Sei Network, which launched its mainnet in August 2023, began to explode after several months of silence. Currently, Sei liquidity staking has exceeded $3.5 million and network TVL has exceeded $11 million. Previously, Sei, together with Beosin and Alibaba Cloud, successfully held the hackathon, Code Sei: Powering New Gaming and DeFi Exchanges. Beosin also completed the audit of Kryptonite, Sei’s liquidity staking project, to enhance the security of Sei ecosystem.

In 2024, Sei is about to launch a very important upgrade, Sei V2, which will improve the performance of parallel processing and introduce EVM into Sei. In this article, Beosin will analyze the technical features, the code implementation, and ecosystem of Sei Network to help you understand the potential opportunities of Sei and its ecosystem.

Sei Features

As a Layer 1 that supports order book and focused trading, Sei provides a built-in central limit order book (CLOB) module. Developers can use Sei’s built-in order module to quickly launch and customize order book trading Dapps for spot, derivatives, options, etc. At the same time, Sei’s parallel design provides a fast, high-throughput network for its ecosystem.

How does Sei improve the processing speed of transactions?

1. Support Compressed Blocks

In most blockchain networks, validators propose blocks and then send hashes and blocks to other validators, which creates a certain waiting time. As shown below:

https://github.com/sei-protocol/sei-chain/blob/3c9576fee3494ce039df684624f918dd8066ba3f/whitepaper/Sei_Whitepaper.pdf

Sei allows its validators to send blocks containing only transaction hashes to its network. After other validators receive a block containing only the transaction hash, they will first construct the block based on the records in their local memory pool. If the corresponding transaction information does not exist in the memory pool, the validators will wait for subsequent blocks containing detailed transaction contents to arrive for validation.

2. Parallel Processing of Transactions

For blockchain networks that execute transactions sequentially, when a block is proposed, validators need to wait for a certain length of time without actually processing the block. As shown on the left:

https://github.com/sei-protocol/sei-chain/blob/3c9576fee3494ce039df684624f918dd8066ba3f/whitepaper/Sei_Whitepaper.pdf

Sei Network processes blocks in the pre-voting and pre-commit phases in parallel through validators. Parallel processing reduces latency and increases throughput.

The code implementation of Sei parallel processing is shown in the figure below. In the ProcessTxs function, Sei will process the transactions. There are two types of processing: parallel processing and sequential processing. For multiple related transactions (by judging whether the key-value pairs storing transaction information overlap), Sei will process related transactions sequentially; for non-related transactions, it will process them in parallel.

https://github.com/sei-protocol/sei-chain/blob/main/app/app.go

During parallel transaction processing, we see that Sei uses Golang’s goroutine to process multiple transactions in parallel. The current design cannot process too many transactions in parallel. For example, if thousands of transactions are processed in parallel by Sei’s nodes at the same time, there is a high probability that consistency problems will occur. Therefore, Sei V2 needs to upgrade in parallel processing.

Parallel EVM

What is Parallel EVM?

EVM is the virtual machine for Ethereum to process transactions related to smart contracts. To ensure network security, EVM transactions must be executed sequentially. The design of sequential execution avoids the complexity and conflicts of parallel execution, but also limits the performance of the associated blockchain network.

As a result, the concept of parallel EVM was proposed. The design of parallel EVM will allow different transactions in EVM to be conducted simultaneously, greatly improving EVM processing speed and network throughput. The current solution is to use high-performance (itself supports parallel transactions) new blockchains such as Solana, Aptos, and Seito be compatible with EVM. Among them, Sei’s parallel EVM attracts the most market attention.

Sei V2 Upgrade

Sei will implement parallel EVM in the V2 to be launched in 2024, supporting the execution and interaction of Cosmwasm smart contracts and EVM smart contracts. The following are the key points of the Sei V2 upgrade:

1. Optimistic parallelization: allows concurrent transaction processing, significantly improving throughput and efficiency. If a state conflict occurs, transactions are reprocessed sequentially to maintain data integrity.

2. EVM compatible: enables developers to deploy existing EVM smart contracts on Sei without changing any code, simplifying the transition to Sei v2 and improving interoperability.

3. Geth compatibility: Sei nodes will integrate Geth to handle transactions for EVM smart contracts in the future network and make any updates through the special interface created by Sei for EVM.

4. SeiDB: Sei will improve its storage layer, using more efficient data structures and databases to enhance IO performance, facilitate easier synchronization of new nodes and improve scalability.

5. Enhanced performance: Fast transaction processing with 390 milliseconds block time and finality, and high throughput of 28,300 batch transactions per second, with lower transaction costs.

The upgrade of Sei v2 will integrate the advantages of Ethereum and looks forward to providing a super-optimized execution layer that is fully compatible with the existing EVM ecosystem to attract more users and developers into the Sei ecosystem.

Sei Contract Security Advice

If developers plan to build Sei ecological applications, they will use CosmWasm to build smart contracts. Beosin recommends that developers follow the following security practices to improve the contract security of their projects:

1. Be prepared for an attack. Developers need to consider how to face attacks and fix vulnerabilities. Therefore, developers need to build upgradable smart contracts and develop risk response plans.

2. Pay attention to the deserialization addr type. CosmWasm’s addr type is not validated after deserialization, indicating that the addr type has unexpected deserialization properties. Therefore, it is recommended to specify the type and verify it after deserializing addr.

3. Pay attention to overflow. In the CosmWasm contract, developers need to pay attention to the risk of integer overflow or division by zero. It is recommended that developers use CosmWasm’s Uint256 and Uint512 types and use the math function full_mul() that does not overflow.

4. Pay attention to infinite loops. The CosmWasm contract may get stuck in an infinite loop by calling itself back in the ACK handler. If developers transfer data packets between two CosmWasm contracts, they should be aware that this may lead to an infinite loop and consume a large amount of gas fees.

Sei Ecosystem

1. Wallet

Currently, the wallets that specifically support the Sei network include Compass Wallet and Fin Wallet. There are 14 wallets compatible with the Sei network, such as OKX Wallet and the wallets Keplr and Leap Wallet that originally supported the Cosmos ecosystem.

source: https://www.sei.io/ecosystem

Safety Advice:

(1) It is recommended that users avoid using wallet projects that have not been audited and have not been running for a long time.

(2) To protect the assets of the wallet, the most important thing is to keep the mnemonic phrases and private keys safely.

(3) When interacting with Sei projects, signature is one of the security risks that require the most attention. Users need to check whether the transaction information is correct before signing the transaction. For example, a hacker can trick users into using cosmos.bank.v1beta1.MsgSend to transfer tokens to the hacker’s address.

2. Kryptonite

Kryptonite is the largest liquidity staking protocol in the Sei ecosystem. Users can stake Sei tokens on its platform to obtain stSei and earn an annualized return of 5.54%. Currently, users can also stake Seilor/Sei’s LP tokens and stSei/SEIYAN’s LP tokens to obtain rewards from related tokens. Beosin has previously completed a contract audit of Kryptonite to improve the security of its staking business.

https://beosin.com/audits/KryptoniteDAO-SEILOR_202308091649.pdf

In the future, Kryptonite will launch the kUSD stablecoin, and users can mint it by staking Sei, BTC, ETH and other assets, which will provide more liquidity for the Sei ecosystem.

3. YakaFinance

Yaka Finance is committed to building a multi-functional DEX and providing users with a variety of DeFi services such as trading, liquidity mining, and Launchpad. Its goal is to become the liquidity hub of the Sei ecosystem.

Previously, Yaka Finance won the first place in the DeFi track in the Code Sei: Powering New Gaming and Defi Exchanges hackathon organized by Sei, Beosin and Alibaba Cloud.

Yaka Finance is currently in the test network stage and has launched an airdrop incentive program, attracting more than 15,000 users to participate in its testing.

source: Yaka

4. Pallet Exchange

Pallet Exchange is the NFT trading platform of the Sei ecosystem, with a current daily trading volume of up to 1.23 million Sei (approximately $1 million). Pallet Exchange will charge a 2% fee for NFT tradings on its platform to maintain the operation of the platform.

Source: Pallet Exchange

Currently, the NFT series that have attracted much attention in the Sei Ecosystem include WeBump, The Colony, Seiyans, Seinsei, etc. Because the Sei ecosystem is in the early stages of development, users need to pay attention to the liquidity risks of related NFTs.

Conclusion

As a high-performance Layer1 focused on trading, Sei has optimized the process of block generation and processing. Currently, Sei’s ecosystem is growing rapidly, and the development of its ecosystem will create a synergistic effect with Sei. Various decentralized applications will continue to amplify Sei’s high-performance advantages, while Sei will also attract more liquidity and users. With the continuation of the parallel EVM narrative, the upgrade to Sei V2 will address the current bottlenecks of Sei, attracting more attention from the market and more developers to join the Sei ecosystem.

Disclaimer：

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