Early Challenges for the New Sui Blockchain
Users have noticed several issues and drawbacks in the Sui network, which launched its Mainnet in early May 2023.
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According to CoinGecko, the SUI token currently ranks 75th among cryptocurrency projects with a market capitalization of $679 million. While it had a promising start and successful trading on exchanges, the project has already encountered some issues.
High transaction fees
Sui's Whitepaper suggests that the blockchain's goal is to eliminate “gas wars” (“gas” is a unit of measurement for performing transactions in some networks like Ethereum, Avalanche, and Sui). It also aims to make the network both cheap and fast by processing multiple transaction chains in parallel.
However, since the cryptocurrency's listing, fees in the network have skyrocketed, reaching as high as 8-10 SUI per transaction (roughly $10-12). These exorbitant fees make it difficult to conduct any activity on the network, particularly transactions that involve token exchange and smart contract deployment.
Maximum transaction fees on the Sui Network (https://suiscan.xyz/)
No ecosystem
As a new cryptocurrency network, Sui is still in the early stages of development. Most of its decentralized applications, lending protocols, and other dApps are currently in the testing phase and have not yet launched on the Mainnet. Consequently, these platforms do not have their own tokens and do not currently play a significant role in the DeFi ecosystem.
According to DefiLlama, there are only 4 active applications currently operating on the Sui network. These are Cetus, Turbos, KriyaDEX, and AnimeSwap, with a combined locked liquidity of $35 million. However, the majority of this amount is attributed to just one project, Cetus, which has a total value locked of $31 million.
Sui’s TVL (defillama.com)
While Sui's DeFi ecosystem is currently in its early stages, it has the potential to gradually grow and develop over time. However, at present, there are limited opportunities for users to engage with the network.
The lack of concern for their own community
The listing of SUI's cryptocurrency and the token sale were plagued by issues, particularly with regard to the team's treatment of their own community. While the team did allocate a portion of tokens for early Testnet users, ambassadors, and influencers, only those who joined the project's Discord channel before January 1, 2023, were eligible to participate in the SUI token sale.
One of the most unusual aspects of the token sale was that the project held two types of pre-sales simultaneously: Whitelist and Public Sale. Only community members who were members of the project’s Discord channel or performed certain activities (such as installing a node or conducting transactions on the Testnet) could participate in the Whitelist, with an allocation of $50. In contrast, the Public Sale was held via a lottery on the KuCoin exchange, where any user with $50 in their exchange account could purchase tokens at $1000. However, the starting price for the Public Sale was three times higher ($0.1 compared to $0.03 for Whitelist).
As a result, those who were unaware of the project until the listing were able to earn many times more than those who had actively engaged with Sui long before the token sale.
Large unlocks and the threat of a price drop
A number of cryptocurrency analysts have expressed concerns about the large volume of SUI tokens that are set to be unlocked in the future. Until September 2023, the majority of the tokens will be distributed to Public Sale participants at a monthly rate of 7%.
Sui token release schedule (https://sui.io/)
However, the situation is set to worsen considerably in the autumn. From September 1 to December 31, 2023, the token emission rate will surge from 8% to 22%, leading to the unlocking of 1.2 billion tokens ($1.55 billion) in less than a quarter. If the total value locked (TVL) remains low during this period and the Sui ecosystem fails to develop, the tokens may become functionally useless. In such a scenario, a significant proportion of the tokens could be sold, potentially having a negative impact on the asset's price within a short period of time.
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