Sui is a Layer-1 public chain created by team members of the original Meta Diem and Novi projects (the team that originally led the development of the Facebook Libra project). The SUI public chain was officially launched in May 2023. The core development team Mysten Labs raised a total of US$336 million in two rounds of private investor financing in 2022, and again raised approximately US$54.3 million in several public offerings in 2023.
Sui has many technical innovations: including an object-centric data model, Narwhal mempool protocol, Bullshark consensus protocol, and the programming language of Sui public chain is "Move". Sui Move is built on the original Move language created by Mysten Labs co-founder Sam Blackshear in Novi, and it provides greater flexibility and security than other Web3 programming languages.
Sui has released a series of protocols and products, such as sponsored transactions, which allows gas fees to be extracted from end users; zkLogin, which enables Sui users to conduct transactions using OAuth endpoints; and Sui Kiosk, a decentralized system for commercial applications. The development of the Sui ecosystem is led by the Sui Foundation, and Mysten Labs is the initial contributor to the development of the Sui blockchain protocol.
Part I: SUI overall performance
The overall performance of the SUI public chain for the first quarter of 2023 and the second quarter of 2024 is shown in the following table:
a. SUI ranked 57th in market capitalization during the reporting period (up 176% QoQ). The Crypto market turned from a bear market to a bull market in Q4 2023, and maintained its growth momentum in Q1 2024. SUI's performance was such that SUI's circulating market capitalization increased by 120% QoQ in Q4 2023, and then increased by 176% in Q1 2024 to $2.3 billion. Its growth rate exceeded that of tokens with similar market capitalizations, and in the past two quarters, its market capitalization ranking rose from 81st to 57th. Due to the large number of tokens unlocked, SUI's price increase was lower than its market capitalization increase, but it still rose by 292% in the past two quarters.
a. SUI's revenue was $807,000 in 2023-Q4, a quarterly high, but fell 35% quarter-on-quarter to $774,000 in 2024-Q1. SUI's revenue indicator counts the sum of all protocol fees, and then SUI distributes the revenue on the chain to its verification nodes.
b. The current total amount of SUI tokens is 10 billion, of which 1 billion tokens are used for participation rewards. For the remaining 90 tokens, the annualized inflation rate of SUI is 3.2%, which is mainly used for equity rewards (until 2024-Q1).
c. About the unlocking status of SUI genesis supply:
1) The amount of unlocking by private investors accounted for 68% of the total unlocking in Q4, amounting to US$1.4 billion. Although FTX was the initial investor of SUI, Mysten Labs completed the repurchase of FTX's initial tokens in the first quarter of 2024 and acquired all SUI tokens held by FTX for US$96 million.
2) The tokens unlocked by the SUI ecosystem account for 15%, which is 309 million US dollars, and are mainly used for rewards for on-chain activities.
3) The development team unlocked 11% of the tokens, amounting to 239 million
4) 6% of the tokens will be unlocked in the public sale, amounting to US$130 million. These tokens will be distributed in May 2024.
Part II: Analysis of SUI Ecological Network
The development of the SUI ecological network in the first quarter of 2023 and the second quarter of 2024 is shown in the following table:
Part III: Public chain usage
a. Network activity, as measured by transactions and active addresses, has declined since its quarterly high in Q3 2023. Average daily transactions fell 73% quarter-over-quarter to 2.3 million in Q4, then continued to fall 35% to 1.5 million in Q1 2024.
b. Daily active addresses fell 44% to 66,000 in Q3 2023, and then continued to fall 66% to 22,000 in Q1 2024. In the past six months, the number of daily active addresses peaked in late October and early November 2023, with a historical peak of 453,000 daily active addresses on November 5, 2023. In Q4 2023, Mysten Labs' "Quest 3" encouraged players to participate in selected game projects from October 12 to November 9, which greatly promoted the increase in daily active addresses.
c. It is worth mentioning that despite the decrease in transaction volume, the average transaction fee of SUI has increased, increasing by 275% in 2023-Q4 and 2.1% in 2024-Q1. However, with an average transaction fee of 0.0038 SUI in 2024-Q1, SUI transactions are still very cheap compared to other public chains, at $0.0056.
Part IV: Decentralization and Security
The amount of SUI pledged continues to increase, reaching $8.3 billion in Q1 2024, a 1.2% increase from the previous quarter. As the price of SUI rises, the total amount of pledged in US dollars has reached $15.6 billion, an increase of 135%. SUI is the third-ranked token in terms of pledged market value.
SUI is characterized by frequent protocol upgrades. In January, the Sui Foundation published a blog post highlighting additional upgrades and expansions planned for Sui Move in 2024. At the end of March, Mysten Labs announced a new execution scaling solution, Pilotfish. Pilotfish distributes execution work across multiple machines for a single validator. In a test environment, Pilotfish achieved 8x throughput using 8 execution workers compared to only 1 execution worker. The work demonstrated linear scaling with increased latency limited to tens of milliseconds. Pilotfish is still undergoing testing and design iterations.
At the end of June 2024, the Sui Foundation announced Sui's upcoming consensus upgrade, Mysticeti. Mysticeti is based on Sui's current Narwhal-Bullshark protocol to further reduce latency and validator CPU requirements. Mysticeti is expected to land on the mainnet this summer.
Part V: SUI Ecosystem
Part VI: DEFI Project
a. Sui's DeFi TVL has grown strongly in the past two quarters, from $50 million at the end of the third quarter of 2023 to $787 million at the end of the first quarter of 2024. In terms of SUI, the locked amount increased from 105 million to 418 million, indicating that the increase is not only due to the appreciation of the SUI coin price.
b. Borrowing/lending protocol NAVI is the top protocol by TVL, with $195 million and a 25% market share. When NAVI launched its points program on December 27, its market share was just under 21%. At the end of January, NAVI announced the completion of a $2 million financing led by OKX Ventures, dao5, and Hashed. Soon after, it launched its token NAVX, which had a market cap of $35 million at the end of June 2024.
c. Borrowing/lending protocol Scallop had a net revenue of $162 million in the first quarter, with a market share of 21%. Scallop launched its points program on January 1. After announcing a $3 million financing led by CMS and 6MV, Scallop launched its native token SCA, which has a market value of $30 million at the end of June 2024.
d. Cetus is Sui’s main DEX, with $116 million TVL or 15% market share. Cetus features CLMM-based swaps, with an average daily volume of $37 million in Q1 2024. At the end of February, Cetus announced a strategic investment from the SUI Foundation. It launched Cetus vault in mid-March to help users automatically manage liquidity positions.
At the end of March 2024, Cetus released the frontend of DeepBook. DeepBook is an on-chain order book protocol built into Sui's codebase. DeepBook had an average daily trading volume of $26 million in the first quarter of 2024. At the end of March 2024, it announced its own native token DEEP. It also airdropped a soul-bound NFT to users, who will be able to open the NFT and receive tokens when it launches. The initial airdrop received a 10% allocation, of which 31% was allocated to the team and investors, and the remaining 59% was used for future grants, community projects, and initiatives.
e. Other top DeFi protocols on Sui by TVL include: Aftermath Finance, which features a DEX aggregator, liquidity staking protocol, and yield farming; spot and perps DEX protocol KriyaDEX; borrow/lend protocol Suilend. Suilend was developed by the same team as Solana’s Solend. It was launched in mid-March after being tested through an NFT airdrop in mid-February 2024.
f. To incentivize TVL growth, many DeFi protocols have been increasing yields through additional SUI rewards on a two-week cycle. For example, at the end of March, 10 protocols announced the distribution of more than 4.6 million SUI ($8.7 million) as rewards over the next two weeks. As a result, Sui's yields are significantly higher than other companies in the industry. NAVI and Scallop's USDC loan yields are maintained at 20-30%, which is 3-4 times higher than the median stable yield of other popular networks.
Part VII: SUI's Network Growth
a. After a lull during the bear market, Sui project funding activity is starting to pick up. In the first quarter of 2024, five projects primarily building on Sui announced funding. These rounds totaled $11.3 million, 31% higher than Sui project funding in all of 2023. The Sui Foundation and other organizations will continue this trend with developer resources and infrastructure, as well as grants, hackathons, accelerators, and other initiatives.
b. In terms of infrastructure, several protocols have been developed to simplify user login and experience. Notably, the SUI Foundation released zkLogin in September 2023. zkLogin allows Sui users to use OAuth credentials for transactions, including Google, Facebook, Twitch, Apple, and Kakao. The user's OAuth credentials are combined with random data (called Salt) to generate a zero-knowledge proof. This ensures that users can be verified by their OAuth credentials without leaking them on the chain. Many wallets and other infrastructure providers have integrated zkLogin.
c. In November 2023, Mysten Labs launched another zk-related feature - zkSend. zkSend allows users to send and receive SUI tokens through shared links. zkSend also integrates zkLogin.
d. Other infrastructure-related developments in the fourth quarter of 2023 and the first quarter of 2024 include: Tencent Cloud’s RPC service launch, verified builds in Sui Explorer, migration to a new GraphQL RPC service, Sui Move GPT, partnerships with auditors OtterSec and Zellic, MPCVault’s Sui integration, oracle Stork’s Sui integration, Inspect’s Sui integration, MSafe’s Object Transfer feature, World Store’s Sui integration, partnership with ZettaBlock, Atomic Wallet’s Sui integration, Hello Moon’s Sui support, ChainIDE grant recipient, and Sui MetaMask Snaps’ Sui Kiosk integration.
Part VIII: Conclusion
The crypto market rebounded in Q4 2023 and Q1 2024, and Sui was no exception. Its market cap grew 508% over the past two quarters to $2.3 billion. Its growth outpaced similarly valued tokens, with Sui rising from 81st to 57th in market cap ranking during this period. In less than a year since its launch, Sui has become the most active network in DeFi. Its TVL grew 1,459% over the past two quarters to $787 million, ranking 12th among all ecosystems. Its average daily DEX volume grew even more, up 3,689% to $78 million.
Over the past two quarters, Sui’s network usage peaked at 453,000 daily active addresses during Quest 3, an online game by Mysten Labs. Excluding this period, Sui averaged 24,000 daily active addresses and 1.8 million transactions per day in Q4 2023 and Q1 2024. Upcoming upgrades will bring further scaling improvements to the network. At the end of March, Mysten Labs launched Pilotfish, a new execution scaling solution that distributes execution work across multiple machines for a single validator. After the end of Q2 2024, the Sui Foundation announced Mysticeti, a consensus upgrade planned for this summer.