L1 blockchain Sei raises $5m in funding led by Multicoin Capital

Sei, a Layer 1 blockchain created for decentralized finance (DeFi), has raised $5 million in funding led by Multicoin Capital to support the launch of its mainnet and accelerate the development of 20 decentralized apps (dApps) within the ecosystem.

Sei Labs co-founder Jay Jog said the funding round was a “major step” for the project and the whole DeFi. He explained that they partnered with “some of the most revered financial institutions in the world” to create Layer 1 of dApps. In addition to Multicoin Capital, several companies participated in the funding round, including Coinbase Ventures, Delphi Digital, GSR, Kronos Research, and the founders of Tangent and Yield Guild Games.

Tushar Jain of Multicoin Capital explained that Sei gained interest from various DeFi apps that sought to build on top of the blockchain. Jain said Sei’s “built-in orderbook infrastructure, frontrunning prevention, and major speed improvements” made the network a suitable environment for dApps to grow.

Multicoin Capital was established in 2017. It has worked with various crypto projects to develop them from the “seed stage." In addition to Sei, it worked with Aptos—another Layer 1 blockchain—and renowned crypto exchange FTX, among many others.

Tangent co-founder Jason Choi said the company “look forward” to developing with Sei after the funding round. Choi explained that developers at Sei managed to address issues found in other DeFi networks.

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Tom Shaughnessy from Delphi Digital said Sei’s advantages included “speed, scalability, and security,” which other blockchains lacked. Shaughnessy added that Sei could be “a real challenger” in Layer 1 DeFi when it launches later.

About DeFi, Sei project

DeFi is an alternative to traditional financial services. This finance system eliminates the use of third parties in financial transactions, increasing people’s freedom to manage their own assets.

DeFi is based on person-to-person transactions built on blockchains. Every transaction generates a smart contract. According to analysts, DeFi started booming in 2020, leading to more projects being developed based on the system.

New DeFi apps are continuously being developed to enable users to implement various activities found in the modern financial system. The apps help reduce transaction costs and expand cross-border financial access. Apps that can be found in DeFi include crypto wallets, decentralized marketplaces, stablecoins, lending platforms, and prediction markets.

The apps require infrastructure–blockchains or networks. Layer 1 refers to the blockchain or network that app developers choose to build on. Currently, Ethereum is the most widely used blockchain in DeFi. However, other blockchains are also rising in popularity, including Polkadot, Solana, Osmosis, and Sei. Generally, a blockchain is either created for general purposes or app-focused.

However, according to Sei developers, Sei is neither a general purpose nor an app-focused blockchain. Instead, the network is “DeFi-specific." The developers explained that the features of Sei answered common blockchain issues, such as insufficient rapid scaling, which can lead to poor user experience and malicious attacks.

A renowned dApp type within the Sei ecosystem is orderbook-based exchanges. These apps can spin up and customize an order book for multiple purposes, including derivatives. The developers claimed that the ecosystem could handle a large-scale order book exchange due to its frontrunning protection.