Layer 1 Series: Sui – Performance, Adoption, and What’s Next

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Welcome to the fifth edition of our Layer 1 series. So far, we've explored Ethereum, Solana, and ICP. Today, we turn our attention to Sui, a relatively new entrant in the Layer 1 space that promises high scalability and low transaction fees.

Sui stands out for its unique consensus mechanism, its use of the Move programming language, and its rapid adoption across decentralized finance (DeFi) and gaming. Let’s break down how Sui works, its adoption trends, and what the future holds.

Sui’s Technical Foundation: A Different Approach to Consensus

At its core, Sui is designed to maximize transaction throughput while keeping costs low. Unlike Ethereum, which relies on sequential execution and congestion-prone gas fees, Sui uses a parallelized execution model to process transactions simultaneously.

Key Features of Sui’s Architecture:

• Move Language: Originally developed for Diem (formerly Libra), Move is optimized for fast, secure smart contract execution. It also prevents common vulnerabilities like reentrancy attacks.

• Narwhal & Tusk Consensus: Sui separates transaction ordering from execution. Narwhal handles data availability, while Tusk ensures consensus, leading to faster finality.

• Object-Centric Model: Instead of account-based transactions (like Ethereum), Sui treats assets as objects, reducing computational complexity.

Sui’s architecture allows for horizontal scalability, meaning the network can handle increased transaction loads by adding more validators, rather than requiring expensive upgrades to existing nodes.

Adoption Trends: Is Sui Gaining Traction?

Sui launched with the promise of better user experience and lower costs, but how has it fared in adoption? The numbers show strong growth:

• Active Accounts: From 8.5 million in January 2024 to over 31 million by November, Sui’s user base has expanded rapidly.

• DeFi Expansion: The total value locked (TVL) in Sui-based DeFi protocols grew from under $250 million to $1.75 billion by the end of 2024.

• Trading Volume: Daily volumes peaked at $551 million, indicating significant on-chain activity.

• Transaction Fees: The average fee remains $0.011, significantly cheaper than Ethereum and even Solana in some cases.

This growth is fueled by partnerships, ecosystem incentives, and a developer-friendly environment. However, competition is fierce, with other Layer 1s like Aptos (which also uses Move) vying for the same market.

Sui’s Developer Ecosystem: Tools, Grants, and Interoperability

Sui has actively pushed for developer adoption by offering:

• Grants and Incentives: Programs to attract developers to build new dApps.

• Improved Tooling: An expanding suite of SDKs and APIs to simplify smart contract development.

• Interoperability Efforts: Work is underway to connect Sui with other blockchains, allowing cross-chain transactions.

However, one challenge is attracting developers away from more established ecosystems like Ethereum and Solana, where liquidity and infrastructure are more mature.

Market Performance: Volatility and Future Outlook

Sui’s token has seen significant volatility:

• It peaked at $5.35 before dropping to $2.27 as of March 2025.

• This is in line with broader crypto trends, where Layer 1s often experience heavy speculation before finding a sustainable price level.

The key question is long-term utility—whether Sui can maintain and grow its ecosystem beyond speculative trading.

Future Roadmap: Where Is Sui Headed?

Sui has outlined several key development areas for 2025 and beyond:

1. Scalability Enhancements: Further optimizing transaction speeds and reducing hardware requirements for validators.

2. Cross-Chain Functionality: Enabling Sui to interact with other blockchains for better liquidity and usability.

3. Ecosystem Growth: Expanding developer grants, hackathons, and DeFi incentives to attract more projects.

4. Improved Governance: Moving toward a more decentralized governance model to involve the community in decision-making.

Sui’s success will depend on how well it executes these plans while maintaining low fees and high throughput.

Conclusion: Where Does Sui Stand in the Layer 1 Landscape?

Sui is one of the fastest-growing Layer 1s, but it faces stiff competition. Its unique consensus mechanism and low transaction fees make it attractive, but long-term success depends on sustained developer and user adoption.

Will Sui become a dominant Layer 1, or will it struggle against more established networks? That’s the question for 2025.

Let me know your thoughts, and don’t forget—clicking on the ads in this newsletter helps support its continued growth.

See you in the next edition!

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