Behind the 10 billion dollar market capitalization: Grayscale analyzes why it is optimistic about Sui

Source: Grayscale Research; Compiled by AIMan@Golden Finance

Key Points of This Article

• Sui is a next-generation blockchain designed for scalability, aimed at supporting consumer applications for the mass market (as well as other applications). Grayscale Research believes that Sui possesses the perfect combination of technical advantages and supportive strategies, allowing it to stand out in the highly competitive field of smart contract platform cryptocurrencies.
• To attract billions of users, blockchain-based applications need to offer features that are at least as appealing as current Web 2.0 applications. This means having high transaction throughput while lowering the entry barriers for mainstream users. While achieving this is no easy task, we believe that Sui may have the necessary conditions.
• Mysten Labs was founded by key contributors of the Facebook Diem blockchain project and is the core team behind Sui. Mysten possesses top-notch expertise and adopts an active vertical integration development approach, building not only at the blockchain layer but also encompassing the entire application stack.
• The native token of this blockchain, SUI, currently has a market value of approximately $10 billion. Sui is a relatively early project, with only 33% of its total supply in circulation; more than 50% of the token supply will not be released until after 2030.
• SUI token provides investment opportunities in the next-generation blockchain at an early stage, which is expected to achieve breakthrough success in mainstream consumer applications. Grayscale offers qualified investors* investment opportunities in Sui through the Grayscale Sui Trust.

Sui was established in 2023 by key members involved in the Facebook Diem blockchain project. Their mission at Facebook was to create a cryptocurrency platform that could support billions of users; in other words, they had their sights set on a global scale from day one. After leaving Facebook to found Sui, the team continued to expand on the foundations they had previously developed.

Sui is a new generation blockchain that prioritizes two points: usability and scalability. It aims to provide an unparalleled user experience, surpassing the best Web 2.0 tech companies, while achieving on-chain ownership and global instant value transfer. Therefore, we believe that the next consumer "killer app" in the cryptocurrency space may come from the Sui ecosystem.

The native token SUI of the Sui network can be found in the cryptocurrency section of the Grayscale smart contract platform. The Sui network mainly competes with high throughput and low-cost blockchains for fee revenue and market share, including Solana, Ethereum Layer 2, and open network (TON), among others. In this competitive landscape, not all projects can succeed. Therefore, the network needs differentiated features to stand out.

Grayscale Research believes that Sui may have a range of differentiated features, including:

1. Technology: The Move programming language and blockchain architecture enable Sui to be uniquely suitable for use cases such as payments and gaming.

2. Team: The team originated from Facebook and is now operating as Mysten Labs, with deep expertise in product development, computer science, and cryptography; supported by a16z and Apollo Global.

3. Strategy: The Mysten team takes a coordinated approach to build a fully decentralized vertical product stack — in other words, developing not only at the blockchain level but also at the application level to help the emerging ecosystem grow.

Since the beginning of 2024, SUI has been one of the best-performing assets in the cryptocurrency space, outperforming Bitcoin as well as its broader industry and direct competitors: Solana (SOL), Ethereum (ETH), and Avalanche (AVAX) (Chart 1).

Chart 1: SUI is one of the best performing cryptocurrency assets over the past year.

In the following section, we will explore the uniqueness of Sui, the potential key elements necessary for developing its ecosystem and network effects, progress and adoption, value accumulation and fees, token supply, and key risks.

Why Sui Can Stand Out

Every blockchain aspires to achieve usability and scalability under certain constraints. What sets Sui apart is its technology, strong support team, and vertically integrated strategy.

1. Technology: Blockchain design and programming languages

• Blockchain Design: Sui's technical architecture is designed for global scalability, particularly suitable for high-frequency, low-latency use cases such as payments and gaming.
• Predictable low transaction fees: Low costs and smooth, predictable fees help reduce friction and optimize user experience.
• Object-based methods and parallel processing: Unlike Ethereum, Solana, and other account-based blockchains that update a global smart contract ledger, Sui adopts an object-based model. In this model, each asset is a unique object linked to a wallet, allowing for parallel transaction processing. By updating only the relevant objects instead of a shared global state, this model reduces computational workload, increases efficiency, and enhances network scalability.
• "Fast Path" execution: Sui differentiates between simple asset transfers and complex smart contract calls. Point-to-point simple asset transfers are conducted through the "Fast Path," achieving near-instant final confirmation. This makes Sui highly suitable for payment use cases.
• Horizontal Scalability: Unlike most blockchains, Sui's network capacity increases as computational power grows. Sui validators can add servers to enhance performance when demand is limited. Therefore, according to the team, an 8-fold increase in hardware capacity means an 8-fold increase in throughput, with no increase in latency.

Thanks to these features, Sui has the highest theoretical blockchain throughput, lowest cost, and fastest finality time among the five largest smart contract platforms by market capitalization (Chart 2). As of July 2025, Sui's actual transactions per second (TPS) lag behind Solana, which is based on current adoption rather than the theoretical capacity when fully matured. Therefore, we believe that as the ecosystem continues to adopt, this data for Sui may improve.

Figure 2: Key blockchain metrics of the top five smart contract platforms by market capitalization

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

2. Team: Experienced top entrepreneurs

Mysten Labs brings together award-winning technologists with expertise in product, computer science, and cryptography, including the following co-founders:

• Evan Cheng: CEO of Mysten, former Engineering Director at Facebook/Meta
• Sam Blackshear: Chief Technology Officer of Mysten. Created the Move language during his time at Facebook/Meta, and previously served as Chief Engineer at Facebook/Meta, responsible for the Diem project.
• Adeniyi Abiodun: Chief Product Officer of Mysten. Formerly the product lead responsible for Facebook/Meta's crypto projects, including Diem and the Move language.
• George Danezis: Chief Scientist at Mysten. Computer Laboratory Ring Award.
• Kostas Chalkias: Chief Cryptographer at Mysten. Former Chief Cryptographer at Facebook/Meta and a three-time recipient of the Best Paper Award in Cryptographic Research.

The Mysten Labs team has over 100 members, with more than 75 PhDs among them. We believe that, in addition to technical strength, what sets Mysten apart is its ability to directly translate technical expertise into products. In contrast, competitor network foundations often take a more academic approach.

3. Strategy: Vertical Integration

Mysten is involved not only in the blockchain infrastructure layer but also in the application layer of Sui, building products, tools, and consumer applications for the entire network. This holistic approach includes:

Walrus

Walrus is an innovative decentralized storage solution aimed at achieving performance and cost-effectiveness. Unlike centralized providers like AWS, decentralized storage eliminates single points of failure and enables trustless data integrity. Among various decentralized storage solutions, Walrus stands out as a highly attractive potential choice. Its proprietary erasure coding technology significantly reduces storage overhead, saving up to 80% compared to traditional solutions like Filecoin and Arweave. Leading crypto media platforms such as Decrypt and Unchained Podcast rely on Walrus to store their content, and Plume Network also trusts Walrus to store real-world asset (RWA) data. Walrus is designed for scalability, aimed at handling high-throughput, data-intensive applications ranging from RWA datasets to large language models.

In many ways, Walrus plays a role in decentralized storage similar to that of Sui in blockchain execution: it eliminates friction, reduces costs, and opens up entirely new application areas in the real world. As more and more applications on Sui require storage for AI models, video content, or off-chain proofs, Walrus is expected to become a core part of the data layer development of the Sui network.

DeepBook

DeepBook is an on-chain central limit order book on Sui (CLOB), designed for institutional-level trading. Today, most decentralized finance (DeFi) operates on automated market maker (AMM) pools. Compared to AMMs, DeepBook enables precise order control, reduces slippage, and narrows spreads, features that are highly favored by professional traders and market makers. As a shared liquidity layer of the Sui ecosystem, DeepBook allows numerous DeFi applications to access a unified order book, thereby improving capital efficiency and reducing liquidity fragmentation.

DeepBook currently serves the first and second largest decentralized exchanges on Sui, as well as various applications ranging from lending to derivatives. As institutional adoption of Sui continues to grow, we believe that DeepBook's trading volume and user base may grow in tandem. We believe that DeepBook is becoming a key liquidity layer and foundational component of the financial infrastructure on the Sui chain, with the potential to be a crucial catalyst for DeFi growth on Sui.

Others

• zkLogins: A patented technology that allows users to register using Google or Twitch, thereby eliminating the complex steps of accessing on-chain cryptocurrency.
• SuiNS: A decentralized domain naming service, similar to Ethereum's ENS or GoDaddy.
• Ika: A brand new network that allows any crypto asset (from Bitcoin to Ripple) to be traded directly on Sui, without the need for bridging, token wrapping, or other steps. The Ika token is expected to launch in mid-July.

In summary, the Sui ecosystem—which includes the Sui blockchain itself, zkLogins, DeepBook, Walrus, SuiNS, and Ika—represents the first fully vertically integrated suite of applications in the cryptocurrency space.

The decentralization level of the Sui project is lower than that of some other blockchains, but this may be an advantage in terms of its specific goals (e.g., mainstream consumer applications). As the Sui network is still in its early stages (only established two years ago), the Mysten team is actively providing products for various use cases to reduce friction between consumers and developers. This proactive approach can accelerate the adoption of applications and ultimately form a more robust ecosystem.

Growth Factors

Compared to more mature networks like Ethereum or Solana, Sui's lifecycle is still in its early stages, both in terms of developer attractiveness and ecosystem maturity. However, given its high scalability and user-centric design, the SUI token stands out as an attractive growth investment with its current market capitalization of about $10 billion (approximately 12% of SOL and 3% of ETH).

For users, Sui offers a low-friction cryptocurrency onboarding experience through its zkLogin technology. In an era where getting started with cryptocurrency often requires entering confusing mnemonic phrases, zkLogin allows users to access their cryptocurrency wallets using familiar Web 2.0 credentials (such as a Gmail account). This eliminates common friction points while protecting user privacy, ensuring that identity providers do not know that users are logging into cryptocurrency wallets. This feature is unique to Sui.

For application developers, Sui offers sponsored transactions, which can be seen as "customer acquisition costs." Sponsored transactions allow application developers to provide "gasless" transactions (i.e., transactions without associated fees). The combination of zkLogin and sponsored transactions enables a complete Web 2.0 experience: users do not need to open a wallet, or even own cryptocurrency, while still being able to record user interactions on-chain.

We believe that these elements—frictionless user onboarding, gasless application experiences, and intuitive experiences in a secure development environment—can serve as a solid foundation to guide users and developers and expand the network effects.

Despite being in the early stages of development, Sui has demonstrated strong network growth momentum in the first half of this year. The monthly active users (MAU) surged from around 10 million to over 40 million earlier this year (ranking second among smart contract platforms), although there has been a slight decline in the past few months. In addition to products from Mysten Labs, Sui has also attracted numerous third-party applications, including Recrd (a video platform for creators to earn revenue, with 490,000 addresses daily) and Fan TV (a video sharing platform that has connected with 5 million cryptocurrency wallets).

Fees and Value Accumulation

The key to long-term competition in the smart contract platform space lies in value accumulation and the ability of the blockchain to generate network fee revenue. Sui generates network income through transaction fees, which accumulate value for stakers in the form of rewards, rather than accumulating value for token holders through token destruction.

The transaction fees on Sui are divided into two parts: computation and storage. The rates are basically anchored to a reference price determined by validators every 24 hours. Therefore, transaction costs remain relatively stable throughout the day, achieving smoother and more predictable pricing. This price stability makes Sui less susceptible to spikes in Gas prices during periods of high network activity, unlike networks such as Solana and Ethereum, which experience significant fluctuations in fees within a day.

Chart 3: Sui transaction costs are relatively low and stable.

However, in terms of overall revenue generation capability, Sui is ahead of its larger competitors. Ethereum and Solana are expected to generate over $500 million in annual network fee revenue by 2025, while Sui's expected revenue is only $15 million. This indicates that Sui, as a network, is in the early stages of user monetization, partly due to Sui's lower average transaction costs (about 3 times lower than Solana and about 150 times lower than Ethereum). The low cost of transactions on its network means that Sui needs to significantly scale up network activity to achieve revenue comparable to its largest competitors. In relation to its fee revenue, the valuation of the SUI token is roughly reasonable (based on circulating market capitalization) (Chart 4).

Figure 4: Market value and fee revenue in the cryptocurrency sector of smart contract platforms

The token supply is still expanding

Sui is a relatively early project, with a circulating supply accounting for only 33% of its total supply. More than 50% of the supply will not be unlocked until after 2030. Under similar conditions, token supply inflation may negatively impact valuation, but the growth in network adoption can mitigate this effect.

The SUI token was launched in May 2023, with a total supply cap of 10 billion coins. The initial token distribution is as follows:

• 50% allocated to the community reserve managed by the Sui Foundation. This includes delegation programs, validator subsidies, research and development, and grant programs.
• 20% for early contributors
• 14% allocated to venture capitalists
• 10% donated to Mysten Labs treasury
• 6% for community access programs and app testers

In the coming year, the inflation rate of SUI will be 17.4%, and approximately $1.7 billion worth of SUI tokens will be released to the market (based on the current SUI price).

Risk

While some Layer 1 networks take a "purist" approach to decentralization, Sui adopts a more incremental approach. Sui has a relatively small number of validators, and the staking requirements for validators are higher, which results in a lower degree of decentralization and weaker censorship resistance compared to other more mature networks like Ethereum. In contrast, Sui places greater emphasis on hardware performance and scalability.

Another factor is the strong influence of Mysten Labs. We see this as an advantage in the short term—because Mysten is able to prioritize the development and release of applications—but if the ecosystem does not further decentralize in the long term, this could limit the potential market for the blockchain. Mysten's approach of building on Sui at both the infrastructure and application layers may, in the short term, encroach upon developers trying to build similar products in the same verticals as its products.

Sui is also facing intense competition in the smart contract platform space. Existing networks like Ethereum and Solana have a higher market share and on-chain assets. Other networks, such as Monad, offer alternative high-throughput solutions. Another potential competitor, TON, can leverage Telegram's massive user base for distribution. Nevertheless, we believe that Sui's technology and Mysten Labs' approach can achieve significant differentiation in specific use cases that require low latency, such as gaming, trading, and payments.

Conclusion

Sui is a next-generation blockchain designed for scalability and usability. Its architecture is built to support consumer-grade applications, featuring low fees, near-instant finality, and intuitive onboarding capabilities — these are key elements for attracting a massive number of users to the blockchain. Compared to competitor networks that focus on speculative use cases or unresolved throughput challenges, Sui is built for scalability, while Mysten focuses on empowering the next "killer app."

Sui currently has a market capitalization of $10 billion, and there is still a large supply of tokens yet to be released, so it remains in the early stages of its lifecycle. However, this also means that its upside potential has not been fully realized. We believe that SUI is a highly confident growth investment that can provide diversified investment opportunities, fully understanding the concept of scalable consumer applications on-chain. With strong technological capabilities, the top-tier team at Mysten, and a vertically integrated strategy, Sui is fully capable of achieving this vision.