SEI | Future of Blockchain?
By Daman Rao | Crescent City Capital Market Analyst Intern
Market Analysis
What is Sei?
Launched this summer, Sei Network is a Layer 1 blockchain designed for trading, featuring a unique consensus mechanism called Tendermint BFT. Tendermint is software for securely and consistently replicating an application on many machines. It can handle thousands of transactions per second with sub-second finality and uses on-chain order books for precise order matching, providing deep liquidity for DeFi applications.
While Sei operates as a permissioned blockchain, meaning projects undergo a vetting process for inclusion, it aims for a more optimised and trustworthy user ecosystem.
SEI coin is the native cryptocurrency within the Sei Network, serving various purposes such as covering transaction fees, staking, and governance. It is used in both decentralised and centralised exchanges, high-frequency trading firms, market makers, and by institutional investors, making it a versatile cryptocurrency for trading and blockchain innovation.
How does it work?
Sei Network functions as a versatile blockchain, enabling asset transfers and the deployment of smart contracts, including Decentralised Exchanges (DEXes) and Automated Market Maker (AMMs) that are decentralised exchanges that use algorithmic “money robots” to provide liquidity for traders buying and selling crypto assets (AMM). It offers a high-performance order placement and matching engine that can be utilised by exchanges built on top of Sei, creating orderbook-based exchanges akin to traditional centralised platforms like Binance and Coinbase. While offering capital-efficient infrastructure for decentralised exchanges, Sei acknowledges that starting and providing liquidity to order-book based exchanges requires technical expertise. The network’s goal is to deliver a cost-effective system for developers and users of decentralised applications, promoting transparency and efficiency for those seeking to leverage its liquidity hub.
Recent Updates
SEI as of October 26th is trading at $.10 with a 24-hr trading volume of $48,564,415. The total circulating supply is 1.8 Billion tokens
Since the launch of the coin back on August 15th of this year, SEI is currently sitting at its all-time low. The following day, it reached an early all-time high of $0.2736. However, the crypto market crashed on August 17 which could have been triggered by news of Elon Musk’s substantial Bitcoin sale. This in turn could have potentially contributed to why SEI’s value plummeted, hitting an all-time low of $0.119 on August 29. Since then, it has shown signs of recovery, with a value of around $0.1325 on September 7, 2023. At that time, approximately 1.8 billion SEI were in circulation out of a total supply of 10 billion, resulting in a market capitalization of approximately $238 million, ranking it as the 113th-largest cryptocurrency by market capitalization.
It may be premature to make definitive predictions on determining whether the price of SEI is set to increase or plummet further. It’s essential to consider that SEI has been in the market for less than a month, making it challenging to anticipate how it will react to market fluctuations. Additionally, its potential for widespread adoption remains uncertain. While it presents attractive features, it’s unclear whether Decentralised Exchanges (DEXes) will migrate to this new blockchain or opt to remain on their existing platforms.
Another possible reason for the continuous decline of the token is due to the delay in the system’s airdrop. Airdrops are a common way for new networks like SEI to distribute governance tokens to essential contributors who undertake specific valuable activities, such as facilitating fund transfers to a network, evaluating decentralised applications, or engaging in a testnet.
Even after guides being posted the day of the system’s airdrop, Sei has received many complaints regarding the speed of being able to bridge their assets.
The plummet of the price could also possibly be due to the reason for token holders selling after successfully bridging funds. After the airdrop on August 16th, there is a slight spike in price but the following day continues to plummet down. This could be due to token holders holding on to the SEI token till August 17th and the plummet after, which could possibly be due to token holders selling which could drive the price down.
Summary
Sei is a relatively new blockchain, designed for trading and offering unique features such as an on-chain order matching engine and a focus on orderbook-based exchanges. Its native cryptocurrency, SEI coin, plays various roles within the network, and it aims to provide cost-effective and transparent solutions for decentralised applications. However, its market performance and adoption are still evolving, as it has only been in the market for a short time, making its future trajectory uncertain.
Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. Please conduct your own due diligence before making any investment decisions.
References:
https://coinmarketcap.com/currencies/sei/
https://x.com/SeiNetwork/status/1691970241599787108?s=20