Over the years, numerous platforms such as Ethereum, Solana, and Avalanche have vied to become the primary foundation layer for smart contract development, each proposing solutions to the three major challenges of blockchain: scalability, security, and decentralization. Launched in May this year, Sui has joined the battle of Layer 1 blockchains. Unlike other L1 blockchains, Sui focuses on instant transaction assurance, reducing latency, and increasing transaction speed. It introduces innovations like an object-centric data model, the Move programming language, and user experience enhancements, providing more possibilities and development space for the creation and promotion of blockchain applications.

Background & Funding

In October 2021, Facebook rebranded to Meta and announced plans to establish a permissioned blockchain and a digital wallet. They set up the independent Diem Association (formerly Libra) and tasked its subsidiary, Novi Finance (formerly Calibra), with developing the digital wallet. However, due to regulatory hurdles and other factors, Meta discontinued both projects. From the ashes of the initial Diem and Novi research emerged two independent blockchain projects: Aptos and Sui. Aptos iterated on much of the original Diem project’s technology, inheriting Diem’s legacy, while Mysten Labs created Sui from Diem’s remnants.

Mysten Labs was founded in 2021 by former Novi project leaders Evan Cheng, Adeniyi Abiodun, Sam Blackshear, George Danezis, and Kostas Chalkias. The team has extensive research and product experience in software language compilers, static analysis (programming security), distributed systems, cryptography, and cloud computing, with previous roles at companies like Apple, Oracle, Microsoft, R3, and Facebook. Co-founder Evan Cheng was awarded the ACM Software System Award for his involvement in designing LLVM, a technology widely used in Apple and Google devices.

（https://twitter.com/SuiDailyTK/status/1585949824398069763）

In December 2021, Sui raised $36 million in its Series A funding round led by a16z, with participation from Redpoint, Lightspeed, Coinbase Ventures, Electric Capital, and other investors. In September 2022, it raised $300 million in its Series B funding round led by FTX Ventures, with a16z, Jump Crypto, Binance Labs, and others participating. After FTX declared bankruptcy, Mysten Labs repurchased the equity and the previously held SUI token purchase rights from it, valued at approximately $96 million.

Sui launched its incentivized testnet in August 2022 and officially launched its mainnet on May 3, 2023.

Technical Analysis

Sui Move Programming Language

Move is a cross-platform smart contract programming language, distinct in its non-reliance on typical blockchain concepts such as accounts, transactions, time, and encryption. Unlike most blockchains that track user account (i.e., cryptocurrency wallet) changes, Sui tracks the movement of objects (i.e., tokens). All transactions take objects as inputs and produce new or modified objects as outputs. Each object contains the hash of the last transaction that generated it. Objects available for input are known as “active” objects. Thus, by monitoring all active objects, the global state can be determined.

It’s the movement of these objects that triggers transactions. These transactions can be mutable, immutable, and even involve multiple parties, free from the wallet-to-wallet constraints of other blockchains. Move’s design prevents issues like reentrancy vulnerabilities, poison tokens, and deceptive token approvals. Sui Move is a reimagined version of Move to fit Sui’s object-centric data model.

Sui also employs Move Prover, a mechanism allowing developers to verify if their code executes as intended, ensuring the validity of any smart contract or blockchain application.

DPoS Consensus Mechanism

Sui utilizes a Delegated Proof of Stake (DPoS) consensus mechanism, where each cycle (24 hours) has a fixed set of validators responsible for processing transactions. In return for operating and securing the network, blockchain validators receive staking rewards in SUI tokens. The system allocates rewards for the validator’s stake, then distributes these, minus a small commission fee, to all token holders who delegated their stake to that validator. Staked tokens are locked in the system only for a specific cycle, after which token holders can withdraw their tokens or change their delegated validator.

Sui currently has only 105 validators. This makes transaction processing faster and more efficient. However, it also means it’s more centralized and more susceptible to a 51% attack than most other blockchains.

Parallel Transaction Execution

To increase scalability, Sui employs parallel transaction execution. Unlike most blockchains that execute transactions sequentially, Sui’s blockchain uses a parallel approach, theoretically capable of processing up to 297,000 transactions per second, a significant increase compared to Ethereum’s 45 transactions/second and Solana’s 65k transactions/second.

Sui categorizes transactions into two types: simple and complex.

For simple transactions, like sending tokens from one account to another, transactions can bypass the consensus protocol and are processed almost instantaneously.

For complex transactions, Sui uses Narwhal and Bullshark protocols. Narwhal, a Directed Acyclic Graph (DAG)-based mempool, separates transactions from the consensus engine Bullshark and ensures fast identification of pending transactions requiring consensus; Bullshark is used for specific transaction ordering, allowing slower validators to participate.

（L1 Scalability Comparison）

Gas Model & Storage Fees

Gas fees on the Sui network are paid in $SUI, with each interaction incurring a minimal cost, represented in the unit MIST, where 1 SUI equals 10^9 MIST. In Sui’s model, each validating node submits its minimum bid for processing transactions each epoch. Sui automatically sorts these bids and selects the price at the 2/3 position calculated by the staking ratio as the reference price. However, this reference price is not equivalent to the Gas fee; the total fee is calculated by multiplying the computational units of the transaction by the reference price, plus an additional amount covering on-chain storage costs.

Sui’s storage fee model allows validating nodes to build a fund while maintaining their infrastructure, enhancing the stability of the Sui network. The stable storage fees are 76 MIST per unit or the equivalent of 0.000000076 SUI. As part of the Gas economic model, storage fees are used for permanent payments and partially refunded when users delete data.

The storage fees contribute to a storage fund rather than being distributed directly to validating nodes. The funds validators receive from staking rewards are used to cover their costs for storing data on Sui, with the fund size reflecting the amount of data stored on the network. Governance proposals periodically set new storage fees based on various factors, adjusting the cost to update storage fees. Sui’s economic model and storage fee mechanism aim to maintain ecosystem growth, supporting the validators running the network.

Tokenomics

The total supply of Sui tokens is 10 billion, with 50% allocated to the community reserve, 20% to early contributors, 14% to investors, 10% to the Mysten Labs treasury, and 6% to the Community Access Program IEO and application testers. The tokens have four primary use cases: network staking, transaction fees, storage fees, governance voting, and as a native asset trading tool for SUI.

According to the Sui Blog, since the launch of the Sui mainnet on May 3, 2023, 179.9 million SUI have been released as staking rewards, while 9,000 SUI have been collected through on-chain transaction gas fees. Since its inception, the Sui network has paid a total of 179.9 million SUI in staking rewards to stakers, with all Sui tokens set to be fully released by 2023.

Source：https://blog.sui.io/token-release-schedule/

Ecosystem Applications

(https://twitter.com/SuiEcoNews/status/1632773800252039173)

Despite only launching a few months ago, Sui has already become quite popular, and its ecosystem continues to expand rapidly. The wallet browser extension has been downloaded over 1 million times.

In the DeFi sector of Sui, DEX Cetus is the largest protocol based on TVL. KriyaDEX, FlowX Finance, Turbos, and Aftermath are other popular liquidity DEXs on Sui. In addition to DEXs, yield projects like Mole and lending platforms such as NAVI Protocol and Scallop are leading projects in the Sui ecosystem.

In the NFT space, Wizard Land and Baby Apes Society have successfully garnered extensive community support, and Sui’s advanced features (like real-time dynamic NFT updates) have sparked a frenzy among NFT collectors since its launch. Dynamic NFTs have also driven GameFi players to join Sui, including competitive card games like Final Stardust, social farming games like Cosmocadia, and free fighting games like Rushdown Revolt.

Beyond NFTs, GameFi, and DeFi, developers are also building SocialFi projects (like Read2N, Peeranha, and ComingChat), as well as Oracles, Launchpads, Bridges, and Domains.

Although Sui’s TVL has recently shown a rapid upward trend, the scale of Sui and Aptos in the DeFi sector is still far less than other Layer 1 networks, disproportionate to their market value. However, Mysten Labs seems more interested in expanding the gaming sector empowered by Sui NFTs, leveraging its high throughput and low gas advantages. In an interview, Game Product Director Bill Allred discussed why Sui is particularly suitable for games, noting that more and more top-tier game developers are entering the Web3 space, and Sui provides them with the tools to abstract complexity for users.

(DeFiLlama L1 TVL Data)

Conclusion

Unlike Layer 1 platforms such as Solana, which focus on DeFi, Sui prioritizes providing instant transaction certainty, reducing delays in smart contract deployment, and enhancing overall transaction speed. It is committed to building a market tailored to digital art, gaming, and collectibles, showcasing its strengths and potential in this domain. Although the price of $SUI fell from its initial launch price of $1.29 to $0.43 today, as the ecosystem token of Sui, it represents an investment asset with lower risk and promising profit potential. Should the market conditions for $SUI and the development of its ecosystem proceed smoothly, the price of $SUI could potentially double. However, this requires investors to manage risks and conduct independent research when making investment decisions.