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Sei Network's validators approved governance proposal SIP-03 on May 1, 2026, immediately halting all new CosmWasm smart contract deployments on the chain's mainnet. SIP-03 is the specific governance proposal passed today; it is a scheduled milestone within SIP-3 (Sei Improvement Proposal 3), the broader multi-phase plan the Sei community approved in Q2 2025 to convert the network into a pure Ethereum Virtual Machine (EVM) chain and remove all remaining Cosmos-based infrastructure.

Any attempt to upload new CosmWasm code or instantiate new CosmWasm contracts on Sei will now fail. Existing contracts continue to run, and inter-blockchain communication (IBC) transfers remain active for the moment. However, Sei Labs is warning users that IBC message passing will also be disabled in a future phase, expected before mid-2026.

Users holding Cosmos-native assets on Sei face the most immediate risk. At the time of the migration, approximately $1.4 million in USDC.n was circulating on the network, according to BlockEden.xyz. Tokens including USDC.n, ATOM, WBTC, USDT.kava, and Wormhole-bridged assets need to be migrated or swapped before IBC is shut down. The primary entry point for this process is the Sei Dashboard, which allows users to move assets between native Cosmos wallet addresses (supported by Keplr, Leap, and Fin) and EVM addresses (supported by MetaMask and Compass). Sei's official documentation also points users to tools including Skip:Go for ATOM and WBTC transfers, DragonSwap and Symphony for USDC.n swaps, and Stargate for larger USDC positions. Sei Labs states that users who do not act before the IBC cutoff may permanently lose access to those funds.

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A Phased Dismantling of Cosmos Infrastructure

SIP-03 did not arrive without warning. Sei Labs has been executing a staged wind-down of its Cosmos architecture since January 2026. The v6.3 upgrade activated EVM-based staking and deprecated the Cosmos staking model. The v6.4 upgrade, released in February and March, disabled inbound IBC transfers and cut off Cosmos-native USDC bridging. The v6.5 upgrade in March replaced Sei's native oracle with third-party providers Chainlink, API3, and Pyth. The CosmWasm deployment freeze is the next step in that sequence.

Sei Labs described the rationale in its official communications: "This is part of the Sei protocol's broader transition to an EVM-only architecture by gradually winding down legacy Cosmos and CosmWasm functionality." The team has also framed the overall SIP-3 effort as performance-focused, likening it to reducing a vehicle's weight while upgrading its engine: "To make a car go really fast, you do both: increase power and reduce weight. SIP-3 represents the weight-reduction component of the performance upgrade."

The stated destination for all of this is the Sei Giga upgrade, which targets more than 200,000 transactions per second and sub-400ms finality. Sei's current throughput sits at roughly 12,500 TPS. Giga's architecture relies on a multi-proposer consensus mechanism called Autobahn, which separates transaction ordering from execution. Sei engineers built the underlying EVM execution client from scratch rather than modifying an existing implementation. The team also claims approximately 40x better execution efficiency versus standard EVM environments, a figure drawn from the Sei Giga Whitepaper that has not been independently verified.

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On-Chain Activity Diverges From Token Price

SEI is trading near $0.056 as of May 1, down roughly 56 percent from its early-2026 levels. Market cap sits around $390 million, placing it at approximately rank 95 on CoinMarketCap. Total value locked across Sei's DeFi ecosystem is approximately $60.6 million as of early May 2026, according to DefiLlama, though other sources have cited a figure closer to $41 million, likely reflecting differences in snapshot date or methodology. Either figure represents a significant contraction from the $626 million peak recorded in 2025.

On-chain engagement tells a different story. According to data published by CaptainAltcoin, average daily active addresses reached 311,000 in Q1 2026, up 78 percent quarter-over-quarter. Daily transactions averaged 639,000 with a peak of 917,000. Returning user growth came in at 137 percent over the same period, suggesting the existing user base is becoming more active even as the token price has declined.

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Regional Considerations: From South Asia to Sub-Saharan Africa

The transition carries mixed implications for users and developers outside the United States. Developers in India, Bangladesh, and Sri Lanka who have built on CosmWasm through Cosmos-affiliated projects will need to retrain in Solidity to continue building on Sei.

That shift is not trivial, though EVM tooling (Hardhat, Remix, MetaMask) is arguably more widely taught in regional developer programmes than the Rust-based CosmWasm stack.

For users in markets where exchange access is limited and on-chain bridging is a primary method of moving assets, the IBC shutdown timeline deserves close attention. The migration steps require comfort with DeFi tooling that is not yet universal in these regions. Users in Nigeria, Kenya, India, and Pakistan who currently hold Cosmos-native assets via IBC face the same migration imperative described earlier: act before the IBC cutoff or risk permanently losing access to those funds.

On the other side of that equation, Sei's shift to EVM-only lowers the entry barrier for developers already writing Solidity for Ethereum, Polygon, BNB Chain, or Avalanche. Teams in Nigeria, Kenya, India, and Pakistan working on payments or DeFi applications can now consider Sei's performance infrastructure without adopting a separate smart contract paradigm. A confirmed partnership with Xiaomi will see a Sei wallet pre-installed on Xiaomi smartphones globally, excluding China and the United States, beginning in Q2 2026, adding a further distribution dimension to watch.

Sei's move also lands amid a live debate across the broader Cosmos ecosystem. A thread on the Cosmos Hub Forum titled "Cosmos Hub Adds EVM — But What About CosmWasm?" reflects a sector-wide reckoning over whether EVM standardisation comes at the cost of the interoperability and smart-contract flexibility that Cosmos chains built their reputations on. SIP-03 is the most definitive answer yet from a major Cosmos-adjacent network, and it points firmly toward consolidation around EVM.

Not every observer is convinced by the direction. One commenter in the SIP-3 governance discussion on GitHub called the EVM pivot "a move that risks abandoning SEI's technological edge in favour of legacy constraints," arguing that Ethereum's underlying architecture is "congested, slow, and architecturally outdated." Another predicted that developer loyalty built on performance alone is fragile: "This growth isn't loyalty. It's laziness." Both commenters are identified only by their GitHub handles in the source discussion (sei-protocol/sips Discussion #9).

With outbound IBC transfers and remaining Cosmos transaction support still scheduled for removal, the Sei network's Cosmos exit will be complete by mid-2026. Whether the Giga upgrade delivers on its throughput promises will determine whether the tradeoffs prove justified.