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Hello readers,
Today, we’re initiating coverage on SUI — an L1 that launched in May of 2023 as a high-throughput chain designed to compete with Solana. After reaching a fully diluted value of $40b in 2025, the SUI token is now down 73%.
Is it over for SUI? Or are we setting up for a fantastic buying opportunity?
We explore that question in this week’s edition of The Watch List.
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Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.
Let’s go.
The SUI founding team all came from Facebook/Meta as the SUI Network was spun out of Diem — a blockchain network that Facebook launched in June of 2019 (previously Libra).
Evan Cheng: Co-Founder & CEO. Evan leads the overall strategy and vision for SUI. Past: Head of Research and Development at Novi (Meta’s crypto division), as well as technical roles at Meta and Apple.
Sam Blackshear: Co-Founder & CTO. Sam is the creator of the MOVE programming language, which is used in SUI smart contracts. Past: Principal Engineer at Meta.
Adeniyi Abiodun: Co-Founder & Chief Product Officer. Adeniyi oversees product development at SUI. Past: Product Lead at Novi (Meta’s crypto division).
Kostas Danezis: Co-Founder & Chief Cryptographer. Kostas leads SUI’s cryptography efforts. Past: Lead Cryptographer at Meta.
George Danezis: Co-Founder & Chief Scientist. George focuses on research efforts at SUI. Past: Research Scientist at Facebook.
Technically competent, distinguished leadership team that has worked together for a long time.
Low profile (for crypto).
The core team behind SUI development is at Mysten Labs, based in Palo Alto, California.
Per LinkedIn, Mysten Labs currently has 203 employees.
The SUI Foundation is a separate entity focused on network growth through ecosystem grants, adoption, and building the SUI community. The SUI Foundation is registered in the Cayman Islands and has 217 associated members per LinkedIn.
Per Electric Capital’s developer report, SUI currently has:
954 monthly active developers. This is down from a peak of 1,896 in June of ‘25 (a 50% decline).
455 single-chain developers (focused purely on SUI). This is down from a peak of 1,156 in June of ‘25 (a 60% decline).
291 full-time developers. This ranks SUI as the #10 crypto network for full-time devs.
For reference, Solana currently has 4,250 monthly active developers, with 2,171 focused purely on Solana (down 55% from a peak in June ‘25), and 1,172 full-time devs.
Ethereum has 10,897 monthly active developers, with 5,148 focused purely on Ethereum (down 50% from a peak in June ‘25), and 3,719 full-time devs.
Total Capital Raised: $336 million (Mysten Labs) + $49m for the SUI Foundation raised through the ICO in March of ‘23.
Series A (June 2021): Raised $36m with a16z as lead investor. Additional investors included Redpoint Ventures, Lightspeed Venture Partners, Coinbase Ventures, Electric Capital, Standard Crypto, and Scribble Ventures.
Series B (August 2022): Raised $300m with FTX Ventures as lead investor (RIP). Additional investors included a16z, Jump Crypto, Lightspeed Ventures Partners, Circle Venture Capital, Franklin Templeton Investments, Binance, Sino Global Capital, Dentsu Ventures, Kevin O’Leary, Coinbase Ventures, and Apollo Global Management
SUI on X: 1.1m followers
Discord: 915k members
Reddit: 31k members
LinkedIn: 56k followers
Aside from SUI’s direct presense across social channels, it has a fairly strong online community, spearheaded by Raoul Pal on X (1.2m followers). With that said, we don’t view this as “organic,” as we understand that Raoul Pal received a token allocation from the SUI Foundation as part of ecosystem-building efforts.
Finally, the SUI founding team is less “market-facing” than the leadership teams of Ethereum, Solana, and Hyperliquid. While difficult to quantify, we think this works against them, as protocols with “celebrity” leadership tend to control market mindshare.
Bitwise includes SUI in its top 10 Crypto Index ETF product, as well as the Bitwise 10 ex-BTC Index Fund.
21 Shares includes SUI in its Crypto 10 Index ETF and offers a 2x Long SUI ETF.
The CoinDesk 20 Index product includes SUI.
The S&P Digital Markets 50 Index includes SUI.
Grayscale has an SUI Trust product — offering investors access to SUI from their brokerage account (with a modest $4.3m of AUM).
Like all L1s, SUI seeks to onboard the next generation of financial and consumer services into its network. It differentiates itself from other L1s by leveraging the MOVE programming language to address the blockchain trilemma by reimagining data storage/processing with an object-centric data model and parallel execution enabled by explicit object ownership, allowing high throughput without global transaction ordering.
Unlike account-centric models (Ethereum), where state is tied to accounts and global ledgers, SUI treats everything (tokens, NFTs, data) as programmable objects with explicit ownership, each identified by a unique ID and properties.
This model allows non-conflicting transactions to execute in parallel, reducing global congestion and enabling low fees and fast finality even at scale.
SUI uses a customized version of MOVE (originally from Meta’s Diem), which is resource-oriented and asset-focused. Key advantages over Solidity/Rust:
Built-in safety prevents common exploits.
Resources are immutable and cannot be copied.
Friendly programming language with web2 developers.
For simple transactions involving single-owner objects, Sui’s architecture enables parallel execution without requiring global transaction ordering. These transactions bypass the shared-object consensus path, allowing sub-second finality and low fees even under heavy network load. Transactions involving shared objects still use full consensus to ensure correct ordering.
Fees are stable and low, with storage fund mechanics ensuring long-term data sustainability. These features are designed to position SUI for mass-market adoption. Ideal for real-time use cases, including gaming, micropayments, and consumer applications, where other chains can be more expensive or slow.
SUI currently has just 125 validators on the network. Many are likely supported by the SUI Foundation, which allocates some of the SUI token allocation as “validator subsidies.”
Is 125 validators “sufficiently decentralized?” I think you can argue its not quite there. Just a few weeks ago, the network was down for six hours.
For reference, Solana has 808 validators — mostly in the U.S. and Europe. We view this as “sufficiently decentralized.” Ethereum has 9,425 execution layer clients and nearly a million validator clients. We view this as “fully decentralized.”
For SUI to truly decentralize, it needs more validators and an economic model that works for them beyond Foundation subsidies. The 30 million SUI requirement today is a clear barrier to entry and a blocker for decentralization.
SUI’s addressable market includes DeFi, gaming, consumer apps, AI integrations, payments, and institutional adoption. It’s going after the same market as Ethereum, Solana, etc.
The top 10 L1s currently have a combined (circulating) market cap of $695 billion. SUI has a market share of less than 1% today.
Do we think this is priced fairly? More later in the report.
As a reminder, you can click the data citation under each chart to access the data dashboard supporting this week’s report.
SUI has two components to its REV:
Computation Fees: user fees paid when transactions execute logic on SUI (smart contracts, read/write, and state transitions). These fees accrue to SUI validators.
Storage Fees: user fees paid when data is written and stored onchain. SUI validators receive 20% of these fees, with 80% going to the “storage fund.” The fees that go to the “storage fund” are then used to rebate users for reducing data by deleting objects, burning tokens, closing positions, etc. The “storage fund” is also used to compensate future validators.
You’ll notice that storage fees go negative at times on SUI. This is due to the “storage fund” rebates.
MEV is structurally lower on SUI compared to Ethereum and Solana. This is due to:
Object-Centric Execution: Sui transactions explicitly declare which objects they touch, eliminating ambiguous global state and generalized mempool ordering. This significantly reduces opportunities for sandwich attacks, backrunning, and mempool sniping. If two transactions do not touch the same object, they cannot conflict or be reordered for profit.
Parallel Processing: Unlike Ethereum’s single-threaded execution, SUI executes non-conflicting transactions in parallel. As a result, validators gain little advantage from transaction reordering, and MEV is largely confined to cases of explicit object contention.
This doesn’t mean MEV is eliminated (it still exists on DEXs used for arbitrage), but toxic MEV (sandwiches/frontrunning) is significantly reduced. This is designed to improve the user experience while shifting value capture up to applications (rather than down to block-level extractive actors).
The trade-off for SUI holders and validators is a lower implicit “real yield.”
Q3-25: $30k
Q4-25: $20k
Since 10/10/25: $18.6k
Last 30 days: $12k
Peak: $70k/day
In 2025, SUI generated $10.6m in REV, up from $7.8m in 2024 (36% increase).
Onchain fees are currently down roughly 83% from peak levels achieved in late ‘24.
SUI’s REV is a drop in the bucket relative to more mature L1s such as Ethereum, Solana, and BNB. As such, SUI validators are compensated almost exclusively through new issuance of the SUI token.
SUI launched in May of ‘23 (32 months ago). The network generated $368k in fees over the last 30 days. In early 2023 (35 months post-launch + FTX unwind), Solana was generating over $1M in fees/month (and maintained this pace through 2023 before exploding into 2024).
From a pure economic perspective, SUI is behind where Solana was at a similar stage of its maturity. The same goes for Ethereum, which was generating $2 - $10m fees/month at the same growth/market phase (mid 2018).
SUI’s total value locked currently sits at just under $1 billion — down from a peak of $2.6 billion on 10.9.25 (down 61%). We think most of the decline can be attributed to the decline in the SUI token price, which is down 73% over the same period.
The leading protocols on SUI:
NAVI Protocol (Lend/borrow & staking): $274m
Suilend (Lend/borrow): $227m
Bluefin (DEX): $128m
For an L1 to succeed and reach escape velocity, it needs a breakout app. Ethereum had this with DeFi, NFTs, stablecoins, etc. Solana had it with Pump Fun and memecoins.
We’ve yet to see a breakout app launch on SUI. That doesn’t mean it’s uninvestible, though. Solana didn’t have a breakout app at this stage of its maturity either.
Performance:
2024: 14.7m/day
2025: 11.5m/day (down 22% in 2025)
Since 10/10/25: 9.3m/day
Peak: 45m/day
Last 30 days: 9.17m/day (down 80% from peak)
Performance:
2024: 524k/day
2025: 879k/day
Since 10/10/25: 588k/day
Peak: 1.7m/day
Last 30 days: 509k/day (down 70% from peak)
Performance:
2024: $70m/day
2025: $281m/day (up 3x)
Since 10/10/25: $273m/day
Peak: $635m/day
Last 30 days: $203m/day (down 68% from peak)
The leading DEX on SUI is currently Bluefin, which has averaged $86m in volumes over the last 30 days. Bluefin has a 42% market share on SUI, followed by Cetus (32%).
For reference, Solana is currently averaging roughly $3.2b in DEX volume/day (15x SUI).
SUI currently has $503m in stablecoin supply on the network, down from a peak of $1.2b (a 58% decline). USDC accounts for 69% of the market, followed by First Digital FDUSD (13%) and USDT (9%).
Max Supply: 10 billion
Circulating Supply: 3.79 billion (38%)
Community Reserve: 10.6%. 12.6m tokens are currently unlocking per month through May of ‘26 ($16.4m at the current SUI price). After May of 2026, the unlocks drop to 4m/month through May of 2030.
Early Contributors: 6.1%. 88m tokens will be released through year-end (roughly 8m/month or $10.4m/month at the current SUI price). Early contributor unlocks decrease over time, fully unlocking in May of 2030.
Investors: 14.1%. Series A investors are fully unlocked. Series B investors are currently unlocking 19.3m tokens/month through May of ‘26 ($25m/month).
Mysten Labs Treasury: 1.6%. 2.06m tokens are currently unlocking per month through May of 2030 ($2.7m/month at current SUI prices).
Community Access Program: 5.8%. These tokens are fully unlocked.
Stake Subsidies: 9.5%. 99.9m tokens will unlock through year-end ($130m). Stake subsidy unlocks decline thereafter, fully unlocking in May of 2030. *Investors should not view the stake subsidy unlocks as potential “sell pressure” as these tokens are granted to validators to run SUI infrastructure and expand the network effect (the tokens are locked up).
TBD: Released after 2030: 52.3%.
In total, there are roughly 41.9m unlocks/month through May of ‘26 ($54.4m/month).
After May of this year, the unlocks will drop to roughly 14m/month ($18.2m at the current SUI price).
The SUI Network does not burn or buyback tokens the way Ethereum, Solana, and Hyperliquid do.
The SUI network is currently issuing roughly 55m tokens/month to network validators ($71.5m at the current SUI price) — as compensation for securing the network. Given that REV is currently quite low ($12k/day), SUI validators are compensated almost exclusively through new issuance/token inflation.
This means the network has a current Cost to Produce $1 of REV of $198 (!). Spending $198 for every $1 you make is obviously not sustainable.
The only way to fix this is to generate more user fees. But since fees are low and the protocol was designed to mitigate MEV, this is working against it at the moment.
SUI’s inflation rate in 2025 was 26%. So, if you own SUI and are not staking it, you are being diluted at a rapid rate.
SUI is currently the 10th-largest smart contract network in crypto but has less than 1% market share. Like all L1s, it’s competing to be the largest decentralized settlement network of the future.
It’s been our long-held view that we probably only need 4-5 L1 networks. Power laws suggest this will likely be the final outcome, with a long tail of less adopted networks that slowly fade over time (as we’re seeing in the market today).
SUI came to market with a differentiated architecture and programming language — designed for speed and throughput. But it’s unclear if the market is truly demanding this.
Ethereum is by far the largest smart contract network. It’s solving its throughput constraint at the L2 level. Of course, Ethereum has a much larger developer community, token standards, mindshare, and institutional adoption.
Solana has established itself as the most adopted competitor to Ethereum — differentiating itself with its monolithic architecture (no L2s), higher throughput, superior UX, a robust developer onboarding program, and a growing list of successful applications.
Meanwhile, Hyperliquid has emerged as the leading Perps DEX and is now building its own L1 ecosystem. BNB and Tron have captured the Asian markets. And we now have corporate chains like Stripe’s Tempo entering the mix.
As such, SUI has stiff competition.
SUI currently trades at a fully diluted value of $13.16b ($5b circulating). With 365-day network REV of $9.7m, this puts the fully diluted price-to-sales ratio at 1,358 (516 based on circulating supply).
For comparison:
Ethereum generated $763m in fees and has a fully diluted price-to-sales ratio of 441.9.
Solana generated $1.35b in fees and has a fully diluted price-to-sales ratio of 53.
Hyperliquid generated $915m in fees and has a fully diluted price-to-sales ratio of 32.2.
Even with the token trading 73% off its high, SUI appears to be significantly overvalued — on both an absolute and relative basis. We view SUI’s higher price-to-sales ratio as a direct result of the economic design (low fees, deferred storage fees, MEV minimized).
We’re impressed with SUI’s success since launching in 2023. Breaking into the top 10 L1 networks by market cap is no easy task.
However, we believe the L1 race is becoming less competitive over time. Power laws are taking hold as network effects compound. Simply put, the incumbent L1’s have a very large lead today.
What was once a blue ocean market is turning red as “the pie” of new entrants to crypto gets smaller with each passing cycle.
In addition to the stiff competition, SUI appears to be entering “no man's land” in terms of adoption (bear market), while token unlocks from the team and investors weigh on the SUI token.
It feels like a similar setup that Solana went through in the last bear market. Given that SUI has ample funding + developer support, it will be interesting to see how the team navigates through the coming challenges.
Will SUI ultimately rebound as Solana did?
We’ll see. There is hope as long as the team continues to ship. In the near term, we’re keeping an eye on developer activity. As far as the SUI token? We’re looking for extreme oversold conditions. If this were to play out before the unlock reduction in May of this year, there could be an interesting buying opportunity.
If you’d like to gain access to our portfolio + receive an alert if we buy SUI (or any other asset), you can sign up for TDR Pro here.
P.S. If you’re not aware, we recently launched a weekly podcast that covers a lot of the themes in our written research.
Here’s the latest episode (subscribe for weekly notifications when we publish on Wednesdays):
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Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.