Crypto Review : SEI

No. 004

SEI: The Decentralized Robinhood Exchange in the Making.

Lightning-fast transactions, parallelized EVMs—this is the future of trading.

Contents:
1. Overview
2. Use Case
3. Adoption
4. Revenue
5. Tokenomics
6. Treasury
7. Governance
8. Team & Investors
9. Competitors
10. Risks & Audits
11. Summary

1. Overview

Sei is a Layer 1 blockchain designed specifically for trading digital assets across:

Gaming, Social, NFTs & DeFi.

It claims to be the fastest blockchain in the industry, with 380 ms transaction finality and was built using the Cosmos SDK.

METIS price chart (source: Coingecko)

2. Use Case

Exchanges built on current Layer 1s face significant scaling issues.

The exchange trilemma: they can't achieve decentralization, scalability, and capital efficiency at the same time.

Sei solves the problem of exchange scalability with a specialized Layer 1 for trading.

Exchange Trilemma (source: docs.sei.io)

By optimizing each layer, Sei provides exceptional infrastructure for digital asset exchange.

Sei offers:

• Fastest chain to finality

• Twin-turbo consensus

• Market-based parallelization

• Native matching engine

• Frontrunning protection

Exchange Trilemma (source: docs.sei.io)

3. Adoption

The TVL on Sei currently stands at $11.4m, which is relatively low considering the project's market cap. However, Sei is a relatively new project/chain, with its Mainnet going live in August '23.

As the ecosystem continues to grow, I anticipate significant inflows into TVL.

Metis TVL (source: DefiLlama)

4. Revenue

The $SEI token captures revenue/fees in multiple ways:

• Transaction fees on the Sei blockchain.

• Tip validators for prioritized transactions.

• Trading fees on exchanges built on the Sei blockchain.

Staking your with one of the validators can earn around 4.59% APR.

SEI Staking (source: app.sei.io)

5. Tokenomics

Sei operates as a decentralized “Proof of Stake” blockchain, powered by the $SEI token which has several functions:

• Network Fees

• DPoS Validator Staking

• Governance

• Native Collateral

• Fee markets

• Trading Fees

Total supply of SEI is capped at 10b tokens.

SEI allocation (source: blog.sei.io)

Around 3% of $SEI tokens were airdropped to early users of the chain from Solana, Ethereum, Arbitrum, Polygon, Binance Smart Chain & Osmosis.

Current supply stats:

• Circulating supply: 2.425b

• Max supply: 10b

• Market cap: $1.9b

• FDV: $7.8b

• Market cap/FDV: 0.24

SEI unlocks (source: Token Unlocks)

6. Treasury

According to the token distribution, 9% of tokens were allocated to the Sei Foundation Treasury.

At today's value, that amounts to 900m $SEI, which is equivalent to $700m.

This provides the project with a substantial runway.

SEI Treasury (source: blog.sei.io)

7. Governance
The SEI network is secured by over 39 active validators, ensuring accuracy through Sei's Twin Turbo Consensus mechanism.

Token holders can participate in governance by submitting on-chain transactions. However, a formal governance process has not yet been fully detailed.

SEI Decentralisation (source: blog.sei.io)

8. Team & Investors

Sei was founded in 2022 by Jay Jog @jayendra_jog@jeffdfeng (ex Goldman).

Over the years, it has raised over $85m from various funding rounds.

Prominent investors include Multicoin Capital, Coinbase ventures, Jump Crypto & Delphi Digital.

SEI Funding Rounds (source: https://www.coincarp.com/currencies.sei-network/fundraising/)

Several projects are competing against Sei to build the best Layer 1 for trading. These projects include Aptos, Injective, Kujira, Sei, Sui, and Solana.

However, Sei stands out as a strong competitor, boasting incredibly fast transaction speeds and a rapidly growing ecosystem.

9. Competitors

Several projects are competing against Sei to build the best Layer 1 for trading. These projects include Aptos, Injective, Kujira, Sei, Sui, and Solana.

However, Sei stands out as a strong competitor, boasting incredibly fast transaction speeds and a rapidly growing ecosystem.

Competitors

10. Risks & Audits

Sei was audited by CertiK in July of 2023. 1 critical risk was identified and resolved and 4 major risks acknowledged.

CertiK has given Sei a security score of 90.39, putting it in the top 10% of protocols they have surveyed.

Lowest scores in governance & fundamental health.

SEI Audits : (soruce: CertiK)

11. Summary
Sei has attracted a huge amount of attention and has some impressive tech. A lot of potential for this project.

Upcoming catalysts:

• Sei v2- Parallelized EVM Blockchain

• $120m SEI ecosystem fund

• Sei Launchpad Program

• Tokenized RWAs

Overall weighted score = 7.70

That's it for now and in the mean time updates both on fundamental and technical perspectives of the project will be available.

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