate users to get started.

3. Through the integration of functional protocols, enrich the types of ecological DeFi products

Different from previous DeFi projects that focused on the linear development of a single product with a single function, Sei chose to directly integrate and adapt functional protocols, which can provide users with a variety of financial management tools and Strategy selection shortens the cold start time of the project.