Sei Network Ditches Cosmos: A Deep Dive into the Ethereum Pivot and its Market Implications
The crypto landscape is constantly evolving, and recent developments highlight the ongoing battle for developer mindshare and market dominance. This blog post analyzes a significant move by the Sei Network, its implications for the broader crypto market, and what it means for investors.
Sei (SEI) 7-Day Price Analysis with Daily Data. Track market trends, volume, and key indicators for informed trading decisions. Includes analysis of recent Cosmos compatibility proposal.
📌 Event Background and Significance
On Wednesday, a Sei Network developer proposed SIP-3, a significant change to the network's architecture. This proposal aims to deprecate support for Cosmos' CosmWasm, effectively limiting Sei Network’s functionality to the Ethereum Virtual Machine (EVM). This isn't just a minor technical adjustment; it's a strategic shift with far-reaching consequences.
🔗 Context: The crypto market in 2025 is characterized by intense competition between various blockchains. While Ethereum remains a dominant force, alternative Layer-1 blockchains are vying for adoption. Cosmos, with its interoperability focus and CosmWasm, is one such contender. However, the EVM has become the de facto standard for many DeFi applications, giving a significant advantage to blockchains supporting it. Past regulatory failures (like the 2024 Terra collapse) have emphasized the importance of standardization and robust infrastructure.
🔗 Sei Network, launched in 2023, initially faced slow adoption due to its lack of EVM support. Adding EVM compatibility in July 2024 dramatically increased its TVL (Total Value Locked), showcasing the significant preference for EVM-based development. This success is further highlighted by the $1 billion in TVL currently on the network, placing it as the 15th largest blockchain by this metric. Before this change, Sei only saw approximately $50 million in deposits, a stark contrast to competitors like Sui which reached over $600 million in its first year.
Philip Su, Sei Labs’ Engineering Lead, argues that supporting both EVM and CosmWasm creates "unnecessary overhead" and complicates development. This decision reflects a pragmatic approach, prioritizing developer experience and community cohesion by consolidating around the dominant EVM ecosystem.
📊 Market Impact Analysis
The Sei Network’s decision to drop CosmWasm support is a significant event with potential short-term and long-term market implications.
Short-Term Effects:
The immediate impact could involve increased price volatility for SEI tokens. Uncertainty surrounding the proposal's acceptance and the broader community's reaction could lead to short-term price swings. Negative sentiment could arise if the community strongly opposes the change. However, if the proposal passes smoothly and shows a clear benefit to developers and users, it could boost SEI's price.
Long-Term Effects:
⚖️ The long-term consequences are more complex. While simplifying the network might boost development, the potential blow to CosmWasm adoption is noteworthy. This could affect the Cosmos ecosystem's growth and attract developers away from it towards EVM-compatible networks. For Sei, the move aims to strengthen its position within the rapidly growing EVM-based DeFi sector. This could attract further investment and developer participation, potentially increasing the value of SEI tokens long-term. However, the lack of CosmWasm support could also limit Sei's appeal to developers who prefer that ecosystem. This ultimately might affect the overall growth of the platform.
Impact on Sectors:
⚖️ The move primarily affects the DeFi sector, as most DeFi apps prefer EVM compatibility. While stablecoins aren't directly impacted, this shift contributes to the broader trend of consolidation within the EVM ecosystem. NFTs could potentially see increased activity on Sei if development ramps up due to the simplified architecture.
📌 Key Stakeholders’ Positions
| Stakeholder |
Position |
Argument |
Investor Implications |
| Sei Labs (Philip Su) |
For deprecating CosmWasm |
Reduces complexity, improves developer experience, enhances community cohesion, and accelerates adoption. |
Potentially positive for SEI token price in the long run if the transition is successful. |
| Sei Community |
Mixed |
Some support simplification; others may prefer CosmWasm compatibility. |
Uncertainty until community feedback is fully assessed; price volatility is expected. |
| Cosmos Ecosystem |
Potentially negative |
Loss of a significant project could negatively impact CosmWasm adoption and the overall Cosmos ecosystem. |
Could negatively affect Cosmos-related investments and potentially benefit competitors like Ethereum. |
🔮 Future Outlook
The outcome of SIP-3 will significantly shape Sei Network's trajectory. If approved, we can expect increased developer activity and a more streamlined platform. However, the Cosmos community’s reaction and the overall adoption of CosmWasm will determine the long-term consequences of this decision. Further regulatory clarity around cross-chain interoperability will also play a crucial role in the network's future. I predict that the proposal will likely pass, leading to a surge in EVM-based development on Sei, potentially boosting SEI token price, although some short-term volatility should be expected. However, the long-term success will hinge on Sei’s ability to attract and retain developers within a fiercely competitive market.
📌 Key Takeaways
* The Sei Network proposes to drop support for Cosmos' CosmWasm, focusing solely on the Ethereum Virtual Machine (EVM).
* This move aims to simplify the network, improve developer experience, and attract more developers to the EVM ecosystem.
* This decision may have a mixed impact on the Cosmos ecosystem and its native token ATOM.
* The short-term market reaction might involve SEI price volatility, while the long-term effects are uncertain but could boost SEI's value if successful.
* This situation highlights the intense competition between blockchains and the significance of choosing the right environment for development and investment.
📌 Thoughts & Predictions
🔗 The success of this strategy hinges on Sei's ability to attract a substantial developer base within the already-crowded EVM ecosystem. The lack of CosmWasm support is a risk, potentially limiting Sei’s appeal to a segment of developers. However, the benefits of simplification and focusing on EVM could outweigh the risks.
I believe that Sei's decision is a bold strategic move that could pay off handsomely, especially if they can effectively market their improved developer experience. The current $1 Billion TVL demonstrates the potential for success.
However, we must carefully observe community feedback and market reaction in the coming weeks and months. While a positive outcome is likely, significant headwinds still exist, especially concerning the competitive nature of the crypto landscape.
🎯 Investor Action Tips
- Monitor community feedback and the proposal's progress closely before making any significant investment decisions in SEI.
- Diversify your portfolio to mitigate risks associated with the volatility of the crypto market.
- Assess the potential long-term impact on Cosmos and CosmWasm before making any investment decisions related to Cosmos.
- Consider the overall market trends and potential regulatory developments before acting on any investment strategy.
📘 Glossary for Investors
TVL (Total Value Locked): The total value of assets locked in a decentralized finance (DeFi) protocol. A higher TVL generally indicates greater user adoption and liquidity.
SIP (Sei Improvement Proposal): A formal proposal for changes or improvements to the Sei Network protocol. SIPs are community-driven and undergo a voting process before implementation.
EVM (Ethereum Virtual Machine): The runtime environment for smart contracts on the Ethereum blockchain and compatible networks. It allows developers to write code once and deploy it across multiple platforms.
CosmWasm: A WebAssembly-based smart contract runtime environment used in the Cosmos ecosystem. It enables interoperability between different blockchains within the Cosmos network.
📈 SEI-NETWORK Price Analysis
| Date |
Price (USD) |
Change |
| 5/2/2025 |
$0.2247 |
+0.00%
|
| 5/3/2025 |
$0.2202 |
-2.01%
|
| 5/4/2025 |
$0.2076 |
-7.59%
|
| 5/5/2025 |
$0.2038 |
-9.31%
|
| 5/6/2025 |
$0.2013 |
-10.41%
|
| 5/7/2025 |
$0.1975 |
-12.12%
|
| 5/8/2025 |
$0.2116 |
-5.82%
|
▲ This analysis shows SEI-NETWORK's price performance over time.
This post builds upon insights from the original news article, offering additional context and analysis. For more details, you can access the original article here.
