From messari by Jake Koch-Gallup

Key Insights

Primer

Sui (SUI) is a delegated proof-of-stake (DPoS) Layer-1 blockchain designed for high scalability and low-latency transactions optimized for mass adoption. Sui’s core developer Mysten Labs was created in 2021 by Evan Cheng, Sam Blackshear, Adeniyi Abiodun, Kostas Chalkias, and George Danezis. These founders previously led Meta’s Diem and Novi blockchain projects and have experience at Apple, the Alan Turing Institute, Microsoft, R3, and Oracle. Mysten Labs raised $336 million in 2021 Series A and 2022 Series B rounds and around $49 million in several 2023 public token sales (KuCoin, OKX, Bybit, and BitForex). Sui launched its mainnet in May 2023.

Sui’s technological stack features many novel aspects, including its object-centric data model, Mysticeti consensus mechanism, Sui Storage Fund, and Sui Move programming language. Sui Move builds on the original Move language created by Mysten Labs co-founder Sam Blackshear while at Novi. It offers enhanced flexibility and safety compared to other Web3 programming languages. Unlike Solidity's reliance on sequential transaction processing, which can lead to inefficiencies and higher gas fees, Sui Move's object-centric data model enables parallel transaction processing, enhancing efficiency. Additionally, five of the OWASP Top 10 vulnerabilities are not possible in Move, and three are partially mitigated.

Several other protocols and products to improve user onboarding and experience have been released on Sui, including sponsored transactions, allowing gas fees to be abstracted away from end users; zkLogin, enabling Sui users to transact using OAuth credentials; Sui Bridge, a native bridge for cross-chain interoperability; and Sui Kiosk, a decentralized system for commerce applications. Growth of the Sui ecosystem is led by the Sui Foundation, with Mysten Labs being the initial contributor to the development of the Sui blockchain protocol. For a complete primer on Sui, refer to our Initiation of Coverage report.

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Key Metrics

Financial Analysis

After the total crypto market grew 63.6% in Q1 2024, the market experienced a cooling period in Q2, decreasing 16.4%. SUI mirrored this trend, with its circulating market cap decreasing by 15.7% from Q1 to Q2. However, in September 2024, SUI broke out of this downward trend, with its circulating market cap increasing by approximately 133.3% over the course of the month. This surge can be attributed to the integration of USDC and CCTP and the launch of the Grayscale Sui Trust. By the end of Q3 2024, SUI's circulating market cap reached $4.8 billion, reflecting a 139.4% increase QoQ, ranking it 21st by market cap. While token unlocks in May 2024, which released 10.19% of the total supply, increased circulating supply and put downward pressure on SUI’s price, the price later began to align more closely with market cap growth.

Sui's fees include all gas fees generated from transactions on the network, which consist of computation costs and non-refundable storage fees. These fees are then distributed to network validators. Total quarterly fees reached an all-time high at $1.1 million (1 million SUI) in Q2 2024 due to a surge in transactions following the May 2024 token unlocks. The influx of newly unlocked tokens triggered increased trading and transfers as holders gained access to their vested assets. As activity slowed following the initial impact of the token unlocks, Sui's Q3 fees declined by 31.8% QoQ to $750,400 (789,900 SUI).

SUI has a fixed total supply of 10 billion, with 1 billion tokens set aside for staking rewards. Relative to the remaining 9 billion tokens, SUI’s annualized inflation rate from staking reward issuance was 0.44% at the end of Q3 2024. This rate is set to continue decreasing by 10% every three months until all 1 billion tokens are distributed.

Other inflationary pressures came from token supply unlocks. By the end of Q3 2024, 26.8% of SUI’s total supply was distributed, a 10.3% QoQ increase from Q2 2024 and a 117.9% increase from Q1 2024.

This increase in supply came from unlocks that occurred on:

In total, 1.45 billion SUI tokens ($2.58 billion as of 9/30/24) were unlocked in Q2 and Q3 2024, which is 14.5% of the total supply. At the end of Q3 2024, 78.8% of the eligible supply was staked, a 2.3% QoQ decrease. Note that locked tokens can still be staked and earn liquid staking rewards. Thus, the supply eligible to be staked is SUI’s total supply rather than its circulating supply. With such a high stake rate, SUI’s annualized real yield is slightly below zero, at -0.31%.

Network Analysis

Usage

Network activity, measured by daily transactions and daily active addresses, has seen a resurgence catalyzed by the major SUI token unlocks in May 2024. Average daily transactions increased by 385% QoQ to 7.1 million in Q2 2024, and then decreased by 53.6% to 3.3 million in Q3. Average daily active addresses increased by 2,126% QoQ to 490,600 in Q2, and continued rising by 31.6% to 645,500 in Q3.

In the past two quarters, the number of daily transactions peaked at 37.5 million on May 4, 2024, due to two main reasons:

The number of active addresses was at its highest several days before and after the SUI token unlock on May 30, 2024, peaking at 2.16 million on May 30. Active addresses picked up again in September when the Grayscale Sui Trust and integration of USDC and CCTP were announced.

Despite the significant increase in transactions, Sui’s average transaction fee decreased by 59.7% in Q2. While it rose by 62.9% in Q3, the average transaction fee was 0.0026 SUI ($0.0024), making millions of daily transactions viable. In addition to providing gas fees at a fraction of a penny, Sui enables dApps and other entities to abstract away gas fees from end users via sponsored transactions. In the first year since Sui went live on mainnet, peak monthly transactions sponsored via infrastructure provider Shinami’s Gas Station API reached 41 million, and peak monthly sponsorship via Shinami’s Node Service covered 87% of transactions.

In previous quarters, Sui saw an increase in the number of transactions and active addresses following Mysten Labs’ Quests (Quest 1, Quest 2, and Quest 3), and product launches such as DeepBook and zkLogin.

Security and Decentralization

Total SUI staked gradually decreased from Q1 highs of 8.3 billion (83% of total eligible supply), declining by 2.7% in Q2 and an additional 2.3% in Q3 to 7.9 billion. With SUI’s price appreciation, growth in total staked denominated in USD tells a different story, up 112% QoQ to $14 billion. As a result, Sui is the third-highest network by staked market cap.

Active validators on Sui have remained relatively steady since launch, with slight growth from 104 to 108. With the Sui Foundation and Mysten Labs holding a significant portion of the total SUI supply on behalf of the Ecosystem allocation, they can help distribute stakes equally among validators. As a result, Sui ended Q3 2024 with a Nakamoto coefficient of 16, which is above the median for a curated selection of Proof-of-Stake Networks.

Upgrades and Roadmap

Sui frequently upgrades its protocol. It entered Q2 2024 on Sui Protocol Version 41 and concluded Q3 2024 on Version 59. Notable new features include:

In early 2024, Sui announced a consensus upgrade, expanding on its Narwhal-Bullshark consensus algorithm. The Mysticeti consensus mechanism was launched on Mainnet in August 2024, reducing consensus latency by 80% to 390 milliseconds (ms) under 100,000 transactions per second (TPS) and lowering validator CPU requirements. Researchers tested Mysticeti’s throughput and latency performance with 50 validator nodes: 400 ms consensus latency at 100,000 TPS, 500 ms latency at 200,000 TPS, and 1-second latency at 400,000 TPS. Mysticeti also optimizes transaction processing by distinguishing between "owned objects" and "shared objects," minimizing cross-validator communication and maximizing network bandwidth.

In July 2024, Sui introduced the Sui Indexing Framework, providing customizable access to onchain data through a flexible data ingestion system. This framework allows developers to collect raw onchain data and derived datasets, facilitating the creation of tailored data feeds for specific applications.

Also in July, Sui announced an integration with Amazon Web Services' (AWS) Blockchain Node Runners. This collaboration simplifies deploying and managing Sui full nodes within the AWS cloud environment, utilizing AWS's high availability, scalability, and reliability.

In September 2024, Sui announced the planned integration of Circle's native USDC stablecoin and Cross-Chain Transfer Protocol (CCTP). On October 8, 2024, native USDC became available on Sui. This integration made Sui the first blockchain using the Move programming language to support native USDC. The upcoming implementation of CCTP will enable secure, permissionless USDC transfers between multiple other blockchains, including Arbitrum, Base, Ethereum, and Solana.

On the last day of Q3, Sui Bridge went live on Mainnet, bringing essential native functionality for cross-chain interoperability. At launch, Sui Bridge supported transfers between Sui and Ethereum, with more tokens, assets, and chains to come in subsequent iterations. The testnet, supported by an incentive program, processed over 184,000 transactions from 24,000 unique Ethereum addresses.

In the near future, Sui plans to partner with more protocols, fully integrate Circle’s CCTP, and continually upgrade its network. The network release schedule is planned several months ahead. Sui also intends to implement owned object unification for Mysticeti in Q4 2024.

Ecosystem Overview

DeFi

Sui's DeFi Total Value Locked (TVL) demonstrated substantial growth over the past two quarters, increasing from $592 million in Q2 to $1 billion by the end of Q3, exceeding $1 billion TVL for the first time. Additionally, when including liquid staking and double count, Sui’s DeFi TVL grew 82.5% QoQ to $1.26 billion by the end of Q3. However, when measured in SUI, TVL declined from 723 million to 555 million, suggesting that the growth in USD value was predominantly driven by the appreciation of the SUI token price. The SUI token price increased 117.1% during this period from $0.82 to $1.78. Over a longer time frame from Q1 to Q3, Sui's TVL in SUI terms increased by 50.8%, indicating underlying growth within the DeFi ecosystem.

Lending protocol NAVI ended Q3 2024 as Sui’s top protocol by TVL, with $374.7 million TVL, representing a 29.8% market share. In April 2024, NAVI launched the NAVI X Ecosystem Fund with 10 million NAVX tokens to support growth and innovation within Sui's DeFi ecosystem. In August 2024, NAVI launched NAVI Pro, which featured an improved UI, advanced DeFi strategies, and better yields. NAVI also introduced LST Leverage Strategies to maximize capital efficiency by leveraging liquid staking tokens.

Lending protocol Scallop ended Q3 with $168.8 million TVL, a 13.4% market share. In July, Scallop introduced Wrapped sCoins to improve visibility and utility across Sui wallets and platforms. Also, during Q3, Scallop surpassed $80 billion in all-time lending and borrowing volume.

Lending protocol Suilend ended Q3 with $168.5 million TVL, representing a 13.4% market share. Developed by the Solend team, Suilend marks Solend's first venture outside the Solana ecosystem. Suilend launched a points campaign to reward users for deposits, distributing 10 million points daily, recorded as non-transferable tokens on the Sui blockchain.

Sui’s average daily DEX volume decreased from Q1 2024 highs of $73.2 million by 0.8% in Q2 and then by 32.9% in Q3 to $48.7 million. Cetus and DeepBook led with $34.6 million and $16.4 million average daily DEX volume, respectively. Other top DEXs by volume included Turbos ($7.5 million), KriyaDEX ($862,500), and FlowX Finance ($623,300).

Cetus, Sui’s leading DEX, ended Q3 with $169.3 million TVL, a 13.5% market share. During Q2, Cetus surpassed 1.2 million users and recorded over $8.8 billion in total trading volume. It launched the Cetus Limit Order feature and announced the Cetus Aquarium Incubator Program in partnership with the Sui Foundation. In Q3, Cetus introduced Cetus Plus, a new Swap Aggregator on the Sui Network, enhancing the DeFi experience with improved order hopping, split capabilities, and faster swap responses. Cetus also beta-launched Cetus DCA, providing users with Dollar-Cost Averaging strategies.

DeepBook, Sui's native liquidity layer, surpassed $500 billion in cumulative volume by the end of Q3. DeepBook is integrated into numerous protocols, including Cetus, Kriya, FlowX, and Hop Aggregator. Its V2 was used by 740,000 wallets in 100 million transaction blocks. DeepBook V3 was released on October 14, 2024, introducing dynamic trading fees, improved gas efficiency, flash loans, shared liquidity across pools, and the DEEP token. By October 31, DeepBook V3 had $22.58 million in TVL and $89.23 million in cumulative volume. The DEEP token launched at an initial price of $0.0176, with a circulating supply of 2.5 billion (25% of the total supply), and by October 31, its price had increased by 204.6% to $0.0536. Active traders (market makers) can stake DEEP in individual pools to receive reduced taker fees, maker rebates, and participate in governance. The DEEP launch has boosted activity in Sui’s DeFi ecosystem, with Cetus facilitating, on average, $17.3 million in daily DEEP trading volume. As new tokens are introduced, Sui’s DeFi trading infrastructure is expected to grow alongside the expanding utility of these assets.

Bluefin, Sui’s leading perps protocol, ended Q3 with $17.2 million TVL. In July 2024, Bluefin announced the launch of its governance token, BLUE, after receiving an undisclosed amount of funding from Flow Traders.

Other notable DeFi protocols on Sui include Aftermath Finance, a DEX aggregator, liquid staking, and yield farming protocol; Haedal, a one-click liquid staking platform; and AlphaFi, a yield aggregator.

Additional DeFi-related events from Q2 2024 and Q3 2024 include the launch of Fordefi's Institutional-Grade MPC DeFi Wallet, Netki's Compliance Oracle, First Digital’s Stablecoin FDUSD, and Agora’s AUSD Stablecoin.

Consumer

Gaming

In Q2 and Q3 2024, Sui continued its expansion beyond DeFi with significant progress in consumer apps such as gaming, NFTs, and DePIN.

At Korea Blockchain Week in September 2024, Sui announced SuiPlay0X1, a handheld gaming device supporting both blockchain-native and traditional games. Set for release in early 2025, the SuiPlay0X1 features PlaytronOS, an optimized Linux-based gaming operating system that supports multiple game stores, including Steam, Epic Games Store, and GOG.com. It will have Sui’s zkLogin and Sui Kiosk SDK natively built in, enabling asset ownership directly connected to a device’s account system. Pre-orders have started at $599, with SUI, SOL, or ETH accepted as payment.

SWAYE, a game platform for Web3 games on Sui, launched its first title in May 2024. OG Battlefront, an arcade-style Telegram game, aimed to create “Web3’s most accessible game,” using account abstraction, Telegram’s API, and AI.

DARKTIMES, a blockchain-based Nordic brawler royale backed by Animoca Brands and built by Animoca’s Blowfish Studios, previewed its pre-alpha playtest at Korea Blockchain Week. It launched its TIMES token in September 2024 and plans to launch its alpha testing in November 2024.

XOCIETY, a pop shooter with RPG elements developed by NDUS Interactive, plans to launch early access in November or December 2024. Built on Unreal Engine 5, it features PvP and PvE gameplay, utilizing Sui's dynamic NFTs for in-game asset ownership.

Sui partnered with ONE Championship, the world's largest martial arts organization, integrating its technology into ONE Fight Arena. ONE Fight Arena is a Web3-enabled mobile game developed with Animoca’s Notre Game, and plans to launch in Q1 2025.

NFTs

Since launch, there has been 13.3 million SUI in total NFT trading volume, a 16.7% increase from Q1 2024. Leading marketplaces by volume include Clutchy (5.7 million SUI), TradePort (2.5 million SUI), and BlueMove (2.2 million SUI). Top NFT collections by volume include Fuddies (3.6 million SUI), SuiFrens: Bullsharks (1.9 million SUI), SuiFrens: Capys (1.4 million SUI), Prime Machin (735,000 SUI), DeSuiLabs (698,000 SUI), Gommies (539,000 SUI), Egg (392,000 SUI), and DSL Legacy (329,000 SUI).

Sui Generis, a rebranded incarnation of the Tombheads NFT auction house that migrated off the Sonic blockchain earlier this year, launched on Sui in April 2024. Sui Kiosk is used to enforce royalties, restrict trades, and create soulbound NFTs. The team also partnered with Aftermath Finance to develop fractionalized NFTs for its S1 Collection.

Artfi allows individuals to buy shares of high-end artworks by fractionalizing pieces into 10,000 NFT fractions, each uniquely numbered. Initially built on Polygon, Artfi transitioned to Sui at the end of May 2024. Artfi launched its ARTFI token on June 17, 2024, used for NFT marketplace payments and to reward stakers.

The multichain NFT marketplace and aggregator Hyperspace announced its shutdown on Solana and Sui layer-1 blockchains, effective September 17, 2024. Since its inception, Hyperspace had 1.7 million SUI in total NFT trading volume.

Other Use Cases

BytePlus, a subsidiary of TikTok’s parent company ByteDance, took its first steps into blockchain by partnering with Sui in April 2024. BytePlus will work with Mysten Labs to adapt its recommendation solutions, augmented reality products, and other services to the Sui blockchain.

3DOS, a manufacturing innovator, announced in September 2024 that it will integrate its 3D printing network with Sui. This integration enables users, 3D printers, and manufacturers to connect globally. 3DOS aims to build the world's largest peer-to-peer 3D printing network.

Atoma Network, an AI startup, announced the integration of its inference network with Sui to help developers leverage AI in their applications. Atoma offers builders access to AI services like automated code generation, workflow automation, and risk analysis for DeFi protocols.

Institutional Interest

Institutional interest in Sui grew throughout Q2 and Q3 2024. Grayscale introduced the Grayscale Sui Trust, a Sui-focused investment product for accredited investors. Following the announcement on September 11, 2024, the SUI token experienced a price gain of 89% by the end of Q3.

In June 2024, Copper, a UK-based digital asset custody and prime services provider, partnered with Sui to expand its custody capabilities. This partnership, implemented in phases, includes custody support for SUI and native Sui tokens and, in the future, staking support and DeFi connectivity.

Zero Hash, a crypto and stablecoin platform, integrated with Sui in July 2024. This enabled businesses to embed Sui tech for value transfer across fiat, crypto, and stablecoins. Institutional Zero Hash customers, including Stripe, Shift4, and Franklin Templeton, can utilize the SUI token in their operations.

Infrastructure

Mysten Labs announced the release of Walrus in June 2024, a decentralized blob storage network powered by Sui for blockchain apps and autonomous agents. Walrus aims to provide cost-effective and high-resilience data storage. Mysten Labs introduced a developer preview in July, which currently stores over 22 TB of data. Between August and October, they hosted a virtual devnet hackathon, Breaking the Ice, which gathered over 200 developers building apps on Walrus. Decrypt, a prominent Web3 media outlet, announced in September that it will store 100% of its content library on Walrus. 

In September, Mysten Labs released the Walrus Whitepaper and the following stages:

In May 2024, Mysten Labs introduced enhancements to zkLogin, Sui's social login primitive, adding multi-signature recovery and support for Apple accounts. These updates provide users with more options for account recovery and allow iOS apps to easily support Sui wallet creation. zkLogin enables users to create Sui addresses using social logins from Google, Facebook, or Apple without handling sensitive cryptographic materials.

In June 2024, Sui Name Service (SuiNS) introduced subnames and a new naming standard. The shift from the .sui suffix to an @ prefix allows users to bridge Web2 and Web3 more seamlessly, and subnames enable the creation of hierarchical identities (e.g., @gia creating gaming@gia). This update came alongside a revamped website and user experience. In August 2024, SuiNS announced its transition toward decentralization by planning a SuiNS governance token launch. The NS token is not live yet, and no official launch date has been announced. Future potential initiatives include shorter name registrations, NFT avatar generators, dynamic widgets, an auctioning system, and a fiat on-ramp.

Sui collaborated with Google Cloud to enhance security, scalability, and AI capabilities in Web3 applications. Key initiatives of this partnership include integrating Sui blockchain data into BigQuery public datasets for analytics, using Google Cloud’s generative AI platform Vertex AI to assist Web3 developers in debugging and code generation, and creating AI-based code auditing tools for security. The collaboration also leverages Google Cloud's infrastructure for scalability and integrates zkLogin to bridge traditional and decentralized applications.

Development and Growth

In Q2 2024, three projects building on Sui announced funding rounds. The rounds totaled $15.3 million raised, a 33.6% increase from Q1’s $11.5 million. In Q3, venture funding cooled, with only two projects announcing funding rounds for a total of $1 million raised. Some of these projects that raised in the past two quarters include Ambrus Studio, XOCIETY, and RECRD, with the Sui Foundation participating as an investor.

Sui Basecamp (April 2024): The largest event for the Sui community took place in Paris, drawing over 1,100 attendees from 65 countries. Over two days, the event featured 44 sessions with more than 100 speakers, focusing on Sui's growth in gaming and DeFi. Attendees participated in panel discussions, networking events, and hands-on workshops that provided insights into the future of the Sui network.

Sui Foundation Grant Recipients (March/April 2024): Ten projects received grants to accelerate Sui's growth, with eight focusing on enhancing the developer experience through better tools, such as new integrated development environment (IDE) and zero-knowledge proof technologies. Notable recipients include Alphaday, Birdeye, Spark Payments, and SWAYE.

DeFi Incubators (May 2024): Sui decentralized exchanges Cetus and Aftermath Finance launched new incubators, with initial contributions of $2 million from the Sui Foundation, to support early-stage projects. These incubators aim to foster innovation by providing resources, mentorship, and financial support to fledgling teams within the DeFi space.

Sui Academic Research Awards (June 2024): Nineteen proposals from universities like UC Berkeley, Yale, NYU, and EPFL were accepted. The proposals focus on blockchain technology, smart contract programming, and Sui-based products. The Sui Foundation committed an additional $1 million to further fund research, covering topics such as zero-knowledge proofs and consensus protocols.

Sui Overflow Hackathon (March-June 2024): Sui's first global hackathon received over 350 project submissions from 79 countries, resulting in 32 winners. Top projects include Pandora Finance (Consumer), Hop Aggregator (DeFi), and AresRPG (Gaming).

Sui Foundation Grant Recipients (May/June/July 2024): Ten projects received grants covering domains like advanced analytics, DeFi, and game development. Recipients include Belong.net, Gamifly, Goldsky, Var Meta’s Unity SDK for Sui, and Verichains' Sui Move Decompiler.

RFP Grant Recipients (July 2024): Sui's Request for Proposals (RFP) program's first cohort was announced. Selected projects include Byzantion Inc.'s minting infrastructure, HashCase's loyalty platform, and Arden Lab Inc.'s consumer engagement platform.

Sui Builder House: Singapore (September 2024): This one-day event in Singapore brought together over 600 participants from various communities and industries. It featured major announcements, networking, and discussions about the future of the Sui ecosystem.

Closing Summary

Over the past two quarters, Sui introduced significant network upgrades and expanded its ecosystem. Implementing the Mysticeti consensus mechanism reduced consensus latency by 80% to 390 milliseconds under 100,000 TPS. Sui’s cross-chain capabilities were enhanced with the launch of Sui Bridge, the integration of Circle's native USDC stablecoin, and the future integration of Circle's CCTP. Sui’s DeFi TVL increased by 42% to $1 billion, influenced by SUI's price appreciation and new features from DeFi protocols like NAVI, Scallop, and Cetus. Network activity peaked with active addresses reaching 2.16 million on May 30, 2024, coinciding with significant token unlocks.

Institutional interest has grown, as highlighted by the introduction of the Grayscale Sui Trust and partnerships with companies like Copper and Zero Hash. Projects building on Sui raised $16.3 million in Q2 and Q3 2024, a 41.7% increase over the previous two quarters. Sui continued to develop its ecosystem by collaborating with organizations like Google Cloud and launching infrastructure projects like Walrus. Sui plans to partner with more protocols, fully integrate Circle’s CCTP, and continually upgrade its network.