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https://content.fortune.com/wp-content/uploads/2023/04/GettyImages-1365659542-e1681248120732.jpg?w=2048As crypto trumpets the promise of layer-2 scaling solutions like Arbitrum and Polygon, Sei Labs is bucking the trend by building a new layer-1 blockchain scheduled to launch later this year.
Fresh off a funding round that valued the company at $800 million, Sei has raised an additional $50 million for its ecosystem fund, cofounder Jayendra Jog exclusively told Fortune. The investment comes from Bitget, a Seychelles-based crypto exchange focused on derivatives, and the venture firm Foresight.
Jog previously worked as the engineering lead at Robinhood during the Gamestop saga, where the brokerage suspended trading amid a rush of demand for the so-called “meme stock.” As a result of the company’s mismanagement, Jog decided that centralization was to blame. When he set out to build a decentralized exchange, he realized that no blockchain solution had sufficient infrastructure to support his vision, leading to the genesis of Sei—a layer-1 focused on trading.
“Internally, we just have one core thesis, which is that exchanges are the most important application in crypto,” Jog told Fortune, pointing to platforms from Binance to OpenSea and Uniswap.
Courtesy of Sei Labs
According to Jog, Sei’s value proposition compared with other blockchains is exchange infrastructure, with a focus on performance, which it measures in “time to finality,” or a metric for measuring transaction speed, as well as the number of orders that can be processed per second. Jog said that Sei aims to have a mainnet launch around the end of June and that it currently has over 120 projects building on Sei ahead of the launch, ranging from marketplaces to games to wallets.
Despite the recent popularity of layer-2 solutions built on top of existing blockchains like Ethereum, Jog said that his team decided to build a new blockchain because it believes layer-2s will not develop quickly enough to support sufficient transaction speed.
“The fundamental problem with layer-2s is you have some kind of computation happening off-chain and then you try to compress data on-chain,” he told Fortune. “It’s just not scalable right now, which is why a layer-1 approach is much, much better.”
The challenge will be attracting projects to build on Sei as opposed to popular current options, from Bitcoin to Ethereum to Solana. The crypto industry, after all, is littered with the skeletons of failed blockchain projects.
Jog said Sei’s scaling capabilities will attract projects, pointing to the popular Ethereum-based decentralized exchange SushiSwap, which is building a perpetuals exchange on Sei.
The newly announced $50 million commitment to the ecosystem fund will further attract projects to Sei, bringing the total size of the fund to $120 million, with prior contributions coming from Multicoin, Hudson River Trading, and GSR. The fund will be used to invest in projects building on Sei as well as to provide liquidity for trading—GSR and Hudson River Trading are both focused on market making.
Other investors in Sei include Multicoin Capital as well as two other firms focused on market making, Jump Crypto and Flow Traders.
While Sei’s focus is decentralized exchanges, one of its new funders, Bitget, is one of the top centralized crypto exchanges. Fortune reported last week that Bitget raised $10 million from the crypto VC Dragonfly, with the goal of collaborating more with the firm’s broad portfolio of companies.
“I think that centralized exchanges understand that there’s a lot of opportunity to support decentralized exchanges,” Jog said, either by investing directly in projects or providing liquidity to projects through market making.
In its latest public testnet, which launched less than a month ago, Sei has processed over 40 million transactions and had over 3.6 million users create wallets.
