What Is Sui? Are There Any Tradeoffs to Its Fast Performance?

The blockchain hit around 42 million daily transactions on October 7, according to the blockchain explorer Artemis. These and other metrics of Sui’s performance in 2024 are worth attention.

So, we’ve pulled together an updated review of the Sui Network, the reasons behind its growth, and how it competes with other blockchains.   

Sui Network: Easy Explanation   

Like Ethereum and Solana, Sui is a Layer 1 blockchain meaning it handles all core functions, such as validating and processing transactions. 

Based on their technological design, blockchains differ in capabilities. Sui, on its official website, mentions that it provides scalable infrastructure for fast, secure, and affordable transactions.

To achieve this, the blockchain uses parallel execution, allowing multiple transactions to happen at the same time by leveraging different computing resources. This way, Sui can handle scalability issues by adding more hardware resources when demand gets high.

Parallelization speeds up transaction confirmation time, allowing the network to handle high traffic volumes. Currently, Sui is able to process 297,000 transactions per second. By this metric, it gets ahead of Solana, Ethereum, Avalanche, and many other chains.   

Reduced network congestion in turn may result in lower gas fees as there’s less pressure on the chain. Users don’t need to bid high gas fees to validators to include their transactions in a block. 

Sui Network processes around 297,000 transactions per second with an average time to finality of 400 milliseconds: Source: sui.io.

Sui uses the Move programming language, which offers developers high flexibility. The logic behind all Sui activities, including trading and gaming, is written in Move.

This language was created by Sam Blackshear, co-founder and CTO of Mysten Labs, the company behind Sui’s development.

Currently, over 40 decentralized applications (dapps) operate on Sui, including DeFi platforms like NAVI Protocol, Cetus AMM, Suilend, and Scallop Lend. Through the Sui Bridge, users can transfer assets between Sui and Ethereum.

Related Fact 1: In Japanese, “Sui” means water, and the logo of the Sui Network is a droplet. In Japanese philosophy, water symbolizes fluidity, adaptability, and purity, which in the context of the Sui Network represents liquidity, flexibility, and transparency.

Sui Consensus Mechanism  

In a blockchain, user requests are completed when network participants, known as validators, agree that those requests are valid. This process helps secure the network and prevent issues like double-spending attempts and other types of fraud. In return for the resources they provide, validators receive rewards. 

Blockchains rely on a set of rules known as consensus mechanisms to ensure participants reach an agreement. In Sui's case, the network uses the delegated proof-of-stake (DPoS) model.   

Related: Exotic consensus algorithms: PoA, DPos, and others

With the mechanism, Sui aims to simplify and speed up the transaction validation process. In this model, SUI token holders vote for a small number of delegates who are responsible for validating transactions and creating new blocks. This way, transactions take less time as a limited number of delegates achieves consensus faster. 

There are around 100 Sui validators, with each holding a specific amount of stake, according to Sui Explorer. To become a Sui Network validator, users need  to install software to process transactions and collect sufficient stake from token holders. A validator's staking pool must hold at least 30 million tokens. The more tokens a validator has, the greater their voting power.

In August 2024, Sui launched its Mysticeti consensus protocol on the mainnet to improve transaction speed and reduce hardware requirements, making the network more efficient and accessible for users.

Another distinguishing feature of Sui is that simple transactions, such as payments and asset transfers, don’t require consensus. They can be grouped together and processed in parallel in any order, making record-keeping for the entire chain unnecessary.

On the other hand, complex transactions, like requests from multisig wallets, must be validated through consensus.

Separate processes for simple and complex transactions were made possible due to Sui’s object-focused, more simply token-focused, design. In comparison to Ethereum and many other blockchains that track wallets, their balances, and transactions, Sui tracks objects like NFTs and other crypto assets.

What Is the SUI Token?  

SUI is the native cryptocurrency of the SUI network, which allows users to:

• Stake SUI to vote for validators and earn rewards. 
• Pay the gas fees required to execute and store transactions or other operations on the Sui network.
• Reward validators for their contribution to the network. This also includes paying them for the computational resources they provide to store past transactions.
• Use SUI as a means for exchange, investment, and store of value.

SUI was launched on the mainnet in May 2023 after two rounds of private sales where it raised around $336 M from investors, including Andreessen Horowitz, Binance Labs, Franklin Templeton, Electric Capital, and others.

SUI has a total supply of 10 billion tokens, 5% of which entered circulation at the time of the mainnet launch in May 2023. The remaining supply will be released gradually by 2030.

How SUI tokens are scheduled to enter circulation from April 2023 to April 2030. Source: sui.io

SUI token distribution looks as the following: 

• 50%: community reserve managed by the Sui Foundation 
• 20%: early contributors 
• 14% investors 
• 10%: Mysten Labs Treasury 
• 6%: community access program and App Testers 

At the time of writing, 2,763,841,373 SUI tokens are in circulation. SUI is among the 20 largest tokens with a market cap of over $847 million. The token hit its all-time high of $2.36 so far on October 14, 2024. Currently, it trades at around $2.23.   

Sui Founders, Mysten Labs, and the Sui Foundation   

Sui’s foundation has an interesting back story. The team behind it was formed by former Meta engineers, including some of the original creators of the Diem (formerly Libra) blockchain project and the crypto wallet Novi. Diem started in 2019 and shut down in 2022 after facing regulatory pushback. 

In 2021, a group of project members established Mysten Labs, a technology company to build a decentralized web stack, with their primary product, the Sui blockchain. 

Mysten Labs founding team includes: 

• Evan Chang: CEO, former Senior manager at Apple, Director of Engineering at Facebook, and Director at Novi 
• Sam Blackshear: CTO, Move language creator, former Principal Engineer at Diem 
• Adeniyi Abiodun: CPO, former Product Lead Novi and Head of Product at VMware Blockchain
• George Danezis: Chief Scientist, former Research Scientist at Facebook, and advisor at Privitar 
• Kostas Kryptos: Chief Cryptographer, former lead cryptographer at Meta and R3

Mysten Labs Founders and core contributors. Source: icodrops.com

In 2022, the Sui Foundation was founded to support the Sui ecosystem, promote community engagement, and facilitate the blockchain’s adoption.

Related Fact 2: Sui is not the only project that originated from Facebook’s Diem. The founders of Aptos, another Layer 1 blockchain, were also part of the project. They launched Apotos in October 2022. To learn more about the blockchain, read our Aptos overview.  

Does Sui’s High Speed Come With Tradeoffs   

There are no blockchains without tradeoffs. This phenomenon is described as a blockchain trilemma because of the challenge of reaching high speed, scalability, and decentralization without compromising any of the three.   

While Sui is one of the fastest blockchains, it has a limited number of fixed validators which makes the network more centralized compared to Ethereum and Bitcoin, for example. 

There are also concerns around SUI’s tokenomics. As we mentioned earlier, 50% of SUI’s supply is managed by the SUI Foundation, while there’s a schedule for token distribution.   

Justin Bones, the CEO of Cyber Capital criticized this design on X, saying there are no guarantees of how the founders manage the coins. Sui responded to the criticism by stating that third-party custodians safeguard the locked tokens, which cannot be moved. The team mentioned that although the Sui Foundation is the largest holder of locked tokens, these are used to support developers, advance the Move programming language, and initiate community programs such as grants, hackathons, and research.

To clarify the claims about the team controlling the staked supply, the Sui team explained that the staking rewards currently in circulation come from network fees and are returned to the community.

How Sui Competes With Solana  

Sui’s technology makes it one of the most competitive blockchains. Users and developers may choose the network for its fast speed, and flexibility. 

Sui has emerged as one of the closest competitors for the Solana blockchain due to its ability to handle a large number of transactions per second. 

In this aspect, Sui gets ahead of Solana with an estimated TPS of 297,000 compared to Solana’s 65,000. However, Solana has a more developed ecosystem with around 165 dapps operating on the chain. 

Also, it has a bigger community as a more established blockchain. Solana uses the programming language Rust, while Sui uses Move built on top of Rust. Move is a relatively new language many developers may be unfamiliar with. 

To sum up, Sui definitely stands out in the blockchain sector. It has both benefits and shortcomings compared to other chains, with the potential to stay competitive in the long run. 

Disclaimer: Please note that this article is only for educational purposes, and doesn’t include investment advice. Do your own research to decide whether to invest in SUI or any other cryptocurrencies.