Behind Sui's significant rebound: the "bloodline advantage" of the Move public chain and the promising new DeFi ecosystem

Author: Haotian

Many people are puzzled by why new public chains like Sui Network perform so well. In my opinion, the surge is just a surface phenomenon; the underlying reasons lie in the unique "hereditary advantage" of Move-based public chains and the potential for a new DeFi ecosystem to explode. Why?

Next, I will briefly analyze the advantages of Move-based public chains and explore the potential for ecological explosion on the Sui chain using two major projects in the Sui ecosystem: Dragon One Scallop and Dragon Two NAVI Protocol.

The Solidity language is the common language for building various types of smart contracts on Ethereum, with a large developer community; as a newcomer, the Move language has significant advantages in resource handling, security, and modularity, especially suitable for the financial application field.

1) The Move language introduces a resource model where each Object is treated as a unique entity, enhancing security;

2) Move provides a strict type system and ownership model, which helps in monitoring and preventing various vulnerabilities at compile time, making it particularly suitable for handling complex financial transactions;

3) Move supports highly modular and composable features, allowing developers to create interoperable modular libraries.

In summary, the Move language has strong security, scalability, and efficient state management features, making it a native underlying language suitable for DeFi financial products. This is the key reason why Move-based public chains are favored by the market in this trend, which can be described as a unique "hereditary advantage." However, whether Move-based public chains can prove their market potential depends on the strong ecosystem supporting the public chain Token SUI; otherwise, it would be a castle in the air.

Next, I selected Scallop, ranked first in TVL on the Sui ecosystem chain according to DefiLlama, and NAVI Protocol, ranked second. Let's evaluate whether the new DeFi ecosystem on Sui has the potential to explode.

Scallop

1) Innovative model: Scallop currently has a TVL of 63.5M, adopting a model that isolates asset pools and collateral pools, preventing circular borrowing and ensuring users can withdraw collateral at any time, thus enhancing security;

2) Product features: 1. Utilizing the characteristics of the SUI network, it provides users with a main account and sub-accounts for asset isolation and portfolio management; 2. Inheriting from Scallop Tool, users can conveniently complete multiple transactions in one interface; 3. The interface displays rich information and can serve professional users based on SDK.

It is worth mentioning that the account separation feature is due to SUI adopting the unique account model of the Move language, centered around Object objects. Unlike the EVM's management of "balances," Objects can manage specific entities, such as Sui fungible tokens, allowing for the management of transfers, issuance, destruction, and interaction records of Sui and all addresses in a global state. Therefore, users can set up multiple accounts to manage assets without any issues, and Sui will clearly record and manage the state of a user having multiple accounts.

3) DeFi complexity design: 1. Scallop implements a three-line dynamic interest rate model for over-collateralized lending, optimizing interest rate stability; 2. Scallop has strong composability and extensibility, allowing users to receive corresponding sCoins when executing collateral, which can then flow into yield aggregators as derivatives. Currently, multiple yield aggregators have integrated liquidity based on Scallop, such as Typus and Kai Finance; 3. Scallop adopts a decentralized security oracle mechanism, using a scalable multi-oracle consensus strategy to increase attack costs and effectively avoid price manipulation attacks, supporting multiple oracles like Pyth, Switchboard, and Supra Oracle, fully leveraging the composability of Sui Move;

To give a specific example: On Ethereum DeFi, there are numerous price manipulation attacks each year due to the depth of various AMM trading pools and oracles failing to weigh prices correctly based on time and trading volume, with many believing these are still legal and controllable arbitrage behaviors. In the Sui ecosystem, strong modularity and composability can help reduce such issues.

NAVI Protocol

1) Basic model: NAVI currently has a TVL of 54M, based on Aave V3, is a one-stop liquidity protocol that allows for circular borrowing, increasing capital efficiency, but also increasing potential risks;

2) Product features: 1. Leverage vault, automated leverage, allowing users to repeatedly borrow assets for shorting or going long, avoiding multiple repetitive operations; 2. Isolation mode, also based on the characteristics of Sui Move, new assets will be launched after governance voting approval; 3. Simple design, user-friendly for novices.

It should be noted that the ability to achieve automated leverage is also due to the characteristics of the Move language, allowing users to precisely authorize a specific Token to a smart contract without worrying about other assets being accessed illegally. Additionally, smart contracts can perform multiple repetitive operations on the borrowed Token based on set logic and rules, while managing the state in real-time, thus achieving automated leverage.

If one were to implement automation in an EVM system, an Approve operation would be required, which poses security risks. However, in Move, once the usage rights of an Object are granted, there is no need for repeated authorization for each transaction.

3) DeFi-specific features allow for low annual interest rate asset borrowing and relatively high mining returns, which actually stems from its efficient application of the native asset Token model. Users can receive discounts on borrowing fees by staking native assets. Additionally, NAVI adopts Curve's Ve model, allowing its veNAVI to play an efficient role in user voting, LP pool incentives, and more. Furthermore, NAVI uses a single oracle in its oracle design, which is efficient but carries similar risks to those in EVM environments, potentially being less effective against price manipulation compared to multi-oracle combinations.

That's all.

I have tried to illustrate the differences between a DeFi protocol in EVM environments and Move environments through two DeFi Lending products on Sui. Overall, the underlying framework of Move significantly enhances the efficient application of assets in DeFi products, user experience, and security guarantees.

However, like ZK technology, the learning curve for the Move language is also quite high. Although the language itself has advantages in security and financial complexity, it will take some time for DeFi developers on Ethereum to overcome the barriers of the Move language and introduce richer and more complex financial gameplay and experiences.