The Sui Narrative is Brewing

The recent performance of Solana, coupled with the focus on parallelized EVM execution with Sei and Monad, has proved the market’s desire for high-throughput blockchains. SOL led the charge over the last six months, but more recently, the brewing narrative has flowed into Sui and Sei, two of the newer blockchains built for performance.
Looking at market capitalization, Sui ranks towards the bottom of its peers. However, it stands out with a much higher FDV, with just 12% of the token supply currently circulating. There are notable token unlocks slated to occur in May of this year, roughly doubling the circulating supply to 23% of the total supply. The unlocked tokens spawn from series A and series B investors. After this unlock, it will take approximately another five years for the circulating supply to double to 46%. While the FDV is noticeably high, it is important to note that the total supply will not be circulating for many years.

Sui’s unlock is its ability to improve upon the shortcomings of its predecessors. While the preliminary technical advancements are impressive, only time and experience can prove the value in production. Fortunately, Mysten Labs focused on improving user experience, which should improve the onboarding experience. zkLogin is built into the protocol and allows users to control a Sui address using the standard OAuth login process. This means users can log in to dapps using “Sign in with Google” just as they do for many web2 applications, including the Blockworks Research site. In addition, Sui supports sponsored transactions that allow any address to fund the gas cost of a specific transaction. zkLogin combined with sponsored transactions are everything Ethereum account abstraction hopes to be, yet it is natively supported at the Sui base layer. 

Sui also executes “transaction blocks” instead of transactions, enabling users to seamlessly link together unrelated actions. For example, transaction blocks allow a user to approve the exact amount of a token for a swap and then execute the swap within a single transaction. Transaction blocks reduce the complexity of executing a similar transaction on Solana and enable use cases that are not currently possible on Ethereum, though EIP-3074 is a potential solution for Ethereum.

Sui’s biggest hurdle will be attracting a developer community around the core protocol. Solana launched in early 2021 but only recently saw its developer community hit critical mass. The network now has multiple teams building clients between the Solana Foundation, Jump, Jito, and Anza. It also has application developers detailing the inefficiencies of the current fee market implementation and suggesting a viable path forward. Solana's staying power increases as more teams invest time in improving the core protocol.  

This hurdle also exists at the app layer, given the network needs to attract builders to launch user-facing applications. Sui is object-oriented, unlike Ethereum, Ethereum L2s, and Solana, which are all account-based blockchains. The object-centric data model treats assets as individual objects and allows certain transactions that do not need to be ordered, like payments, to skip consensus. While this innovation aims to improve performance, it differs from existing L1s and may act as an initial hurdle for attracting developers.