Solana is currently the leading alternative layer-1 network alongside Ethereum, but according to analysts from K33 Research, Sui Network could one day compete for that spot.
In a research note on September 18, K33 DeFi analyst David Zimmerman said Sui’s performance compared to Solana, coupled with its architecture and upcoming console launch, could make it a top contender among “L1 alts.”
“Solana often gets the spotlight in the L1 battle, but while SOL/ETH is up 6% since the beginning of August, SUI/SOL is up 115% in the same time period,” Zimmerman said.
While he acknowledged that much of Sui’s recent outperformance — with SUI, the network’s native coin, up 36% over the past week — may stem from “mispricing,” he asserted that SUI “definitely” possesses the necessary ingredients to support its recent price surge.
On September 17, stablecoin issuer Circle announced the upcoming launch of its native USD Coin (USDC) on the Sui network, signaling growing acceptance and support from key industry figures.
Zimmerman explained that Sui has the technical muscle needed to compete with Solana. Sui boasts a theoretical peak capacity of 297,000 transactions per second, compared to Solana's theoretical peak capacity of 65,000.
It's worth noting that there's a big difference between a network's theoretical maximum TPS and the actual TPS it can achieve, with Solana's highest “real” TPS just under 3,000 and Sui's highest TPS reaching 854 in July 2023, according to data from CoinGecko here.
“Sui has created impressive technology, arguably the most impressive in the space. However, we have yet to see it outperform Solana in real-world use cases and metrics like average daily TPS,” he said, adding that this could become a reality soon if Sui can continue to attract users and capital to its ecosystem.
Zimmerman argues that Sui is facing a major obstacle that affects long-term price behavior: token supply.
He noted that Sui is launching in May 2023, a time when tokenomics with low supply and high fully diluted value (FDV) are “extremely popular.” As a result, only 27% of Sui’s total token supply is in circulation, leaving current investors at risk of facing significant sell-offs as future token unlocks occur.
Meanwhile, 80% of Solana's total token supply is currently in circulation.
SuiPlay0x1 Game Console
Another promising product from the Sui network is the upcoming launch of a handheld gaming console called SuiPlay0x1 — developed and distributed by Mysten Labs, the main developer of Sui.
Scheduled to release next year, the console will come with a native NFT called “Eternals,” which will unlock exclusive rewards for users.
Zimmerman compared Sui's console to Solana's first mobile device, the Saga, which gave users airdrops that far exceeded the initial cost of the device.
“This is the real value of consoles for venture capitalists.”
However, Zimmerman said that while Sui may be justified in taking a rival position from Solana in the “L1” war, Ethereum is not in danger in the near term.
“Sui has a lot to offer in the L1 competitive landscape. The market still largely views L1s outside of Ethereum as ‘Ethereum competitors’ […] In a world after the US spot ETH ETF launch, we have put Ethereum in a category of its own,” he said.
Sui is a layer-1 blockchain and smart contract platform that aims to simplify and improve the creation of applications and functions in the Web3 ecosystem. Its model is based on the Move programming language and allows for parallel transaction execution.
