Original Author: Grayscale Research

Key Takeaways

·Sui is a next-generation blockchain designed for scalable applications, aiming to support consumer-grade applications (among other use cases). Grayscale Research believes that Sui has an outstanding combination of technical advantages and complementary strategic approaches, positioning it to stand out in the competitive Smart Contract Platforms Crypto Sector.

·To attract billions of users, blockchain-based applications must deliver functionality on par with or stronger than current Web 2.0 applications. This requires high transaction throughput and a low barrier to entry for mainstream users. While achieving this is no easy feat, we believe Sui may have the right elements to achieve this goal.

·Founded by core members of Facebook's (now Meta) Diem blockchain project, Mysten Labs is the core development team behind Sui. Mysten Labs boasts a top-tier technical background and has taken a proactive vertical integration development approach, focusing not only on blockchain infrastructure but also on the application layer to build a complete technology stack.

·Sui's native token SUI currently has a market capitalization of around $10 billion [1]. As a project still in its early stages, Sui has only 33% of its total supply in circulation, with over 50% of the token supply expected to be released after 2030 [2].

·The SUI token provides investors with an opportunity to access early-stage next-generation blockchain, especially given its potential breakthrough in mainstream consumer applications. Grayscale offers eligible investors the opportunity to invest in Sui through the Grayscale Sui Trust.

Sui launched in 2023 and was founded by core members of the Facebook Diem project. During their time at Facebook, these team members' mission was to build a secure platform serving billions of users worldwide, in other words, they aimed for "global scale" from day one. After leaving Facebook to create Sui, they continued to build on the foundation they had established.

Sui is a next-generation blockchain with "usability" and "scalability" as its core design goals. Its vision is to provide on-chain ownership and global instant value transfer while delivering a user experience that matches or surpasses that of top Web 2.0 tech companies. Therefore, we believe that the next "breakthrough consumer-grade crypto application" is likely to emerge within the Sui ecosystem.

SUI is the native token of the Sui network and can be found in the Grayscale Smart Contract Platforms Crypto Sector. In terms of transaction fee revenue and market share, the Sui network primarily competes with high-throughput, low-cost chains such as Solana, Ethereum Layer 2, and The Open Network (TON). In this competitive landscape, not all projects can succeed. Therefore, each network needs to have differentiating features to stand out.

Grayscale Research believes that Sui may have a set of differentiating advantages, including:

· Technical Aspect: By using the Move programming language and a unique blockchain architecture, Sui has a natural advantage in scenarios such as payments and gaming;

· Team Strength: The team is from Facebook, operated by Mysten Labs, with members having deep backgrounds in product, computer science, and cryptography; backed by capital from a16z and Apollo Global;

· Strategic Path: The Mysten team is taking a coordinated approach to build a fully decentralized vertical tech stack—not only developing at the blockchain layer but also driving application-layer growth to foster ecosystem development.

Since early 2024, SUI has been one of the best-performing assets in the crypto market, outperforming Bitcoin (BTC) and its industry and major competitors: Solana (SOL), Ethereum (ETH), and Avalanche (AVAX) (see Chart 1).

Chart 1: From January 1, 2024, to July 8, 2025, SUI has been one of the best-performing assets in the crypto market

Why Sui Stands Out

Every blockchain aims to achieve "availability" and "scalability" under specific constraints. What sets Sui apart is its technological architecture, the team behind it, and its vertically integrated strategic path.

1. Technology: Blockchain Design and Programming Language

· Blockchain Design: Sui's technical architecture is designed for global-scale expansion, particularly suited for high-throughput, low-latency use cases such as payments and gaming.

· Predictable Low Transaction Fees: Low-cost and stable transaction fees help reduce user friction and optimize the user experience.

· Object-Oriented Model and Parallel Processing: Unlike other blockchains like Ethereum and Solana that are based on an account-based, globally updated smart contract ledger, Sui uses an object-oriented model. In this model, each asset is an independent object associated with a wallet, allowing for parallel transaction processing. The system only updates relevant objects rather than a globally shared state, reducing computation and increasing efficiency, thus achieving higher network scalability.

· "Fast Path" Execution Mechanism: Sui distinguishes between simple asset transfers and complex smart contract calls. Peer-to-peer simple asset transfers can be executed through a "fast path," achieving almost instant finality. This gives Sui a significant advantage in payment scenarios.

· Horizontal Scalability: Unlike most blockchains, Sui's network capacity scales linearly with computational power. Sui's validation nodes can enhance processing performance by adding servers to meet growing demands. The team has stated that an 8x increase in hardware capability results in an 8x throughput increase without added latency.

· Programming Language: Sui's Move programming language was initially developed by members of the Mysten Labs team during their time at Facebook. The Move language is a derivative of Rust, one of the world's most popular programming languages. As a high-level language, Move provides strong guarantees for smart contract development, significantly reducing the likelihood of common programming errors and vulnerabilities. In contrast, Solidity (Ethereum's programming language) lacks these built-in protections, placing a greater burden on developers to manually implement security best practices when writing smart contracts.

Due to these features, Sui has the theoretically highest throughput among the top five smart contract platforms by market capitalization, the lowest fees, and the fastest confirmation time (see Chart 2). As of July 2025, Sui slightly lags behind Solana in actual transactions per second (TPS), but this is mainly due to the level of adoption still being developed rather than the architecture's limit. Therefore, as the ecosystem further adopts, Sui's actual TPS is expected to increase.

Chart 2: Key Blockchain Metrics of the Top Five Smart Contract Platforms by Market Capitalization

II. Team: First-Class Entrepreneurs with Deep Experience

Mysten Labs has brought together award-winning technical experts in product, computer science, and cryptography, with its co-founders including:

· Evan Cheng: Mysten CEO, former Facebook/Meta Engineering Director

· Sam Blackshear: Mysten CTO, Founder of the Move language, former principal engineer at Facebook/Meta, involved in the Diem project

· Adeniyi Abiodun: Mysten Chief Product Officer, previously responsible for Facebook/Meta's cryptocurrency-related products, including Diem and Move

· George Danezis: Mysten Chief Scientist, recipient of the Computer Laboratory Ring Award

· Kostas Chalkias: Mysten Chief Cryptographer, former Chief Cryptography Expert at Facebook/Meta, three-time recipient of the Best Research Paper in Cryptography award [9]

Mysten Labs has over 100 members, with more than 75 members holding a Ph.D. [10]. In our view, what sets Mysten apart is not only their technical background but also their ability to efficiently translate technical expertise into practical products. In contrast, the core development teams of other networks often take a more academic approach.

III. Strategy: Vertical Integration Development Path

Mysten not only focuses on the blockchain infrastructure layer but also actively participates in Sui's application layer development, building products, tools, and consumer-grade applications across the entire network. This holistic strategy includes the following key components:

Walrus

Walrus is a decentralized storage solution designed for performance and cost optimization. Unlike centralized storage services like AWS, decentralized storage eliminates single points of failure, ensuring data integrity. Among many storage solutions, Walrus stands out with significant appeal. Its unique erasure coding technology significantly reduces storage costs, saving up to 80% compared to Filecoin and Arweave. [11] Walrus has been used by mainstream crypto media such as Decrypt, Unchained Podcast for content storage, and by Plume Network for storing Real World Asset (RWA) data. Walrus inherently offers scalability, supporting high-throughput data-intensive applications such as RWA datasets and large language models.

In many ways, Walrus in decentralized storage is akin to Sui in the blockchain execution layer: it eliminates friction, reduces costs, and opens up new directions for real-world applications. With the growing number of AI models, video content, off-chain proofs, and other applications on Sui, Walrus is poised to become the core data infrastructure for Sui Network's future growth.

DeepBook

DeepBook is an on-chain Central Limit Order Book (CLOB) deployed on Sui, designed for institutional-grade trading. Currently, most DeFi systems rely on automated market maker (AMM) mechanisms. In contrast, DeepBook supports more precise order control, lower slippage, and tighter spreads, catering more to the needs of professional traders and market makers. [12] As a shared liquidity layer in the Sui ecosystem, DeepBook allows multiple DeFi applications to share a unified order book, enhancing capital efficiency and reducing liquidity fragmentation.

DeepBook currently serves the first and second largest decentralized exchanges on Sui and is also adopted by multiple lending and derivatives applications. [13] As Sui is increasingly adopted by more institutions, we believe that the trading volume and user base of DeepBook will also grow in tandem, becoming a key component of Sui's on-chain financial infrastructure and a core driver of its DeFi growth.

Other Components

zkLogin: A patented technology that allows users to register with a single click using their Google or Twitch account, providing access to on-chain applications without the need for a mnemonic phrase;

SuiNS: Sui's decentralized domain name service, similar to Ethereum's ENS or GoDaddy;

Ika: An innovative network that enables direct trading of any cryptographic asset, including Bitcoin and XRP, on Sui without the need for cross-chain bridges or wrapped assets. The Ika token is scheduled to launch in mid-July;

Sui's ecosystem—including the Sui blockchain itself, zkLogin, DeepBook, Walrus, SuiNS, and Ika—form the first fully vertically integrated suite of applications in the cryptocurrency industry.

While Sui's decentralization level is slightly lower compared to other blockchains, for its target market focus (such as mainstream consumer-level applications), this may be an advantage. In the context of Sui still being in its early stages (only two years since launch), the Mysten team is actively rolling out various products covering a wide range of use cases, significantly reducing both development and user adoption barriers. This proactiveness will help accelerate adoption and further enhance ecosystem resilience.

Key Elements of Growth

Compared to mature networks like Ethereum and Solana, Sui is still in the early stages in terms of developer attraction and ecosystem maturity. However, with its strong scalability and user-centric design, under the current market capitalization of about $10 billion (only 12% of SOL, 3% of ETH), SUI has significant growth potential.

For users, Sui provides a low-threshold encrypted experience through zkLogin. In an environment where complex mnemonic phrases are still required, zkLogin allows users to access their wallet using familiar Web2 credentials like Gmail. This not only lowers the barrier to entry but also ensures privacy through encryption, ensuring that the identity provider does not know that the user is using a cryptographic wallet—a unique feature of Sui.

For developers, Sui offers a "Transaction Sponsorship" feature, which can be seen as a "User Acquisition Cost" mechanism. Developers can provide users with "gas-free" transactions, where users do not have to pay fees. By combining zkLogin with Transaction Sponsorship, a complete Web2 user experience can be achieved: users can even record on-chain interactions without opening a wallet or holding tokens.

We believe that a frictionless user registration experience, feeless application usage, intuitive interaction, along with a secure development environment, will provide a solid foundation for Sui's user and developer growth, potentially leading to network effects.

Although still in the early stages of development, Sui has demonstrated strong network growth in the first half of this year. The monthly active users (MAU) have surged from around 10 million at the beginning of the year to over 40 million (ranking second among smart contract platforms), despite a slight decline in the past few months. In addition to apps launched by Mysten Labs, the Sui ecosystem has seen widespread adoption of various third-party products, such as Recrd (a video platform for creator monetization with 490,000 daily active addresses) and Fan TV (a video sharing platform that has onboarded 5 million wallets into the crypto ecosystem). [16]

Transaction Fees and Value Accrual

In the smart contract platform space, long-term competition hinges on value accrual and the blockchain's ability to generate network fee revenue. Sui generates network revenue through transaction fees, which reward validators to accrue value, rather than burning tokens to accrue value for token holders.

Sui's transaction fees are divided into computation fees and storage fees, with the fee rates mostly pegged to the reference price determined by validation nodes every 24 hours. As a result, transaction costs remain relatively stable throughout the day, enabling a smoother and more predictable pricing mechanism. This price stability makes Sui less susceptible to gas price spikes during times of high network activity, unlike networks such as Solana and Ethereum, where fees can fluctuate significantly within a day.

Figure 3: Sui's Transaction Fees are Low and Stable

Although Ethereum and Solana are poised to achieve over $500 million and $5 billion in annualized network fee revenue in 2025, respectively, Sui's current annualized revenue is estimated to be only $15 million. [17] This indicates that Sui is still in the early stage of user monetization, partly due to its extremely low transaction fees (average fee about 1/3 of Solana and 1/150 of Ethereum). [18] Low transaction costs mean that Sui needs to significantly expand its network activity to reach a revenue level comparable to its biggest competitors. In terms of market capitalization and fee revenue comparison, SUI's valuation is currently roughly reasonable (see Figure 4).

Figure 4: Smart Contract Platform Race Market Cap vs. Fee Revenue Comparison

Token Supply Still Expanding

As a relatively early-stage project, Sui currently only has about 33% of its token supply in circulation, with over 50% of the total supply unlocking after 2030.[19] Under unchanged conditions, the token's inflation rate could put pressure on valuation, but this can be offset by the growth in network adoption.

The SUI token was issued in May 2023 with a total supply of 10 billion tokens. The initial token allocation is as follows:[20]

· 50% allocated to the community reserve managed by the Sui Foundation, including staking programs, validator node subsidies, and research and grant programs;

· 20% allocated to early contributors;

· 14% allocated to venture capital firms;

· 10% allocated to the Mysten Labs treasury;

· 6% used for community access programs and app testers;

Over the next year, SUI has an annual inflation rate of 17.4%, releasing approximately $1.7 billion worth of tokens into the market (at current prices).[21]

Risk Factors to Consider

While some Layer1 blockchains follow a path of "pure decentralization," Sui has taken a more progressive approach. Sui currently has a relatively small number of validator nodes and a high staking threshold,[22] so it slightly lags behind more mature networks like Ethereum in decentralization and censorship resistance. Instead, Sui focuses more on hardware performance and scalability.

Another factor is the strong dominance of Mysten Labs. We believe that in the short term, this is an advantage as Mysten Labs can prioritize development and swiftly deliver applications. However, if the ecosystem does not further decentralize in the long term, it may limit the scalable market of the Sui network. Furthermore, Mysten Labs' deep involvement in infrastructure and the application layer may lead to "competition squeeze" effects on other developers looking to build applications in the same sector in the short term.

Sui also faces fierce competition in the smart contract platform space. Established players like Ethereum and Solana hold a larger market share and on-chain asset size. Emerging networks like Monad offer high-throughput alternative solutions. TON, leveraging Telegram's massive user base, can distribute widely. However, we believe that Sui's technical capabilities and Mysten Labs' strategic path can achieve differentiation in specific scenarios (such as gaming, trading, and payments), providing lower-latency solutions.

Conclusion

Sui is a next-generation blockchain built for scalability and usability. Its architecture is designed to support consumer-grade applications, with low fees, nearly instant finality, and an intuitive user onboarding process — all key elements for onboarding a large number of users onto the chain. Unlike many competing networks that focus on speculative use cases or have yet to solve the throughput challenge, Sui has had mass adoption as its goal from the outset, with Mysten Labs consistently focused on driving the next "killer app." [23]

Sui currently has a market cap of 100 billion USD, with most of the token supply yet to be released, indicating that the project is still in its early stages. However, this also means that its growth potential has not been fully realized. In our view, SUI is a growth-oriented investment worth holding onto, providing a diversified investment exposure to the core proposition of "consumer-grade applications on-chain." With a strong technical foundation, a top-tier team at Mysten Labs, and a vertically integrated development strategy, Sui has a solid foundation to realize this vision.

Glossary

Central Limit Order Book (CLOB): A trading system where buyers and sellers place orders based on price and time priority to match trades, creating a transparent market order book.

Smart Contract Platform: A blockchain system that allows developers to deploy self-executing code (smart contracts), automatically enforcing rules and transactions, eliminating intermediaries.

Throughput: The total amount of transactions a system can process in a given time, commonly used to measure blockchain performance.

TPS (Transactions Per Second): A metric reflecting blockchain scalability, indicating the number of transactions the system can process per second.

Validators: Participants in the network responsible for validating and adding new transactions to the blockchain, often rewarded for this process.

Automated Market Makers (AMMs): Protocols that enable on-chain asset trading using algorithms and liquidity pools, replacing traditional order book mechanisms.

Gas Fee/Price: The cost users must pay to compensate for the computational resources required to execute transactions or smart contracts.

Token Burns: The process of permanently removing tokens from circulation, usually done to reduce supply and increase the value of remaining tokens.

Staking: Locking up tokens to support network operations (such as transaction validation), often earning rewards or returns.

Data References

[1] Source: Artemis, data as of 7/8/2025.

[2] Source: Artemis, data as of 7/8/2025.

[3] Sui's architecture separates simple object transfers—such as sending tokens—from complex transactions involving smart contract execution. This design enables faster and more scalable processing by allowing simple transfers to bypass the full consensus mechanism.

[4] Chainspect estimates finality at 2 seconds as of 7/7/2025.

[5] Crypto Slate. Sui aims to become the "Internet Coordination Layer," says Mysten Labs Co-Founder.

[6] Theoretical throughput refers to the amount of transactions per second that a particular blockchain can process at its maximum capacity.

[7] Top by market cap referring to Layer 1s with $10bn in market cap or over

[8] High-level language features include type safety, memory safety, and support for formal verification.

[9] Outliers: Kostas Chalkias, Mysten Labs: The Cryptographers of Greece and the Blockchain of the Future

[10] According to discussions with the team

[11] Hacker Noon: Can Decentralized Storage Finally Go Mainstream? Walrus.xyz on Sui Might Hold the Answer

[12] Backpack Exchange. What is DeepBook? A Decentralized Order Book for the Sui Ecosystem

[13] DeFi Llama, data as of 7/7/2025. Cetus and Bluefin, largest by 30d DEX volume.

[14] By number of developers (Electric Capital) and number of dapps (Dapp Radar). Data as of 7/7/2025.

[15] Artemis, data as of 7/8/2025.

[16] Source: FanTV Creators Reach Millions on Sui, Record numbers based on Artemis daily transacting users.

[17] Source: Artemis. Based on fee revenue from the first half of 2025.

[18] Artemis, data as of 7/7/2025. Data based on averages for the first half of 2025.

[19] Tokenomist, data as of 7/7/2025.

[20] Figment, Sui Tokenomics.

[21] Tokenomist, as of 7/7/2025.

[22] Around 117 validators as of 7/7/2025 (Suivision.xyz) and a 30 million SUI validator staking requirement

[23] The Block. Sui creator says crypto's 'ChatGPT moment' coming as protocol celebrates the mainnet's first year.

Original Article Link

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia