Introduction

Sui has remained a vital component of Luganodes’ staking services portfolio, showcasing its adaptability and reinforcing its position in the realm of digital asset ownership. The sustained growth and adoption has, pushed its market capitalization towards the impressive $1.5 billion mark, highlights its significance as a formidable asset in the cryptocurrency domain.

This stable growth is related to its inventive approach. While most people in Web3 have heard of the Solidity programming language or Vyper, Sui is an innovative Layer-1 blockchain that streamlines crypto asset ownership with its object-centric model powered by the Move programming language.

Earlier, we had given an overview of Sui and how Mysten ecosystem aims to bring digital asset ownership to the next billion users, and even decoded the SUI whitepaper from a validator perspective. You can also find resources on the Sui’s object-centric model on our blog.

We have now come up with a refresher article which will comprehensively get into the nuts and bolts of how things work at Sui, starting with the founders, its role in Web3 gaming, its consensus mechanism, and how investors can participate in its future growth potential.

Sui Founders and Mysten Labs

The founders at Sui (CEO Evan Cheng, CPO Adeniyi Abiodun, CTO Sam Blackshear, and Chief Scientist George Danezis) also founded the software company Mysten Labs in 2021. These developers tackle complex problems with elegant solutions, they are some of the most impressive personnel you can find, with cofounder Sam Blackshear also developing the Move programming language.

Sui means "water" in Japanese and envelops the positive attributes of adaptability and fluidity—hence the water drop logo.

The project has impressively raised hundreds of millions of dollars from some of the most prominent investors in crypto, including Andreessen Horowitz, Coinbase, Binance Labs, and Circle. Initially, it looked like Sui was targeting Asian markets for adoption and investment, as in the case of Alibaba Cloud. But it has also partnered with other high-profile firms outside of Asia, like Formula 1's winning team Red Bull Racing.

Sui and Object Orientation

The Sui platform uses a novel concept whereby objects define assets. Object orientation is a thing with Sui. Contrast this approach to Ethereum, which is account-based. It tracks what accounts are doing with transactions and balances, etc.

The Sui blockchain, however, keeps track of what objects are doing. So users aren't pressed to interact with a smart contract each time they want to perform an action. This reduces transaction fees and increases transaction speeds.

Developers create and define these programmable objects that represent user assets. Moreover, these objects can carry a rich set of properties and attributes—ownership being one of them. On Sui, smart contracts don't store these objects. Instead, an object and its attributes are stored on-chain. Next, we have Move.

The Move programming language is what brings Sui's object orientation to life. It's an open-source language developers can use to create, define, and manage programmable Sui objects. Sui uses Move's security and flexibility while enhancing it with some other features described below.

Simple vs. Complex Transactions

Simple transactions (such as asset transfers or minting NFTs) do not need to pass through consensus on Sui. Furthermore, they can be completed in random order. Sui is designed to optimize simple transactions and can process them in parallel.

On other blockchains, every transaction (whether simple or complex) goes into an ordered list to be verified and processed through global consensus. This typical design can cause bottlenecks between latency and throughput. But Sui uses the Byzantine Consistent Broadcast algorithm to reduce the typical bottleneck experienced on other blockchains to maintain low latency and high throughput.

So, only complex transactions on Sui demand consensus. For example, assets with shared ownership will require multiple accounts to authenticate a transaction. Such transactions are considered complex and must pass through consensus to be finalized.

For complex transactions, Sui's consensus engine uses two parts—Narwhal and Tusk. Narwhal serves as the mempool and ensures data availability for processing by validators. Tusk is the mechanism for ordering all the transactions that involve shared objects.

Sui’s Programmable Transaction Blocks

Programmable Transaction Blocks (PTBs) are among Sui's most potent core developer primitives. For conventional blockchains, a transaction is the fundamental unit of execution. For Sui, however, the basic unit of execution rises to a higher level of complexity with a composable sequence of transactions. In instances where an object owns other objects, it becomes a new asset called a "composable asset."

The Sui documents illustrate a real-world example of how a single PTB can function. For instance, it could take a Player object from a smart contract wallet, then make a move with the object in a game to win a Badge object. Lastly, it could send the Badge to a multi-game Trophy Case. Moreover, it could perform this sequence without publishing any new smart contract code.

Notably, a single PTB can hold up to 1024 different transactions and can access any public Move function across all smart contracts. PTBs also leverage gas smashing. So, if you have "dust coins" (multiple coins with negligible value) available, Sui automatically smashes them into a single coin to pay for your transaction's gas fee.

The TLDR version is that Sui is extremely fast—capable of processing up to 297,000 transactions per second (TPS). And that his features makes it perfect for Web3 gaming.

Sui's Role in Web3 Gaming

The Sui blockchain's scalability and high throughput make it an excellent platform for gaming projects. Thus, it's unsurprising that many game developers are already building there. Projects like Arcade Champion and Panzerdogs saw player adoption racing into the hundreds of thousands, with millions of in-game interactions on Sui. Not only could the blockchain support such demand with 100% uptime, but its gas fees remained solid, with no spikes incurred.

That is because Sui had already undergone intense development before its Mainnet launch. Thus far, it's readily handled the heavy transaction load necessary to host gaming projects. Below are some highlights of Sui's role in Web3 gaming in 2023.

1. Gaming Alliances

Sui's ascent in the Web3 gaming space began with securing partnerships with three Korean gaming giants: NCSoft, Netmarble, and NHN. Landing these strategic alliances will help Sui shape the future trajectory for Web3 gaming.

2. The Play Beyond Hub

The establishment of Play Beyond means it will serve as a hub for inspiration and knowledge to help propel web3 gaming beyond conventional norms.

3. Quest 3 Metrics

Quest 3 aims to incentivize user engagement with Sui-based games like Panzerdogs. This game created by Lucky Kat Studios showed impressive numbers during Quest 3. Players created over 300,000 new accounts, and there were approximately 1.5 million matches between players over 30 days. Quest 3 provides valuable insights to help games deliver a more satisfying player experience. It also demonstrates Sui's role as a driving force in advancing Web3 gaming.

We expect many more new games to launch on Sui this year in 2024.

The SUI Token

With its 297,000 TPS capabilities, Sui will attract game developers and other projects to its platform. But what about investors looking to profit from Sui's potential success? First of all, SUI is the native token for the Sui Blockchain. Its uses include crypto staking, governance, and payment of transaction fees. The maximum supply of SUI is 10 billion, which is distributed as follows:

50% to the Sui Foundation

20% to early contributors

14% to investors

10% to MystenLabs

10% of the foundation's allocation goes to extra staking rewards

6% to Community testers

Investors can buy and hold the token outright or stake SUI tokens to earn additional income.

But let's look deeper into Sui's consensus mechanism to see how nodes, validators, and the staking mechanism work together.

Sui DPoS Consensus - Validators, Nodes, and Staking

Sui is a Layer 1 blockchain, so it performs its own consensus and validation for transaction blocks. Further, it uses a delegated proof-of-stake (DPoS) consensus mechanism with validators playing a crucial role. They secure the network, handle read/write requests, verify transactions, and update on-chain information.

The Sui Foundation hand-picks the validators, and with only 100 validators operating, the platform can appear centralized. But it is quicker and more secure than most blockchains because its validators only store the state rather than the entire blockchain's transaction history. This makes it easier to process transactions by leaving the job of storing the complete transaction history to the full nodes.

Candidates seeking to become validators must meet specific requirements, including a staking pool with a minimum of 30 million SUI. They can use their funds or partner with the Sui Foundation to obtain the necessary amount from Sui token holders (delegators).

A fixed set of validators processes operations within each epoch (Sui uses 24-hour epochs). Additionally, Sui validators maintain their staking pools to track the stake amount and to compound staking rewards. Notably, they can get their staking rewards or even their stake slashed if they misbehave.

Other validator rules include:

1. 20 Million SUI Threshold

If a validator's stake falls below this threshold, they have seven epochs of grace to regain their stake before removal.

2. 15 Million SUI Threshold

If an active validator's stake falls below this minimum, they get removed from the validator set.

Staking Rewards on Sui

Successful validators get paid through commissions from staking rewards. During each epoch, users submit transactions, and validators process them. Users pay the computation and storage gas fees for each transaction. Sui sets aside a portion of these transaction fees and distributes staking rewards to participants of the DPoS consensus at the end of each epoch.

The total staking rewards for each epoch are calculated by adding the accrued computation fees through the epoch with the staking reward subsidies. The second half of this equation—staking reward subsidies—only exists temporarily until the SUI in circulation reaches its total supply.

Three key events happen at the beginning of each epoch:

1. SUI holders stake their tokens to validators to form a new committee.

2. Gas prices are set.

3. The storage fund size adjusts based on the net inflow of the previous epoch.

Next, the protocol adds the staked SUI plus the storage fund to compute the total stake amount.

Validator Pools and SUI Token Holders

Each validator pool has a staking amount from SUI token holders. A validator's percentage of the total stake determines their share of voting power for processing transactions. When users stake SUI tokens, they remain locked for the entire epoch. After the epoch changes, SUI holders can withdraw their tokens or pick a different selected validator.

Due to Sui's incentive system, delegators may want to pick a different validator at the end of an epoch. That is because the Sui economic model bestows a vital monitoring role on its users. Sui users want their transactions processed quickly and efficiently. User clients, like wallets, will encourage efficiency by systematically prioritizing communication with the most responsive validators. Therefore, efficient operations get boosted rewards relative to the less responsive validators.

Likewise, users who stake their SUI tokens with a validator get to share in the rewards (whether they be boosted or penalized) based on their selected validator's performance. Thus, an unresponsive validator faces a double whammy regarding Sui incentives. They can lose via slashed rewards and reduced user stakes in future epochs. Token holders who stake are also creatures of incentives and will move their tokens to more responsive validators where they can earn more rewards.

In the long run, Sui's incentive program encourages users to put their stakes with the network's most efficient validators, thus ensuring the most efficient network.

Please read our article "Sui Network: A Validator's Perspective" to thoroughly explain the maths behind Sui validator rewards.

Conclusion

SUI's price is on an upward trajectory, which is likely the market's response to the platform's technical innovations. Investors are also watching to see if it can pass through its all-time highs and possibly form a base to launch into new territory.

With all its potential, Sui still faces stiff competition from other protocols. Furthermore, while it appears to be targeting blockchain gaming, Sui's primary niche is still yet to be determined. As with any Layer 1 blockchain, adoption is critical, and time will tell if users catch onto this innovative project.

If you hold the SUI token, you can enhance your portfolio by staking to earn rewards. Leverage Luganodes' institutional-grade infrastructure to stake your holdings and create a passive income. Staking with us ensures ease of use, support, and safety while you earn, and also contribute to the security of the Sui chain.

Learn how to stake SUI tokens using this guide. You can learn more about staking on our website, and feel free to contact us for any queries!

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.