Sui technology provides efficient transactions at low cost, and it is highly scalable. However, there are concerns about the centralization of SUI. This article, written by Justin Bons, the founder of Cyber Capital, discusses these issues.
The design of Sui is impressive, except for its token economics. SUI claims to have a total supply of 10 billion tokens, with 52% remaining “unallocated” until 2030. However, the problem is that more than 8 billion SUI tokens have already been pledged, and over 84% of the staked supply is held by the founding team. This means that SUI is undoubtedly centralized, as the founders control the majority of the supply without any lock-up period or legal guarantee.
The Sui Foundation’s published circulating supply chart is a lie, as there is no lock-up period for the so-called staked SUI. All legal documents confirm this, allowing the Sui team to do whatever they want with this portion of SUI tokens.
Their communication has been deceptive, lacking disclosure, and filled with lies and greed. We have previously requested SUI to disclose their addresses, but they refused. However, they did reveal that these SUI tokens are held by custodians, specifically BitGo, Anchorage, and Coinbase Prime. This implies that someone has legal ownership of the entire “unallocated” SUI supply. These custodians must work with legal entities, just like the collaboration between Cyber Capital and BitGo.
In other words, we don’t even know if the Foundation or the profit organization Mysten Labs controls this portion of staked SUI. It could even be some random individuals behind it. Without further disclosure from the core team, we cannot know for sure.
For a project that has raised over $330 million, this is completely unacceptable. Additionally, out of the total supply of 10 billion tokens, 160 million tokens are allocated to profit organization Mysten Labs, 600 million tokens are allocated to “early contributors,” and nearly 1.5 billion tokens flow directly to venture capital firms. Furthermore, there are over 1 billion tokens in “staking subsidies,” which will eventually return to the founding team, as they effectively control the majority of the staking shares.
At the same time, SUI has not conducted any public sale (i.e., 100% pre-mined). This has been a trend in cryptocurrency economics in recent years, and SUI is one of the worst examples, especially considering the “unallocated” supply.
That is why I wrote this article. We must raise the standards for the entire industry. Describing Sui’s token distribution as “excessive” is an understatement.
So far, SUI has refused to disclose information about the majority of its token supply, which poses a high risk as the leadership of SUI effectively controls network consensus. They can manipulate consensus and even cause a market collapse overnight if they decide to sell. However, from a game theory perspective, it is more likely that they will gradually sell off and slowly drain retail investors’ interests.
One solution is to destroy the “unallocated” SUI supply. This is a radical solution, equivalent to destroying over half of the supply, worth over $1 billion. It sounds crazy, but it will send an incredible positive signal.
Another solution is to transfer control of this portion of the supply to a treasury address governed by the Sui chain’s governance system. The advantage is that this portion of funds can still be utilized, bringing more competitive advantages to Sui.
The technology of Sui itself has great potential. Its object-oriented model allows for more control and regional sharding. For the problem of state bloat, Sui has proposed a novel solution by combining object locking with parallel processing, achieving high scalability.
In the cryptocurrency field, very few things are absolute, and nothing is perfect. Sui is a permissionless public blockchain with a predatory token distribution, where both good and bad coexist. It is astonishing that SUI’s token distribution makes SOL look like a saint, and ETH like an angel.
Given this situation, we cannot help but feel conflicted. However, there is still a chance for SUI to take the right path. They just need to give up control of the “unallocated” supply and destroy them.
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