Sui is a decentralized Layer 1 blockchain designed to deliver exceptional transaction speeds at low cost. Developed by Mysten Labs, the project is led by former executives from Meta's (formerly Facebook) now-disbanded digital wallet project, Novi. This guide explores the core concepts, technology, and tokenomics behind the Sui network.
Understanding the Sui Network
Sui is a Layer 1 public blockchain developed by Mysten Labs, with the goal of enabling developers to build experiences that cater to the next billion users in Web3. Founded in September 2021, Mysten Labs comprises former leaders and developers from Novi Research, a Meta division that focused on the Diem blockchain and the Move programming language.
Unlike some other projects, Sui is not a direct derivative of Diem. It is a entirely new blockchain built from the ground up with foundational scalability in mind. This allows for instant settlements, high throughput, low latency, and reduced costs, powering applications for a massive user base.
In essence, Sui aims to enhance scalability without compromising security by leveraging its native Move programming language, transaction parallelization, and a Delegated Proof-of-Stake (DPoS) consensus mechanism. The result is a network that offers fast, private, and secure digital asset ownership for everyone.
Key Features of the Sui Blockchain
The Sui ecosystem utilizes the Rust-based Move programming language and currently employs a PoS consensus mechanism similar to Ethereum's. Its standout features include:
- Powerful Scalability: The network horizontally scales its throughput by achieving parallel agreement on causally independent transactions. This is done through Byzantine Consistent Broadcast, which eliminates the overhead of global consensus while maintaining security and liveness guarantees.
- Secure Smart Contract Language: Move, a language initially developed by Facebook, is used for writing secure smart contracts. It supports shared libraries, tools, and a developer community across blockchains.
- Complex On-Chain Assets: Sui's scalability extends beyond transaction processing. Its storage is also low-cost and horizontally scalable. This allows developers to define complex assets with rich attributes that reside directly on-chain, avoiding the need for indirect layers of off-chain storage to save on gas fees.
- Superior Web3 User Experience: The Sui team aims to make it the most accessible smart contract platform, providing developers with the tools to create exceptional user experiences in Web3. The Sui Developer Kit (SDK) is designed to empower builders without limits.
In summary, Sui's architecture is known for instant settlement, high throughput, rich on-chain assets, and an excellent Web3 experience. Its horizontally scalable throughput and storage enable efficient DApp development at a lower cost.
How Does Sui Differ from Other Layer 1 Blockchains?
A key differentiator for Sui is its use of the "Narwhal and Tusk" asynchronous consensus protocol. Narwhal ensures the availability of data submitted for consensus, while Tusk is responsible for agreeing on a specific ordering of that data. This modular, two-tiered approach allows Narwhal to be used with external consensus algorithms.
The most significant difference is that Sui does not absolutely depend on its consensus protocol for all transactions. It only runs consensus when necessary—to periodically check its state and process transfers that require a strict global order. For most transactions, Sui uses "causal ordering" instead of consensus. This means Sui doesn't always require global agreement; transactions are ordered based on their dependencies, unlike other blockchains that require full ordering for everything.
This consensus architecture dramatically improves performance by enabling Sui to execute many transactions simultaneously. It reduces latency and allows validators to utilize all their CPU cores. The team states this makes Sui the "first permissionless blockchain with horizontal scalability and no upper limit on network capacity."
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How Does the SUI Blockchain Operate?
Sui incorporates several unique architectural designs to distinguish itself from blockchains like Ethereum, Solana, and Polkadot, boosting its speed and scalability without sacrificing security.
The Move Programming Language
Sui Move is a variant of the Move language originally created by Facebook for the Diem blockchain. It is used for building smart contracts.
While most blockchains (like Ethereum) design smart contracts around "accounts," the Move language is built around programmable "objects." These objects are assets native to the Sui blockchain. Developers can create custom rules for these objects (including their mutability) and define rules for how they are transferred. This object-oriented approach makes it easier to program assets, particularly for NFTs and gaming applications.
Delegated Proof-of-Stake (DPoS) Consensus
Sui uses a specific type of Proof-of-Stake mechanism called Delegated Proof-of-Stake (DPoS) to achieve consensus.
In Sui's DPoS system, a fixed set of validators processes transactions during each epoch (a 24-hour period). SUI token holders select this group of validators based on their share of the total stake, which is determined by the number of SUI tokens they have staked.
In exchange for operating and securing the network, validators receive staking rewards in SUI. The system then distributes these rewards to all token holders who delegated their stake to that validator, after deducting a small commission.
Staked tokens are only locked in the system for a specific epoch. Once the epoch changes, token holders can withdraw their tokens or change their delegated validator.
Notably, the network currently has a cap of 100 validators. This enables faster transaction processing and higher efficiency but also means it is more centralized than most other blockchains and potentially more susceptible to a 51% attack. To counterbalance the low validator count, Sui runs 2,000 full nodes, which enhances network decentralization.
Parallel Transaction Processing
To improve scalability, Sui executes transactions in parallel.
Most blockchains execute transactions sequentially, one after another. The Sui blockchain instead executes transactions in parallel. This allows it to process up to 120,000 transactions per second (TPS), compared to Ethereum's ~15 TPS or Solana's ~4,000 TPS.
The chain also interestingly categorizes transactions into two types: simple and complex.
- For simple transactions, like sending tokens from one account to another, a transaction can bypass the consensus protocol and be processed almost instantly. By eliminating the need for unrelated assets to undergo a longer and more expensive consensus process, Sui significantly increases its throughput.
- For complex transactions, Sui leverages Narwhal and Bullshark. Narwhal is a Directed Acyclic Graph (DAG)-based mempool. It decouples transactions from its consensus engine, Bullshark, and ensures fast identification of pending transactions that require consensus. Bullshark is used for specific transaction ordering and allows slower validators to contribute.
What Is the SUI Token?
The native asset of the Sui blockchain network is the SUI token. On the network, SUI is used to pay gas fees, execute on-chain transactions, and help secure the network through staking. Furthermore, holders have the right to contribute to the project's future governance.
A portion of its total supply was released at the platform's mainnet launch. The remaining tokens will be distributed over the coming years through vesting schedules or as future staking reward subsidies.
Uses of the SUI Token
The native asset on Sui is called SUI. To distinguish the token from the network, the token is referred to in uppercase (SUI).
The total supply of SUI is capped at 10,000,000,000 (ten billion tokens). SUI tokens serve four primary purposes within the Sui network:
- Staking: You can stake SUI to participate in the Proof-of-Stake mechanism and help secure the network.
- Gas Fees: SUI is the asset used to pay for the gas fees required to execute and store transactions or other operations on the Sui network.
- Liquid Asset: SUI functions as a versatile and liquid asset for various applications. This includes its standard functions as money—a unit of account, medium of exchange, and store of value—as well as more complex functions enabled by smart contracts, such as interoperability and composability within the Sui ecosystem.
- Governance: SUI tokens play a vital role in governance by granting holders the right to participate in on-chain votes concerning issues like protocol upgrades.
Since the supply of SUI tokens is limited, increased adoption and economic activity on the platform could have significant implications for the token's long-term value. Furthermore, the existence of the storage fund (explained below) creates a dynamic where higher on-chain data demand translates into a larger storage fund, effectively reducing the number of SUI in circulation.
SUI Tokenomics
The total supply of SUI tokens is 10 billion. The allocation is as follows: 50% to Community Reserve, 20% to Early Contributors, 14% to Investors, 10% to Mysten Labs Treasury, and 6% to Community Access Program (IEO) and app testers. The token's main use cases are network staking, transaction fees, storage fees, governance voting, and as a native trading asset.
The Sui Foundation controls 50% of the token supply. While this may seem high, the Foundation states these funds are designated for empowerment programs, grant initiatives, research and development, and validator subsidies.
It's worth noting that the token's release schedule has been a point of discussion and scrutiny in the market, highlighting the importance of transparency in project tokenomics.
The SUI Storage Fund
The storage fund is one of the most unique and important aspects of Sui's tokenomics. It is a validator reward mechanism designed to prevent a future scenario where users cannot afford massive gas fees due to the blockchain's data size growing over time.
Specifically, when users pay a gas fee, they also pay a storage fee. This storage fee is deposited into the storage fund. This fund then pays validators for the cost of storing user data, subsidizing the increasing storage costs as the network grows and matures. This ensures that data storage is priced accurately and that stored data does not become a burden for future users.
Notably, this storage model also includes a "delete option." When a user deletes on-chain data, they can receive a refund of their storage fee. This incentivizes keeping only truly important and necessary data on-chain, preventing the infinite expansion of data storage.
Frequently Asked Questions
Q: What is the Sui blockchain?
A: Sui is a Layer 1 blockchain focused on high speed, low cost, and scalability. It uses a unique architecture involving parallel transaction processing and the Move programming language to achieve its performance goals.
Q: What is the SUI token used for?
A: The SUI token has four primary uses: paying for network gas and storage fees, staking to secure the network and earn rewards, participating in on-chain governance votes, and functioning as a native liquid asset within the ecosystem.
Q: How is Sui different from Aptos?
A: While both Sui and Aptos were developed by teams with backgrounds from Meta's blockchain projects and both use the Move language, they are entirely separate and unrelated projects. Their technical architectures and consensus mechanisms differ significantly.
Q: How does Sui achieve such high transaction speeds?
A: Sui's high throughput is primarily achieved through parallel execution of independent transactions and by only using its consensus mechanism for transactions that absolutely require a global ordering, bypassing it for simple transfers.
Q: Is the Sui network decentralized?
A: Sui uses a Delegated Proof-of-Stake model with a current cap of 100 validators, which offers efficiency but leads to questions about decentralization compared to networks with thousands of validators. However, the network is supported by 2,000 full nodes to enhance decentralization.
Q: What is the Sui Storage Fund?
A: It's a fund fueled by user storage fees that is used to pay validators for data storage costs. It's designed to ensure future users aren't burdened by the storage costs of historical data and includes a mechanism for refunds if data is deleted.