With the Solana and Nomad hacks over the last week, the demand for a secure and scalable blockchain has become increasingly apparent. Our previous report discussed Aptos, a blockchain founded by Meta (former Facebook) employees that runs on the Move programming language. That said, Aptos isn’t the only new kid on the block (pun intended). In this paper, we’ll discuss Sui, a blockchain project by Mysten Labs with the aim of being the first internet-scale programmable blockchain platform.
Sui was founded under the premise that, due to the issues that constitute the blockchain trilemma, current blockchain networks aren’t efficient enough to scale into the demand that comes with at-scale adoption. It’s important to note that Sui itself is not a derivative of Diem. Sui was built from scratch with fundamental scalability in mind to enable instant settlement while also providing the high throughput, low latency, and low cost required to power applications for billions of users.
Team & Background
Similar to Aptos, Sui was founded by a team of researchers who previously worked at Novi Research (Meta’s advanced crypto R&D team). Among the founders is CEO Evan Cheng, who formerly headed research and development for Meta’s crypto wallet effort. Other founders include:
Among the founders is CEO Evan Cheng, who formerly headed research and development for Meta’s crypto wallet effort. During the team’s time at Novi Research, they had the opportunity to dive into the intricate layers of blockchain networks in order to challenge performance and efficiency. However, just as most crypto-related stories go, the team was captivated by the alluring potential of blockchain technology and decided to leave the comfort of their secured positions at Novi Research, ultimately forming Mysten Labs. The team’s relevant history consists of three years of working on high-level projects such as the Diem blockchain, cryptographic proofs of solvency, novel high-performance consensus/execution strategies, and the Move programming language development.
On December 6th, 2021, Mysten Labs reported raising $36M in a series A led by Andreessen Horowitz, with participation from Redpoint, Lightspeed, and Coinbase Ventures, among others. The valuation for the Series A raise is currently unknown to the public. However, according to The Information, Mysten Labs is currently in talks to raise >$200M in Series B funding at a $2B valuation, led by FTX ventures.
Sui uses an asynchronous consensus protocol called Narwhal and Tusk. The dual name correctly implies that the system divides the responsibilities of ensuring the availability of data submitted to consensus (Narwhal), and agreeing on a specific ordering of data (Tusk). Since this is accomplished in two-layer modules, Narwhal can be used in conjunction with an external consensus algorithm such as HotStuff, Istanbul BFT, or Tendermint. Narwhal is currently being integrated into the Celo and Sommelier blockchain.
With that said, one of the primary differentiators between Sui and other L1s is the lack of a dependency on the consensus protocol. Sui only runs consensus as needed to checkpoint its state regularly, and for transactions that require a total ordering. Unlike other blockchains, Sui forgoes consensus for a majority of transactions through the utilization of “causal ordering.” This means that Sui doesn’t always require consensus; when it does, transactions are causally ordered, whereas other blockchains always completely order them.
This consensus architecture is a massive improvement to performance as it enables Sui to parallelize the execution of many transactions. Consequently, it reduces latency while allowing validators to utilize all of their CPU cores. According to the team, the architecture will make it “the first and only permissionless blockchain that has horizontal scalability [with] no upper limit on network throughout.”
Due to limitations on throughput, users of existing blockchains pay hefty gas fees as network usage increases. Furthermore, as application demand scales, high latency can become an issue, consequently affecting the responsiveness of dApps. Sui adapts to the demands of decentralized applications by focusing on scaling horizontally. Recent tests have shown that an unoptimized single-worker Sui validator running on an 8-core M1 Macbook Pro can execute and commit over 120k transactions per second (TPS). The number of workers scales proportionally to the processing power of nodes, resulting in reduced gas prices even during periods of network congestion. In theory, this means Sui’s node infrastructure has the capacity to infinitely scale the network throughput as demand and utilization increase.
User-Experience for Developers
The Sui Developer Kit (SDK) was created to serve as a means of optimizing the user experience for developers. The Sui Developer Kit will provide developers with open-source, versatile, and user-friendly tools. In addition, SDK’s design allows developers to build with a significant reduction in time spent on debugging smart contracts, waiting for audits, and constructing basic tech stack elements.
To read more about SDK, including their first three iterations, refer to their blog post here.
The Move programming language was created to serve as a secure, programmable foundation for Sui’s vision to create a scalable financial infrastructure. Achieving a high level of security is one of the significant milestones that can dictate the success of a project. With that in mind, Mysten Labs achieves this feat by implementing the Move programming language. Move’s architecture prevents “re-entry vulnerabilities, poison tokens, and spoofed token approvals that attackers have used to steal millions on other platforms.”. In addition, Move’s emphasis on security makes it an easy proxy for developers to build on during their transition from Web2 to Web3.
Move Programming Language
Move’s main feature is the ability to define custom resource types, which statistically ensures that a resource can only be moved between program storage places and never cloned or deleted. This implementation significantly improves security by effectively preventing issues such as the vulnerabilities described above. Resources are then governed by move modules, similar to smart contracts in that they control the procedures that encode the rules for creating, updating, and deleting declared resources. Move modules benefit over smart contracts is that they enforce data abstraction, meaning that a resource is transparent inside its declaring module, and opaque outside of it.
Furthermore, with the help of an expressive specification language, the Move prover can formally validate the characteristics of Move modules, and is efficient enough to be used in continuous integration testing. Sui’s object-centric model and storage system differ quite a bit from core Move and Aptos. At the time of writing, developers have reported in their discord that there have been issues with updating the documentation quick enough to follow their latest branch. That said, this is very easily fixed, and developers have expressed their confidence in building on top of the MOVE programming language.
To read more about the Move programming language, refer to the documentation here.
In this section, I will be giving a high-level overview of Sui’s tokenomics. For a detailed read on SUI tokenomics and the state of Sui’s economy, I suggest reading through their tokenomics whitepaper, released earlier this year in May.
SUI Token Use-Case
- SUI can be staked within an epoch in order to participate in the proof-of-stake mechanism.
- SUI is the asset denomination used to pay for the gas fees required to execute and store transactions or other operations on the Sui platform (similar to other native blockchain tokens). In addition, gas fees are used to reward participants in the proof-of-stake mechanism, and prevent spam and denial-of-service attacks.
- SUI can be used as a liquid asset for a variety of smart contract and monetary policy applications.
- SUI will also be used for governance for on-chain voting on critical matters such as protocol upgrades and other functions.
- The total supply of SUI is capped at 10,000,000,000 (i.e., ten billion tokens). A share of SUI’s total supply will be liquid at mainnet launch.
- The remaining tokens vesting over the coming years will be distributed as future stake reward subsidies. The exact allocation percentages for the distribution have yet to be released. However, it’s been mentioned in Sui’s discord that this information will be published within the next few weeks.
According to their tokenomics documentation, SUI currently doesn’t have built-in deflationary mechanisms to offset emissions. However, since the supply is finite, increased network activity will significantly increase demand for SUI. Furthermore, the presence of the storage fund creates important monetary dynamics in the sense that higher on-chain data requirements translate into a larger storage fund, reducing the amount of SUI in circulation.
Protocols on Sui
While Sui as a blockchain is still very much in its infancy, developer activity has increased exponentially since the incentivized test net was first launched in late June.
Scalability has been a common topic of conversation within the space over the past few years. It’s become apparent that many widely used blockchain systems aren’t inherently optimized to support blockchain technology’s continuous growth and adoption. In this report, we give a high-level overview of Sui Blockchain. Sui is the world’s first permissionless Layer 1 blockchain with POS (Proof of Stake) consensus built from the ground up to allow creators and developers to build experiences catered specifically for Web3 users. Furthermore, Sui addresses the primary pain points of existing blockchains by leveraging its architecture and novel methodologies emphasizing performance, scalability, and user operability. All of these aspects highlight the continuous value that Sui proposes to bring to the space- along with the underlying goal of creating an environmentally sustainable, cost-efficient, high throughput, and low-latency permissionless blockchain that empowers the masses.
This report is for informational purposes only and is not investment or trading advice. The views and opinions expressed in this report are exclusively those of the author, and do not necessarily reflect the views or positions of The TIE Inc. The Author may be holding the cryptocurrencies or using the strategies mentioned in this report. You are fully responsible for any decisions you make; the TIE Inc. is not liable for any loss or damage caused by reliance on information provided. For investment advice, please consult a registered investment advisor.