LD Capital: A New Public Chain with Accumulated Strength, Recent Developments of Sui

Written by: Alfred, LD Capital

I. Overview of Fundamentals

In June 2019, Facebook (now Meta) announced plans to build a permissioned blockchain and a digital wallet to support a global payment network, establishing the Libra Association (later renamed Diem) to construct the blockchain, while its subsidiary Calibra (later renamed Novi Finance) was responsible for developing the digital wallet. However, both projects ultimately did not fully materialize, and in 2022, Diem and Novi were terminated. Subsequently, two independent blockchains emerged from the research based on Diem and Novi: Aptos and Sui. Aptos inherited the legacy of Diem, iterating on the technological foundation developed for the project, while Mysten Labs created the entirely new Sui.

Sui is a brand new public chain, the first Layer 1 blockchain and smart contract platform designed from the ground up, aimed at making digital asset ownership fast, private, secure, and accessible to everyone. The name Sui is inspired by the water element in Japanese philosophy, where the power of water comes from its fluidity—able to easily adapt and change in any environment.

1. Features and Advantages of Sui

Strong scalability, fast speed, with the potential for large-scale Web3 adoption:

Sui Move programming language: Under the design of the currently mainstream Solidity language, assets are represented as a value, transferred by adding or subtracting in a wallet, rather than the actual movement of assets. Move treats assets as resources stored in modules, which are similar to smart contracts, where resources cannot be copied or deleted, only moved and stored. Resources are transparent within the contract but opaque to calls outside the contract. In simple terms, Move changes ownership by isolating assets and altering them through movement, which is also the origin of the name Move.

Sui has made new improvements on the basis of Move to form the Sui Move language, with key differences including object-centric global storage, address representation of object IDs, and objects having globally unique IDs, forming the underlying foundation for other technological innovations in Sui.

Object-centric data model:

In Sui, assets are type objects, and all objects have stable, globally unique IDs. Each object can be transferred to other objects without interacting with smart contracts and can even interact with different smart contracts running on your assets. In Sui, all transactions take objects as input and generate new or modified objects as output. By observing all active objects, the global state can be determined.

Objects are mutable assets that can own other objects, allowing developers to change, combine, and create hierarchies, which gives Sui strong composability. The composability of assets is crucial for scalability; for example, in a game, you may have assets like stones, wood, and cement, and contracts allow these assets to combine into a house. Most blockchain data models poorly model asset ownership. They have restrictions that make it difficult for stateful applications (e.g., games, social) to use them, while Sui's object-centric data model addresses these usability and programmability issues.

Dual consensus mechanism:

Sui's system design breaks through a key bottleneck in many blockchains: the need to reach global consensus on a total ordered transaction list. Given that many transactions do not compete for the same resources, this computation is wasteful. Sui achieves breakthroughs in scalability by enabling parallel protocols on causally independent transactions, categorizing transactions into complex and simple types for processing.

Complex transactions: Complex transactions involving shared objects are ordered and reach consensus through Sui's Narwhal and Bullshark protocols. The Narwhal memory pool maintains the availability of submitted transaction data and provides a structured path in the form of a directed acyclic graph (DAG) to traverse (select order) this data. Bullshark consensus reaches agreement on a specific order of these structured data by traversing a specific directed acyclic graph.

Complex transactions require five steps before reaching final confirmation.

1. Transactions are broadcast from their respective users/clients to nodes.

2. Validator nodes receive the messages and vote on the validity of the messages based on their stake size.

3. After the user/client collects a Byzantine majority vote, a record certificate is generated and broadcast back to the validators.

4. The transaction certificate is ordered through Narwhal and Bullshark so that the Byzantine-resistant majority validators agree on the ordering of the transaction data.

5. Validators respond one last time, while users collect an "impact" certificate, which is proof of state change and ensures the finality of the transaction.

Simple transactions: Simple transactions involving only non-shared objects do not require ordering through Narwhal and Bullshark. In other words, simple transactions can skip step 4 of the above transaction processing flow. Simple transactions are only constrained by a lightweight algorithm for Byzantine consensus broadcasting, which is less stringent than Byzantine consensus and more scalable. Broadcasting ensures that all nodes receive the same message from users/clients; it does not require nodes to reach consensus on the network state. Therefore, if multiple transactions are unrelated (not involving the same object), these transactions can be processed in parallel in any order, and all simple transactions bypass complex consensus.

2. Team Background

The Sui team has rich industry experience and strong technical capabilities. Evan Cheng is the co-founder and CEO of Sui/Mysten Labs, previously the head of R&D at Novi Financial. He has 10 years of development experience at Apple, followed by 2-3 years at Facebook and Novi Financial, and founded Mysten Labs in September 2021.

Sam Blackshear is the co-founder and CTO of Sui/Mysten Labs, previously the chief engineer at Novi Financial. He has 6 years of experience working on Meta's Libra/Diem and was deeply involved in the creation of the MOVE language.

3. Financing Situation

Sui has an excellent investment background, raising $36 million in Series A funding on December 6, 2021, with investors including star investment firms like A16Z and Coinbase Ventures. On September 8, 2022, it raised $300 million in Series B funding, with investment institutions including Jump Crypto, Binance Labs, and Circle Ventures.

II. Recent Ecosystem Development

Sui is one of the fastest-growing public chains in terms of TVL, nearly doubling in the past month. According to data from DefiLlama, it surpassed $175 million on December 7, exceeded $200 million on December 26, and surpassed $300 million on January 14, currently approaching $350 million.

The Sui ecosystem has transformed from initially being lackluster to now thriving, with emerging hot tracks and projects, showing good potential for ecological development:

(1) Karrier One (Depin): On January 11, 2024, the Sui Foundation established a strategic partnership and invested in Karrier One. Karrier One is a Depin project aimed at building a decentralized mobile network and telecommunications service, with the goal of creating a community-owned operator-level 5G network that offers greater accessibility, speed, cost-effectiveness, and security. Currently, NFT Minting is underway.

(2) E4C (GameFi): On January 4, 2024, E4C announced its launch on Sui, providing a mobile-native MOBA game, sustainable in-game asset ownership, and a seamless asset trading experience. The founder of E4C is Johnson Yeh, known as the godfather of esports in Asia, who has been leading Riot Games' esports business in China since 2015, making LOL the largest sports project in China. He later became the general manager of Riot Games (China, Japan, and Southeast Asia) and incubated titles like "League of Legends Mobile," "Teamfight Tactics Mobile," and "LPL Esports Manager," before bringing MOBA games into Web3 with E4C: Final Salvation.

(3) MRC20-MOVE (Smart Inscription): During the boom of the inscription market, MRC20-MOVE was issued on January 1, 2024. The concept of easily expandable, combinable, and burnable refund smart inscriptions suddenly became popular, with 10 billion $MOVE fully minted within three days, locking over 1 million SUI, with nearly 50,000 minting addresses.

(4) Solend Protocol-Suilend Protocol (Lending): A few weeks ago, Sui announced that Solana's largest lending protocol, Solend Protocol, would launch on Sui (supporting both Solana and Sui), named Suilend Protocol. The founder of Solend Protocol believes that Sui's technological foundation is very developer-friendly, with the developer experience around Move being ten times better than that of Solana.

III. Token Situation

Distribution and Unlocking

Sui has a total supply of 10 billion tokens, with 48% allocated for ecosystem reserves, 20% for private investors, 20% for the team, 9% for the foundation, and 3% for Binance Launchpool. The current circulation mainly consists of the ecosystem, foundation, and Launchpool, with a circulation rate of 11%.

The current market capitalization is $1.515 billion, with an FDV of $13.759 billion and a 24-hour trading volume of $745 million, primarily on exchanges like Binance (25.72%), Upbit (20.68%), and OKX (12.41%). In a comparison of new public chains published by LD Capital Research on January 12, titled "The Accelerated Development of Sei: The New Narrative of Parallel EVM Overlaying Active Operations," Sui's market capitalization is lower than that of Aptos and Sei, while its TVL in DeFi applications is higher than Aptos and far exceeds Sei.

SUI will unlock 66 million tokens (valued at $92.17 million) monthly in the near future, with the first large investor unlock occurring on May 3, 2024, when over 800 million tokens will be unlocked, followed by regular monthly unlocks of around 100 million tokens starting in June.

The use cases for the SUI token mainly include five categories:

(1) Native asset of the Sui platform

(2) Gas fees: Charged for all network operations, used to reward participants in the proof-of-stake mechanism and to prevent spam and denial-of-service attacks.

(3) Storage fund: The Sui storage fund is used to transfer staking rewards over time and to compensate future validators for the storage costs of previously stored on-chain data.

(4) Proof of stake: The delegated proof-of-stake mechanism is used to select, incentivize, and reward the honest behavior of Sui validators and SUI owners related to their stakes.

(5) Voting: On-chain voting is used for governance and protocol upgrades.

1. Spot and Futures Data

Since SUI was listed on May 1, 2023 (closing price of 1.2431), its price has been in a downward trend until October. Starting in November, the token price began to slowly rise, accelerating from January 8, 2024, from 0.8 to 1.2506, returning to the price level at which it was listed in 2023. Recent observations of the 15-minute line show that the price is consolidating in the range of 1.35 to 1.45, supported by the 30-day EMA, with good technical indicators, possibly further rising after consolidation.

In the one-hour spot order situation, there are relatively many buy orders around 1.35, providing some short-term support, while dense sell orders are at 1.42 and around 1.5.

In futures data, the open interest of 30-minute contracts has seen a decline from its peak, with a long-to-short ratio of 1.06, and the large holder's long-to-short ratio is 1.33. The number of active buy and sell orders has increased, but the difference in trading volume has not changed significantly, overall aligning with a state of accumulating strength.

IV. Conclusion

1. The MOVE language used by Sui has advantages such as high scalability, good programmability, fast speed, and low costs, with a thriving ecosystem and emerging hot projects. The team's technical capabilities are solid, and the investment background is good, providing a strong fundamental basis.

2. The token has not seen large unlocks in the past three months, with the first investor unlock occurring in May. Comparisons with new public chain data show advantages.

3. The token price has just returned to the listing price level from 2023, with active spot trading volume, currently in a trend of consolidation or further upward breakout.