Sei Network recently released an educational guide aimed at positioning its Layer 1 blockchain as an appealing staking option. The guide shifts the focus from merely promoting high annual percentage yields (APY) to highlighting user experience elements that are often overlooked in yield comparisons.
This initiative comes at a critical time, following the announcement by Kadena about its shutdown due to unfavorable market conditions. Maintaining a sovereign blockchain incurs fixed costs, which can become unsustainable when token prices decline, irrespective of promised staking rewards.
The current landscape for Layer 1 staking yields is quite diverse. For instance, Ethereum offers an APY ranging from 3% to 4.3%, while Solana reaches approximately 9.3% on certain platforms. In contrast, yield aggregators like Lune.fi claim rates as high as 29.5%, although these figures often come with additional smart contract risks or complex decentralized finance (DeFi) strategies.
Notably, Sei Network refrains from quoting specific APY figures for its own blockchain. Instead, it argues that the definition of the “best” yield encompasses more than just a high number; it includes net returns after validator fees, realistic lockup periods, and the actual usability of staked assets.
Key Features of Sei Network”s Staking
Three primary technical aspects underpin Sei”s appeal to potential stakers:
- Fast finality (~400ms): Transactions are confirmed in under half a second, enabling quicker delegation changes and faster reward claims for stakers.
- Parallelization: The network can handle multiple operations simultaneously, maintaining responsiveness even during demand surges, which is particularly beneficial when users rush to restake or claim rewards.
- EVM compatibility: Applications designed for Ethereum can operate natively on Sei, broadening options for liquid staking and DeFi integration. This feature allows stakers familiar with Ethereum tools to avoid learning new systems.
Understanding Tradeoffs in Staking
Sei”s guide also addresses the practical tradeoffs that many promotional materials tend to overlook. While liquid staking provides enhanced flexibility, it also carries smart contract risks and the potential for depegging. Validators with high APYs may suffer from poor uptime or questionable histories. Furthermore, staking an entire balance may leave no funds available for transaction fees.
The guide recommends that stakers select validators based on their uptime and reputation rather than simply opting for the lowest commission rates. It also advises diversifying across multiple validators and being aware of unbonding periods before committing funds.
In the broader market context, established Layer 1 blockchains tend to offer single-digit yields, while speculative tokens sometimes advertise unrealistic rates, with some presale projects claiming APYs as high as 30,000%. Sei Network is betting that experienced stakers prioritize execution quality over mere headline figures. The success of this strategy will depend on the growth of the ecosystem. EVM compatibility will only be beneficial if developers create valuable applications, while fast finality will prove useful only if there is sufficient activity to finalize.
For now, Sei Network is establishing a foundation for stakers who have come to realize that the highest advertised yield does not necessarily correlate with the best actual return.
