Solana may currently be the top alternative Layer 1 network after Ethereum, but analysts at cryptocurrency research firm K33 Research speculate that Sui Network may eventually challenge that status.
David Zimmerman, a DeFi analyst at K33, said in a research note published on Wednesday that Sui’s performance relative to Solana, coupled with its architecture and upcoming game consoles, could make it a major contender among “alternative L1s.” Zimmerman said:
“Solana often steals the spotlight in the L1 battle, with SOL/ETH up 6% since opening in August, but SUI/SOL up 115% in the same period.”
While he admitted that SUI's recent outperformance - the network's native currency SUI has gained 36% in the past week - may be due to broader "price misvaluation" in the market, he said SUI "does" have the ability to support recent prices. The right factors for the rise.
Sui Blockchain aims to simplify and improve the creation of applications and functionality in the Web3 ecosystem, with a model based on the Move programming language that enables parallel transaction execution. On September 17, stablecoin issuer Circle announced the upcoming launch of its native USDC stablecoin on Sui, signaling further adoption and support for the blockchain from major industry players.
Zimmerman explained that Sui has all the necessary technical capabilities to become a competitor to Solana, with Sui theoretically capable of executing 297,000 transactions per second (TPS) compared to Solana’s 65,000 TPS. According to data from CoinGecko, Solana actually topped out at 3,000 TPS, while Sui peaked at 854 TPS in July 2023.
Source: K33 Research
"Sui has demonstrated impressive technology and is arguably the most impressive in the space," Zimmerman said. "However, we have yet to see it surpass Solana in terms of metrics such as practice and average daily TPS." He It is believed that this may happen soon if Sui can continue to attract users and funds into its ecosystem.
SuiPlay0x1 Game Console
Another major bullish factor for Sui is the upcoming launch of a handheld console called the "SuiPlay0x1", which will be developed and distributed by Mysten Labs, the main developer behind Sui, with deliveries of pre-order units set to begin in 2025. It is worth noting that this game console will also come with a native “Eternals” NFT that allows users to obtain exclusive rewards, just like Solana’s first smartphone Saga.
K33's Zimmerman compared SuiPlay0x1 to Solana's Saga, where Saga users were rewarded with airdrops that far exceeded the cost of the phone. He said that for speculators, this is where the true value of the console lies.
Source: SuiPlay0x1 Token Supply Issues
Zimmerman believes Sui does have one major obstacle that will affect long-term price trends: token supply. He noted that Sui launched in May 2023, when low-volume/high fully diluted valuation (FDV) token economics were “all over the place.”
Only 27% of Sui’s total token supply is in circulation, leaving current investors exposed to the risk of significant sell-offs that may occur when tokens are unlocked in the future. By comparison, 80% of Solana’s total supply is already in circulation.
Source: K33 Research
However, Zimmerman said that Sui can reasonably catch up with Solana in the so-called "L1 battle" and that Ethereum's position will not be threatened for the time being. Zimmerman wrote:
“Sui has great potential in the fiercely competitive L1 landscape. The market still largely regards L1 other than Ethereum as a “competitor of Ethereum”... In the post-U.S. Ethereum spot ETF world, we have placed Ethereum in its own category."
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