Designed to give exchanges an unfair advantage
Intro to Exchanges
Exchanges are crypto’s killer app, across DeFi, GameFi, and NFTs, most if not all trade volume flows back to exchanges. Orderbook models continue to reign supreme across all large centralized exchanges, both in traditional finance and crypto. They are proven to be reliable, fast and capital efficient. However, bringing an orderbook on-chain is immensely difficult. Teams need to deal with high transaction costs, slow trade execution, and inaccurate pricing among other obstacles.
There have only been a select few working implementations of orderbooks on-chain thus far. Each one deals with clear tradeoffs, balancing between speed, efficiency, and reliability.
The Significance of On-chain
Off-chain order books have historically dominated perpetual and spot trading on venues like FTX, Binance, and Coinbase. Having been built on robust web2 infrastructure, centralized exchanges have near-zero transaction costs and near-instant order executions. The main drawbacks of off-chain orderbooks are their centralized nature and increased regulatory exposure.
On the other hand, on-chain orderbooks can be decentralized and trustless, but frequently hindered by network congestion, high transaction costs, and slower execution. This means that most on-chain orderbooks are only as efficient and capable as the chains they are built on.
Sei is a layer 1 blockchain purpose-built for an orderbook. The parameters of the chain are perfectly form-fit to match exactly what an orderbook needs. Sei prioritizes reliability, security and high throughput above all else, enabling an entirely new echelon of DEX products. Apps built on Sei benefit from specialized built-in orderbook infrastructure, blazingly fast execution, deep liquidity, and a fully decentralized matching service.
Built using the Cosmos SDK and Tendermint Core, Sei serves as a shared liquidity hub for ultra-high performance DEX products to be built on top.
Orderbook DEXs have been de-risked:
- dYdX has grown to nearly 25K traders with $800B+ in annualized volume*
- Serum has built a thriving ecosystem on top of it, comprising a major portion of Solana DeFi
Institutions are taking note:
Large players like FTX and Binance have paved the way for educating institutional players. Over the next few years, Sei expects DEXs to become the go-to
DeFi will start to see meaningful institutional order flow try out DEXs for the first time.
Differentiated technology stack:
The Cosmos SDK has been proven and battle tested at scale. Sei can learn from the mistakes of past orderbook implementations and build superior trading infrastructure from scratch.
Dive in with us
Our Seinami Incentivized Testnet is launching in June. Stay tuned for announcements by following Sei on Twitter. What are you waiting for? Jump on and Sei hi!
*As of April 10 2022