Black Horse Public Chain: SUI's performance tracking in the second quarter of 2024

SUI is a Layer-1 public chain created by the team members of the original Meta Diem and Novi projects (formerly the team leading the development of the Facebook Libra project). The SUI public chain was officially launched in May 2023. The core development team, Mysten Labs, raised a total of $336 million in two rounds of private investor financing in 2022, and raised approximately $54.3 million in several public offerings in 2023.

Sui has many innovations in technology: including an object-centric data model, Narwhal mempool protocol, Bullshark consensus protocol, and Sui’s native language for writing smart contracts is “Move”. Sui Move is built on the original Move language created by Sam Blackshear, co-founder of Mysten Labs during his time at Novi. Compared to other Web3 programming languages, it provides greater flexibility and security.

Sui has released a series of protocols and products, such as sponsored transactions that allow for the extraction of natural gas fees from end-users; zkLogin, which enables Sui users to transact using OAuth ports; and Sui Kiosk, a decentralized system for commercial applications. The development of the Sui ecosystem is led by the Sui Foundation, and Mysten Labs is the initial contributor to the development of the Sui blockchain protocol.

Part I**: SUI overall performance**

The overall performance of the SUI public chain in the first quarter of 2023 and the second quarter of 2024, as shown in the table below:

a. In the reporting period, SUI ranked 57th in market capitalization (a 176% increase QoQ). The Crypto market transitioned from a bear market to a bull market in Q4 2023 and maintained a growth trend in Q1 2024. SUI’s performance was remarkable, with its circulating market cap increasing by 120% QoQ in Q4 2023 and then by 176% in Q1 2024, reaching $2.3 billion. Its growth rate exceeded that of similar tokens, and its market cap ranking rose from 81st to 57th in the past two quarters. Due to a larger number of tokens being unlocked, the price increase of SUI was lower than the increase in its market cap, but it still rose by 292% in the past two quarters.

SUI’s revenue was $807,000 in 2023-Q4, which was a quarterly high, but decreased by 35% to $774,000 in 2024-Q1. SUI’s revenue indicator counts the total fees of all protocols, and then SUI distributes on-chain revenue to its validation nodes.

b. The current total supply of SUI tokens is 10 billion, with 1 billion tokens allocated for participation rewards. As for the remaining 9 billion tokens, the annual inflation rate of SUI is 3.2%, mainly used for equity rewards (as of 2024-Q1).

c. About the unlocking situation of SUI genesis supply:

1. The unlock amount of private investors accounts for 68% of the total unlock amount in Q4, amounting to 1.4 billion US dollars; although FTX is the initial investor of SUI, Mysten Labs completed the repurchase of FTX’s initial tokens and acquired all SUI tokens held by FTX for 96 million US dollars in the first quarter of 2024;

2. The proportion of tokens unlocked in the SUI ecosystem is 15%, which is $309 million, mainly used for on-chain activity rewards.

3. The proportion of tokens unlocked by the development team is 11%, with a total amount of 239 million.

4. 6% of the tokens unlocked for public sale, amounting to $130 million, will be distributed by May 2024.

Part II: Analysis of the SUI Ecological Network

The development of the SUI ecosystem network in the first quarter of 2023 and the second quarter of 2024 is shown in the following table:

Part III**: Usage of Public Chains**

Network activity measured by trading and active addresses has decreased since the quarterly high in Q3 2023. The average daily trading volume decreased by 73% to 2.3 million transactions in Q4 and continued to decrease by 35% to 1.5 million transactions in Q1 2024.

b. The number of daily active addresses decreased by 44% to 66,000 in Q3 2023, and then continued to decline by 66% to 22,000 in Q1 2024. In the past six months, the number of daily active addresses reached its peak from the end of October to the beginning of November 2023, with November 5, 2023 being the historical peak, with 453,000 daily active addresses. During October 12 to November 9 in Q4 2023, Mysten Labs’ Quest 3 encouraged players to participate in selected game projects, greatly boosting the increase in daily active addresses.

c. It is worth mentioning that, despite the decrease in trading volume, the average money laundering of SUI has increased, with a rise of 275% in 2023-Q4 and a rise of 2.1% in 2024-Q1. However, with an average money laundering of 0.0038 SUI in 2024-Q1, SUI transactions are still relatively cheap compared to other public chains, at 0.0056 USD.

Part IV: Decentralization and Security

The staking amount of SUI continues to rise, reaching $8.3 billion in Q1 2024, a 1.2% increase from the previous quarter. With the pump in SUI price, the total staked amount in USD has reached an impressive $15.6 billion, a rise of 135%. Based on the market capitalization of staking, SUI is the third-ranked token.

The feature of SUI is frequent protocol upgrades. In January this year, the Sui Foundation published a blog post focusing on other upgrades and expansions planned for Sui Move in 2024. At the end of March, Mysten Labs announced a new execution scaling solution called Pilotfish. Pilotfish assigns execution tasks to multiple machines for a single validator. In a test environment, Pilotfish achieved 8 times the throughput with only 1 execution worker using 8 execution workers. This work demonstrates linear scalability, with increased latency limited to tens of milliseconds. Pilotfish is still undergoing testing and design iterations.

At the end of June 2024, the Sui Foundation announced the upcoming consensus upgrade of Sui, Mysticeti. Mysticeti is based on Sui’s current Narwhal-Bullshark protocol, aiming to further reduce latency and validator CPU requirements. Mysticeti is expected to go live on the Mainnet this summer.

Part V: SUI Ecosystem

Part VI: DEFI Projects

a. Sui’s DeFi TVL has grown strongly in the past two quarters, increasing from $50 million at the end of Q3 2023 to $787 million at the end of Q1 2024. In terms of SUI valuation, the lock-up amount has increased from $105 million to $418 million, indicating that the increase is not solely due to the appreciation of SUI’s price.

b. The lending agreement NAVI is the number one protocol for TVL, worth $195 million, with a market share of 25%. When NAVI launched its point plan on December 27, its market share was slightly less than 21%. At the end of January, NAVI announced the completion of a $2 million financing led by OKX Ventures, dao5, and Hashed. Shortly afterwards, it launched the token NAVX, which had a market capitalization of $35 million at the end of June 2024.

c. The first quarter net revenue of Scallop’s borrowing/lending protocol was $162 million, with a market share of 21%. Scallop launched a points program on January 1st. After announcing a $3 million financing led by CMS and 6MV, Scallop launched its native token SCA, which had a market capitalization of $30 million at the end of June 2024.

d. Cetus is the main DEX of SUI, with a TVL of $116 million or 15% market share. Cetus features CLMM-based swap trading, with an average daily trading volume of $37 million in the first quarter of 2024. At the end of February, Cetus announced a strategic investment from the SUI Foundation. It launched the Cetus vault in mid-March to assist users in automatically managing liquidity positions.

At the end of March 2024, Cetus released the frontend of DeepBook. DeepBook is an on-chain order protocol built into Sui’s codebase. The daily average trading volume of DeepBook in the first quarter of 2024 was $26 million. At the end of March 2024, it announced its native token DEEP. It also airdropped a soul-bound NFT to users, who will be able to unlock the NFT and receive tokens when it launches. The initial airdrop received 10% allocation, with 31% allocated to the team and investors, and the remaining 59% reserved for future grants, community projects, and initiatives.

e. TVL on Sui’s other top DeFi protocols include: Aftermath Finance, which features a DEX aggregator, liquidity staking protocol, and yield farming; spot and perps DEX protocol KriyaDEX; borrow/lend protocol Suilend. Suilend and Solana’s Solend are developed by the same team. It was launched in mid-March after NFT airdrop testing in mid-February 2024.

f. In order to incentivize TVL growth, many DeFi protocols have been using a two-week cycle to boost yield through additional SUI rewards. For example, at the end of March, 10 protocols announced a distribution of over 4.6 million SUI (8.7 million USD) as a reward over the next two weeks. As a result, the yield of SUI is significantly higher than that of other companies in the industry. The USDC lending yields of NAVI and Scallop are maintained at 20-30%, 3-4 times higher than the median stable yield of other popular networks.

Part VII: SUI**'s Network Scalability**

After experiencing a downturn in the bear market, the Sui project’s financing activities began to increase. In the first quarter of 2024, five major projects built on Sui announced financing. The total amount of these rounds of financing was $11.3 million, 31% higher than the total financing of the Sui project for the entire year of 2023. The Sui Foundation and other organizations will continue this trend through developer resources, infrastructure development, grants, hackathons, accelerators, and other initiatives.

b. In terms of infrastructure, some protocols have been developed to simplify user login and experience. It is worth noting that the SUI Foundation released zkLogin in September 2023. zkLogin allows Sui users to transact using OAuth credentials, including Google, Facebook, Twitch, Apple, and Kakao. The user’s OAuth credentials are combined with random data (called Salt) to generate zero-knowledge proofs. This ensures that users can be verified using their OAuth credentials without leaking them on-chain. Many wallets and other infrastructure providers have already integrated zkLogin.

In November 2023, Mysten Labs launched another zk-related feature called zkSend, which allows users to send and receive SUI tokens through shared links. zkSend also integrates zkLogin.

Other infrastructure-related developments in the fourth quarter of 2023 and the first quarter of 2024 include: Tencent Cloud’s RPC service launch, verified builds in Sui Explorer, migration to a new GraphQL RPC service, Sui Move GPT, partnerships with auditors OtterSec and Zellic, MPCVault’s Sui integration, oracle Stork’s Sui integration, Inspect’s Sui integration, MSafe’s Object Transfer feature, World Store’s Sui integration, partnership with ZettaBlock, Atomic Wallet’s Sui integration, Hello Moon’s Sui support, ChainIDE grant recipient, and Sui MetaMask Snaps’ Sui Kiosk integration.

Part VIII: Summary

The encrypted market rebounded in the fourth quarter of 2023 and the first quarter of 2024, and Sui was no exception. Its market capitalization has grown by 508% in the past two quarters, reaching $2.3 billion. Its growth rate has exceeded that of similar tokens, and during this period, SUI’s market capitalization has risen from 81 to 57. In less than a year since its launch, Sui has become the most active network in DeFi. Its TVL has grown by 1459% in the past two quarters, reaching $787 million, ranking 12th in all ecosystems. Its average daily DEX trading volume has grown even more, increasing by 3689% to reach $78 million.

In the past two quarters, during the online game mission quest 3 of Mysten Labs, the network usage of Sui reached a peak of 453,000 daily active addresses. Apart from this period, Sui averaged 24,000 active addresses per day in the fourth quarter of 2023 and the first quarter of 2024, with 1.8 million transactions per day. The upcoming upgrade will bring further expansion improvements to the network. At the end of March, Mysten Labs introduced Pilotfish, a new execution scaling solution that can allocate execution work for individual validators across multiple machines. After the end of the second quarter of 2024, the Sui Foundation announced Mysticeti, a consensus upgrade planned for this summer.