Sei Labs, a startup co-founded by a former Robinhood engineer and a former VC from Coatue, has launched a new open sourced project that offers a novel and exciting approach to make Ethereum faster and less expensive for developers.
On Wednesday, Sei launched The Parallel Stack, a public good project — meaning free for any crypto developers to use. It aims to improve the performance of transactions per second (TPS) of Ethereum Virtual Machine (EVM)-based layer-2 blockchains through the tried-and-true computer science concept of parallel processing, TechCrunch learned exclusively.
Sei Labs is a company the crypto community is already watching after it raised $30 million, at a valuation of $800 million, about a year ago to build its own super-speedy, open source, layer-1 blockchain focused specifically on crypto trading.
But now Sei has turned its attention to help improve Ethereum, a far bigger, more established blockchain, the biggest by total value locked, according to CoinMarketCap — aka the value of all the digital assets on the network.
By default, EVMs process transactions sequentially, one after another, a slow and inefficient method that doesn’t scale well.
“The biggest limitation of the EVM is the lack of throughput,” Jay Jog, co-founder of Sei Labs, formerly of Robinhood, told TechCrunch. Ethereum’s throughput can’t go beyond 50 TPS, which is limiting growth of its ecosystem and results in high so-called gas fees, the fees charged to transact on Ethereum blockchains. These fees make Ethereum unaffordable for “99.9% of normal users,” Jog added.
Aside from The Parallel Stack, Sei Labs has also been working on upgrading its blockchain to Sei V2, a parallelized EVM, which processes multiple transactions simultaneously and would make it accessible to a “global base of EVM developers,” according to a November 2023 blog post. “We’ve been working on scaling EVM for a long time and doing it by parallelizing,” Jog said.
Obviously, the higher the transactions per second, the faster, more efficient and scalable a network is. For reference, Bitcoin’s blockchain, by default, averages 5 TPS, while Ethereum’s average 20-30 TPS. Solana’s is around 2,500 TPS and some of the newer, Ethereum-centric layer-2 blockchains like Polygon and Arbitrum can do 65,000 and 40,000 TPS, respectively.
The Parallel Stack can do around 5,000 TPS, but is aiming to hit 10,000 TPS by the end of the year, Jog said.
Sei, of course, isn’t the only one working to make Ethereum faster and cheaper. Optimism’s OP Stack, an “EVM equivalent” layer-2 blockchain, does an average of 2,000 TPS. But they use different design philosophies and Sei’s focus is on higher throughput through parallel processing, said Jeff Feng, Sei Labs co-founder, previously an investor at Coatue.
“It’s like a stove; you can cook two things at the same time, as opposed to one dish then another,” Feng said. “Historically if you wanted that kind of TPS, you needed to build on Solana and learn a brand new development framework.”
But if Sei is building its own layer-1 blockchain, not derived from Ethereum, why would it be working to solve Ethereum’s problem? Because Ethereum is where most developers are and scaling is a problem they think they can also address. And if Sei can offer them a way to adopt parallel processing to improve their Ethereum work, they could also learn core tenets of Sei’s ecosystem along the way.
Plus, they don’t see the two blockchains as competitors. “Our goal is to scale the EVM. There has been significant interest to have parallel EVMs and this is a natural next step: democratizing access to make it as plug and play as possible,” Jog said.
So perhaps it makes sense that Sei is honing in on the EVM space, to reach a majority of the blockchain developers.
“It’s almost been a no-brainer but it clearly unlocks a level of performance and throughput that allows for applications much larger to successfully build and stay on Ethereum,” Feng said. “With parallelization, it will bring the industry forward.”
But why would they freely share their work as open source projects? Sei’s framework isn’t the first to do it, but holds true to the ethos many crypto projects have of providing open code for anyone to build with.
“I was at Robinhood when the GameStop saga happened; a small number of people were making decisions and we didn’t know anything until the news came out,” Jog said. The lack of internal transparency made him want to build a decentralized chain that is open sourced, so anyone can access it and it’s not limited to a group of people.
Jog and Feng anticipate initial excitement for The Parallel Stack to come from existing Ethereum-focused applications that are hitting bandwidth issues and are looking for higher TPS options.