One year after the mainnet launch, Sui Ecosystem DeFi track review and outlook

In the ever-changing cycle of the crypto market, no matter how the popular application narrative rotates, the DeFi track is always an area that all participants cannot ignore, because the core of all gameplay revolves around trading behavior. If you want to understand the DeFi track, in addition to actively paying attention to the gameplay innovation of those specific protocols, the public chain dynamics that have special advantages in developing DeFi protocols cannot be missed.

After more than a year of birth, Sui has become an important participant in the DeFi market. Sui has become one of the leading platforms for on-chain finance with its object-centric architecture, parallel processing capabilities and excellent programmability. Although in the past two months, the TVL and transaction volume of the Sui ecosystem have decreased due to the cooling of the crypto market. However, looking at the development dynamics of Sui since the launch of the mainnet, it can be seen that Sui still has considerable development potential in the DeFi field.

Continue to build developer-friendly: Mysticeti consensus and Move language

On July 8, Georgios Konstantopoulos, partner and CTO of Paradigm, said at X that as more and more people began to discuss the use of multi-proposer consensus as a tool to deal with bad MEV and enhance the network's anti-censorship performance. Georgios recommended the consensus protocol Mysticeti to the community, "It was designed by some researchers I am very optimistic about." Georgios said that the design of this consensus protocol can help improve the security and efficiency of blockchain networks and reduce unfair transaction costs and risks.

Mysticeti, as Georgios calls it, is a Byzantine consensus protocol designed for Sui by Sui developer Mysten Labs, which aims to significantly reduce transaction latency on the Sui network while reducing the CPU requirements of validators. Compared to the Narwhal-Bullshark consensus algorithm launched when Sui mainnet was launched a year ago, Mysticeti can further increase transaction speed and reduce the CPU requirements of verification nodes, thereby ensuring that users can trade quickly and safely.

Sui will introduce the Mysticeti consensus engine during Q3-Q4 of 2023. For DeFi protocols, the significance of Mysticeti is that it can confirm trading strategies, liquidation, portfolio rebalancing and other needs in real time. It is understood that the results of Mysticeti on the test network are very significant, with transaction submission delays reduced by 80%, enabling the Sui network to process tens of thousands of transactions per second with a delay of less than one second. Mysticeti can provide end-to-end customer settlement finality at a speed of approximately 0.640 milliseconds (of which the consensus part is 0.395 milliseconds), which can achieve ultra-fast execution of on-chain transactions.

In addition, Sui's parallelizable architecture allows different applications and scenarios in DeFi to run independently. Whether it is an application across different DeFi dApps or using different liquidity pools in the same DeFi dApp, Sui's performance in these cases will not be affected by the traffic in other scenarios. This means that for traders interested in different assets, scenarios, and strategies, there is no need to worry about interfering with each other, because each operation of Sui is completed independently.

For DeFi protocol developers, Sui's development language Move is also one of its technical advantages. Move is a smart contract language born for operating digital assets, known for its high transaction processing speed (TPS) and suitable for large-scale commercial applications. Unlike Solidity, Move performs better in security and verifiability. The Move language is flexible and secure, allowing developers to work in a less risky environment, allowing developers to quickly build and test new products and accelerate the deployment of DeFi applications.

For example, through the Move language, developers can use programmable transaction blocks (PTBs) to launch more attractive protocols. PTBs allow users to complete transactions for multiple DeFi applications with a single click, improving the composability of DeFi and bringing new features and experiences to DeFi enthusiasts. For example, users can interact with multiple pools directly through a single transaction, and can also complete large order transactions, which is very beneficial for traders and developers, saving time and resources and reducing transaction fees. Combine transactions and customize transaction blocks.

DeFi Development Review: A Year of Rapid Ecosystem Development

Currently, there are 30 DeFi protocols under development in the Sui ecosystem, covering DEX, lending, liquidity pledge, derivatives and other types. Within half a year of the mainnet launch, the DeFi ecosystem on Sui has achieved rapid development, ranking among the top ten public chains in terms of liquidity and transaction volume. Two months before the overall pre-cooling of the crypto market, Sui's TVL was still above $700 million.

TVL and Trading Volume

TVL (total locked value) is one of the important indicators to measure the success and health of DeFi projects, and it is even more important for a public chain featuring DeFi. In March 2024, Sui's TVL reached $750 million. The liquidity on Sui is mainly concentrated in lending protocols and decentralized trading platforms, among which lending protocols such as Scallop and Navi contribute most of the liquidity, while decentralized trading platforms such as Cetus, Kriya and Aftermath drive the growth of trading volume.

During the same period, the transaction volume based on the Sui network also increased significantly. The active transaction volume means that liquidity is effectively utilized and liquidity providers will get rich returns. At the end of March 2024, the derivatives and spot trading volumes on the Sui chain reached US$166 million and US$125 million, respectively. Among them, derivatives trading mainly occurred on BlueFin, and more than 90% of the trading volume came from perpetual contract trading of BTC, ETH and SUI. Cetus has the largest spot trading volume, and the other half is mainly distributed in Sui's other four major DEXs.

Asset Types

In addition, Sui's DeFi ecosystem contains a rich variety of asset types. Native SUI, stablecoins, and non-SUI volatile assets constitute the main TVL assets. USDC and USDT stablecoins introduced from Ethereum through the Wormhole bridge dominate the network's TVL. In addition, First Digital also plans to launch its stablecoin FDUSD natively on Sui and introduce more native stablecoins.

In addition to stablecoins, Sui's native DeFi protocol tokens such as CETUS, NAVX, and SCA have also contributed to Sui's TVL. Amid the meme craze, meme coins on Sui also account for part of the TVL of volatile assets. More DeFi and gaming projects are expected to launch tokens, bringing a wider variety of non-SUI volatile assets to the ecosystem.

In terms of non-volatile assets (mainly stablecoins), more than $380 million in stablecoins have been bridged into the Sui network. Most of this is USDC transferred across chains, amounting to $265 million, mainly from Ethereum. The remainder is mainly USDT, with a cross-chain amount of $115 million. Most of these cross-chain USDC and USDT were transferred to the Sui network through Wormhole bridging.

While stablecoins have widespread applications on many different blockchains, in the Sui network, stablecoins have found product-market fit primarily in the DeFi space. Approximately 70% of USDC and USDT are deposited in DeFi protocols. These stablecoins contribute a significant share to Sui's TVL and support many important trading activities on the Sui chain.

Looking back on this year, Sui's DeFi ecosystem has demonstrated its great potential and vitality in terms of technology, liquidity, trading volume, and asset diversity. After the launch of Mysticeti Consensus, with the addition of more protocols and assets, Sui is expected to become an important player in the DeFi market, providing users with rich and diverse financial services.

This article comes from a contribution and does not represent the views of BlockBeats

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