As we closed December 2023, the Sui network's TVL exceeded $200 million, marking a substantial leap from its $35 million valuation just three months prior. Let’s unpack the reasons behind this surge and speculate on what 2024 might hold for this project.
The most striking aspect is the 800% increase in the volume of funds locked in the Sui blockchain in this period, in contrast to a 250% rise in its native token's price. This trend indicates that the project's ecosystem is expanding more rapidly than the value of the coin, potentially signaling a shift in market perception.
However, there are several drawbacks impacting both the network and the Sui token:
Sui Ecosystem
Data from DeFiLlama reveals that the Sui blockchain is home to around twenty decentralized applications. These range from DEXs to liquid staking platforms, yield aggregators, and trading and options apps.
The most significant platforms on the Sui blockchain, each with a TVL of over $20 million, are:
- Cetus;
- Scallop Lend;
- DeepBook;
- NAVI Protocol;
- Aftermath Finance.
Sui Ecosystem. Source: defillama.com
Overall, the network has locked in $205 million, exceeding the TVLs of other notable blockchains like Arbitrum Nova, zkSync Era, Celo, Aptos, Near, and Algorand. This positions Sui as the 18th largest cryptocurrency network in terms of TVL.
Sui Network's TVL. Source: defillama.com
Bitcoin and Aptos: Driving Forces Behind Sui's Surge?
In exploring the reasons behind Sui network's remarkable TVL surge, several factors stand out:
- The cryptocurrency market's overall positive momentum.
- Bitcoin's bullish trend.
- Dedicated support from the Sui network team and developers, marked by ongoing initiatives like campaigns, quests, and various activities.
- A lack of significant token releases.
Token releases for investors and early contributors in Sui's ecosystem were rescheduled for May 2024. This deferral reduced the asset's availability, effectively boosting demand.
SUI Unlock Schedule. Source: cryptorank.io
The Aptos network, with its APT token, also demonstrated notable growth in the October-December period, recording a 120% increase. How does this relate to Sui's growth? Both Aptos and Sui are unique in being the only crypto networks built on the Move programming language.
This shared architectural base leads to a strong correlation between their TVLs and token prices.
APT and SUI Price Correlation. Source: tradingview.com
On-Chain Analysis of the Network
A comprehensive look at Sui's blockchain data sheds light on what's fueling its user activity. The overall number of transactions reveals a wave-like growth pattern, with significant spikes on December 17 and 24, exceeding 1 million transactions per day:
Transaction Dynamics in the Sui Network. Source: suiscan.xyz
The pattern for active accounts is notably varied. The most interaction occurred on November 5, December 3, and December 15:
Active Account Numbers in the Sui Network. Source: suiscan.xyz
The trend for new Sui users echoes this pattern:
New Account Figures in the Sui Network. Source: suiscan.xyz
A steadily rising trend is observed in the deployment of smart contracts. In December, the network saw an 88% increase in token creation and a 60% rise in NFT minting:
Growth in New Tokens and NFTs in the Sui Network. Source: suiscan.xyz
These insights suggest that the TVL's robust growth stems not from new investors but predominantly from targeted activities within the network and developers introducing new coins, injecting liquidity for trading facilitation.
The Pros and Cons of Sui
Key Advantages of the Sui network:
- Low transaction fees and swift transaction speeds.
- Simplified creation of custom products, including fungible tokens and NFTs.
- With a project capitalization of $800 million, there's a strong potential for growth in TVL.
- Every month, up to 60 million SUI are released into the market from Stake Subsidies, the Community Access Program, Community Reserves, and the Mysten Labs Treasury. These coins could potentially be sold, negatively impacting the price;
- The growth rate of new Sui users is relatively slow;
- High dependence on the market dynamics of BTC and Aptos;
- Signs of overvaluation of the project compared to its TVL metrics.
Will SUI Continue to Rise?
The trajectory for SUI's price growth seems closely tied to the broader trends of the crypto market. Should Bitcoin maintain a stable, sideways trading pattern, SUI could potentially reach a valuation between $1.0 and $1.2.
Conversely, a downward correction in the market, especially a sharp drop in Bitcoin's price, could erase SUI's gains from the past three months.
