Rongchai Wang
Jan 16, 2026 15:38
Sei’s SIP-3 upgrade deprecates CosmWasm to become EVM-only by mid-2026. USDC.n holders must migrate assets by March or risk losing access.
Sei Network is gutting its Cosmos roots to chase 200,000 transactions per second. The SIP-3 upgrade, approved by governance last May, will transform Sei into an EVM-only chain by mid-2026—and users holding legacy IBC assets need to act now or lose access to their funds.
The first domino falls this month. Version 6.3, deploying to Pacific testnet in January, enables full staking functionality through EVM interfaces. March brings v6.4, which adds the kill switch for inbound IBC transfers. Once that governance proposal passes, Cosmos-native tokens like ATOM and USDC.n can no longer enter the network.
The Weight Reduction Strategy
Sei Labs frames this as automotive engineering: to make something fast, you either add power or cut weight. SIP-3 does the latter, stripping “hundreds of thousands of lines of code” from the protocol. The Giga upgrade coming afterward presumably handles the power side of that equation.
What’s getting removed? CosmWasm smart contract support. Native Cosmos transaction handling. The chain’s built-in oracle solution—replaced by Chainlink, API3, and Pyth. IBC interoperability, both inbound and outbound transfers, will be disabled through separate governance votes.
By the time this wraps up, only EVM addresses will be able to initiate transactions on Sei. Full stop.
USDC.n Holders Face Deadline Pressure
Here’s the urgent part: anyone holding USDC via Noble (USDC.n) needs to migrate to native USDC before late March 2026. Sei Labs isn’t being subtle about this—they’ve been warning users since early January to swap or migrate immediately.
The distinction matters. Native USDC, which went live on Sei with Circle’s CCTP v2, offers institutional-grade infrastructure and regulatory compliance. USDC.n, the bridged Cosmos version, becomes worthless baggage once IBC transfers shut down.
Sei Labs points users toward Skip:Go as one migration option, though they’re careful to note this isn’t an endorsement. Users in DeFi protocols with USDC.n exposure should “wind down any reliance on those assets,” according to the announcement.
What Changes for Builders
Infrastructure providers face the biggest lift. Indexers and custodians need to update their systems to track staked balance changes through EVM APIs. Any application built on CosmWasm needs a complete rewrite or abandonment.
The upside for developers who stick around: a cleaner, more competitive position within the broader EVM ecosystem. Fewer edge cases. One execution environment instead of two. Whether that tradeoff appeals depends on how much Cosmos-specific functionality a project actually used.
Timeline and Trading Implications
The full transition completes by mid-2026, but the critical dates hit sooner. Q1 2026 brings the IBC inbound shutdown. Additional releases will disable outbound transfers and sunset the native oracle.
For traders, watch the governance proposals. Each vote that passes removes another Cosmos capability and potentially triggers migration flows. The USDC market, currently at $75.72 billion in market cap, won’t notice Sei’s transition—but Sei’s internal liquidity dynamics could shift as legacy assets exit.
Sei is betting that becoming a pure EVM chain at 200K TPS beats being a hybrid at lower speeds. Users have until March to decide if they’re coming along for the ride.
Image source: Shutterstock
Source: https://blockchain.news/news/sei-network-sip3-giga-upgrade-evm-only
