Is Sui Token a Good Investment? A Comprehensive Review

Sui is a L1 object-oriented blockchain that facilitates the deployment of smart contracts within its network utilizing a Delegated Proof-of-Stake (DPoS) consensus mechanism. It is built using a modified version of the Move programming language, which was based on the Rust language, a characteristic of the Solana platform.

Much like with Aptos, Sui is linked to a previous project of Facebook (now Meta) known as Libra (later renamed Diem). Libra did not succeed due to regulatory pressures and eventually shuttered in January 2022. Consequently, some members of this team decided to embark on their own ventures and established Mysten Labs in 2021, which is responsible for creating Sui. Its key figures include Evan Cheng (CEO), Adeni Abiodun, Sam Blackshear, George Danezis, and Kostas Chalkias.

The project raised $36 million in 2021 from various venture funds, with Anderssen Horowitz (a16z) leading the charge. In 2022, it garnered an additional $300 million from prominent investors, including FTX Ventures, Binance Labs, Circle, Coinbase Ventures, Jump Crypto, and once again, a16z.

During the spring of 2023, SUI tokens underwent an Initial Exchange Offering (IEO) on multiple centralized exchanges, resulting in a successful fundraising of nearly $50 million.

Currently, the Sui blockchain has 2000 nodes and 100 validators, who, along with their delegates, earn an annual return of 8% (more details on this in the SUI Tokenomics section). In the event of poor validator performance, their reward decreases.

The consensus mechanism utilized by the Sui network is touted to be capable of processing 300,000 transactions per second, although the actual figure remains unknown. The network's high speed is achieved through the parallel processing of simple transactions (which do not require consensus) and object orientation.

Unlike most blockchains (like Ethereum) that are account-oriented (cryptowallets), Sui tracks what objects (tokens) do. This means you do not need to interact with a smart contract every time you move tokens or NFTs.

SUI is the native token of the eponymous network, ensuring its operation. It is necessary for validators to create nodes, and for users to pay transaction fees. Additionally, in the future, SUI will allow its holders to participate in the project's governance.

Validators require a minimum stake of 30 million SUI to participate in the network's defense. However, validators can also accept tokens from delegates, who will also receive their reward for staking.

SUI has a maximum supply of 10 billion tokens, which is allocated as follows: 50% for the Sui Foundation treasury, 20% for early contributors, 14% for investors, 10% for Mysten Labs, 6% for the Community Access Program and application testers.

As the founders themselves indicate, the Sui project is primarily geared towards the Asian market. This may be due to the regulatory landscape in the United States, which led to the closure of Libra (Diem), although the future may hold changes.

At present, we observe that Sui's competitor, Aptos, is faring better, as its token (APT) has been listed on the largest American exchange, Coinbase. This is likely due to the method of distributing APT via airdrop, rather than conducting an IEO as Sui did. Token sales through ICOs or IEOs often draw the keen attention of the SEC.

Upon viewing various interviews with the founders, it becomes clear that the project intends to cover a wide range of areas, including DeFi, NFTs, and gaming. At the time of writing, Sui has not achieved significant results in any of these areas. The ecosystem is currently small, and there is not much activity observed in the blockchain. However, this indicates room for growth and development, especially considering that the project launched during a less than ideal period in the cryptocurrency market.

Potential investors should be aware that a large number of tokens are expected to be unlocked in November 2023 and May 2024, which could exert significant pressure on the price of SUI. It should be noted that investors and other fortunate individuals who were able to secure an allocation at the IEO purchased tokens at prices of $0.03 and $0.10.