Sei What?! The Fastest Layer 1 For Trading Has Arrived | by Daton | Jan, 2024

In Web3 land, a new Layer 1 solution seems to launch every week. It seems that everyone is trying to solve the same issue — “our Layer 1 is faster, more secure, scalable, blah, blah, blah, etc., etc.” It has quickly become a tale as old as time itself. For those who have no idea what I’m talking about, allow me to use an analogy:

Picture a thriving marketplace where people exchange all kinds of goods, anything from fresh produce to handmade products. Some people come to casually browse, while others are merchants who are looking to trade in high volumes. As the marketplace becomes busier, bottlenecks (situations that cause delays in a process or system) start to form. Long lines slow transactions at the fruit stand, while across the way a jewelry vendor struggles with keeping track of inventory while simultaneously dealing with a constant flow of customers.

This is pretty much the growing pains facing a majority of crypto exchanges today. As trading volumes skyrocket, existing marketplaces are becoming quite congested. Transactions take too long, costs are too high, and activities like high-frequency trading are nearly impossible. Maybe I should rephrase that last statement. Transactions USUALLY take too long, costs are NORMALLY too high, and HF trading can be nearly impossible.

However, there’s a new sensei in town that is working to make all of that a thing of the past. Allow me to introduce you to Sei (and prepare for the bad puns)…

Sei is building the first Layer 1 blockchain specialized for trading digital assets and scaling with the industry. Sei aims to be the preferred destination for the exchange of gaming assets, NFTs, social tokens, DeFi assets, fiat tokens and more. This will be achieved through optimizing performance and throughput specifically for exchanges. Sei is like a brand new marketplace, but it prioritizes the unique needs of crypto trading.

Previous blockchains, like Ethereum, were designed for dApps — similar to a farmer’s market where you can find anything from locally grown carrots to handmade soaps. However, Sei is optimized just for exchanging digital assets, like a dedicated wholesale market for just trading fruits and vegetables.

Sei is built from the ground up to provide the speed, reliability and scalability needed to power mass market trading dApps. This is achieved through a few specialized features.

With generalized blockchains, exchanges have to compete with other applications for transaction throughput — which becomes limited. This often leads to unpredictable spikes in fees and delays during periods of peak demand.

Sei eliminates these issues through custom features including:

• Twin Turbo Consensus — An optimized consensus mechanism to facilitate faster block production and finalize transactions in seconds.
• Parallelized processing — Transactions process in parallel, similar to multiple payment counters to prevent congestion in the fruit wholesale marketplace.
• Built-in order matching — Sei natively understands concepts like bids, asks and order books. This is like the fruit marketplace simplifying transactions by always dealing in standard crates of produce rather than weighing individual items.

Because the features are tailor-made for trading, Sei has achieved improvements in throughput and scalability by leaps and bounds — 300ms (millisecond) block times to be exact. Sei has seemingly achieved the impossible. It has managed to provide the ideal infrastructure for exchanges by solving the scalability trilemma (providing proper decentralization, scalability, and security). This will pave the way for the next generation of lightning-fast decentralized exchanges. With exponential growth in crypto adoption, the demand for trading digital assets is skyrocketing.

If it hasn’t become obvious, I’m a believer in what Sei is building (even though I’m making it a point to take an unbiased stance while writing this article). I have been a participant in the ecosystem — particularly the different NFT communities (Dob, Webump, Seiyans, etc.) that have emerged — and in my seven years of being in crypto, the experience has been unmatched. The amount of camaraderie, innovation, building, and collaboration between the different communities is truly amazing. To be fair, every ecosystem experiences its ups and downs. However, the vibe is up right now.

Needless to say, I’d like to see the ecosystem grow and thrive. So, I’ve taken it upon myself to to come up with 10 creative product ideas that I would focus on building (if I were the Lead Research Engineer perhaps…IJS):

First, let me say that Pallet Exchange has done a wonderful job quickly launching an NFT marketplace for us Sei enthusiasts to buy and sell on. However, there’s always room to push even further. Build a decentralized protocol that allows NFT creators to seamlessly launch auctions for their works. Features could include:

• Setting reserve prices
• Auction duration
• Royalties
• Open bidding from any wallet

This would provide a smooth auction experience without needing to build custom contracts. This could even be done in collaboration with Pallet Exchange.

The goal would be to enable users to automatically mirror trades from top performers in real-time. Followers would opt-in to copy trades via on-chain signaling. This would:

• Allow users to auto-mirror trades from top performers
• Create viral trading activity on Sei

The metaverse narrative died out on us a little since the last cycle. However, there’s no doubt in my mind that once the bull market is back in full swing, the metaverse discussion will be back at the forefront. Building a solution now would position Sei to:

• Create a bridge for seamless transfer of metaverse assets like avatars, wearables, and items between different virtual worlds.
• Unlock true interoperability for digital assets across metaverse platforms.

Who actually loves the mundane task of rebalancing their portfolio? I don’t. I can see auto portfolio rebalancing being an immediate hit. This is how it could work:

• On-chain AI advisors could automate portfolio rebalancing based on target allocations.
• As prices fluctuate, the smart contracts rebalance portfolios to stay at desired percentages.

Because degens are gonna degen no matter what, a DOP would be quite appropriate for the Sei ecosystem. It would:

• Be a protocol for permissionless creation and trading of options contracts on any underlying asset.
• Adds advanced risk management capabilities tailored to crypto’s volatility.

There are a number of platforms launching that will probably offer options trading. However, it wouldn’t hurt to explore the option (no pun intended) of creating one.

It would be nice to have a central hub that services the entire ecosystem when it comes to identifying NFT rarity. The goal would be to:

• Build tools to analyze NFT collections and assign rarity scores to each NFT based on attributes and activity.
• Create an open standard for quantifying rarity.

Just like portfolio rebalancing, creating trading strategies is another task that could benefit from AI automation. The generator would:

• Let users describe custom trading strategies in plain English *Bonus points if it works in any language*.
• Use NLP to parse instructions and automatically generate the necessary code to execute the strategy.

This is an idea that I’ve seen attempted on many occasions, but no one has managed to get it right. I think Sei could greatly benefit from being one of the first blockchains to successfully launch a digi-asset rental protocol.

• Allow short-term rentals of NFTs, metaverse assets and other virtual items.
• Owners can earn yields on idle assets while renters pay for temporary usage rights.

The esports sector is constantly growing. Any blockchain that wants to cater to Web3 gaming must have a platform that can host tournaments.

• Build the infrastructure to run esports tournaments on Sei with crypto prizes.
• Verify game results, generate brackets, and reward winners automatically.

Loot boxes can either be a gift or a curse. It really all boils down to execution. I think with the right approach and community involvement, we can definitely set the standard for delivering cross-chain loot boxes. The Sei team could partner with gaming platforms to allow loot box rewards to be redeemed across different blockchains. Therefore, making rewards interoperable across ecosystems.

As Sei works to become the go-to destination for trading all digital assets, purpose-built infrastructure and network effects will be the key competitive advantages. The product ideas presented offer a number of benefits such as:

• Smoother experiences for auctions, metaverse interoperability, and tournaments.
• New revenue streams from item rentals and cross-chain loot boxes.
• Viral trading activity from social features and automated rebalancing.
• Robust risk management tools with options protocols.
• Standardizing NFT rarity on-chain to make valuation more transparent.
• Dramatically lowering barriers to creating custom trading strategies.

Proper execution of these ideas will easily place Sei ahead of the pack in the Web3 protocol war. We are still in the infant stages of what the Web3 market will eventually grow to ($50T+), and Sei has the opportunity to become a major player. The marketplace is open for business. Welcome to Sei.