Sui Token: Potential to Repeat Solana's Bull Market?

In recent years, the Sui public blockchain, developed by Facebook, has garnered significant attention, especially as discussions around its token SUI have surged on social media. Many commentators have begun comparing it to the performance of Solana (SOL) in 2021. Numerous analysts believe that the upward trajectory of SUI resembles the initial phase of SOL before the last bull market, sparking market expectations that Sui could become the next Solana.

The mainnet of Sui was officially launched in May 2023, while Solana began operations in March 2020. Although there is currently a significant gap between the two in various metrics, analyzing their performance one year post-launch from a growth potential perspective offers valuable insights.

On-Chain Data Comparison

To accurately assess the growth potential of Sui versus Solana, we will use Solana's key data as of July 12, 2021, while Sui's data will be up to September 24, 2023. From an on-chain data perspective, Sui generally outperforms Solana's records from 2021.

Specifically, although Solana experienced a significant increase in the price of its token SOL in 2021, its ecosystem's data performance was not ideal. Particularly, the statistics for daily active addresses showed that Solana maintained only tens of thousands of daily active addresses in 2021, breaking the 100,000 mark for the first time only in 2022. In contrast, Sui's on-chain daily active addresses surged after a spike in April and have steadily risen to the million level, even remaining above 400,000 during the market cooling period in August. Recent data indicates that Sui's daily active addresses have once again surpassed one million, undoubtedly boosting confidence in its potential to become a hot token in the next bull market.

Transaction Performance Comparison

In terms of performance metrics, Sui's peak transactions per second (TPS) reached 297,000, while Solana's peak was only 65,000. However, considering the daily TPS performance, Sui's current TPS still falls short of Solana's level in July 2021. Overall, Sui's activity in on-chain data demonstrates strong performance, indeed providing robust support for its potential to replicate Solana's bull market.

Influence of Social Media

While ecosystem development is crucial, the influence of social media in the crypto space cannot be overlooked. One of the major catalysts for Solana during the 2021 bull market was the public support from FTX founder SBF and endorsements from numerous celebrities, including Mike Tyson and Melania Trump. In contrast, although there is a considerable number of industry KOLs supporting Sui on social media, Sui seems to lack a "star spokesperson" like SBF. In September, K33 Research analyst David Zimmerman noted that Sui, with its technological advantages and upcoming native gaming console, could become a strong competitor to Solana.

Market Trends and Competitors

Capitalizing on market trends is vital for a project's success. In 2021, the rise of NFTs and DeFi drew substantial attention to Solana, while MEME currently represents the largest market trend. Although Sui is making gradual progress in this area, with the daily addition of over 300 tokens, there remains a significant gap compared to Solana, which generates nearly 10,000 new tokens daily.

In terms of trading volume, Sui's trading volume within 24 hours on September 24 reached $95 million, while Solana's soared to $1.1 billion, indicating that Solana still holds a dominant position in the MEME market. At the same time, Sui faces pressure from multiple competitors, including Base, Ethereum L2, and TON.

Capital Support and Funding Situation

Capital support is a crucial factor in the growth of a token's market capitalization. Recently, the asset management scale of the Sui trust fund launched by Grayscale has surpassed $1 million, and Jeremy Allaire, co-founder of Circle, announced the launch of USDC on the Sui network. However, compared to the substantial funding support Solana received in its early days, Sui's capital backing appears to be somewhat lacking.

Looking back at Solana in 2021, its ecosystem support stemmed from the strong financial backing of FTX and its investment arm Alameda Research, which invested over $100 million in Solana. Sui completed a $300 million funding round in 2022, with investors including FTX Ventures, which had close cooperation with Solana.

Potential of Sui Token

With the rapid rise of the Sui public blockchain, market expectations for its token SUI are high. Many analysts have started comparing SUI to the performance of Solana in 2021, believing that SUI has the potential to become the next "Solana." The main reasons behind this belief include:

1. On-Chain Activity: Sui's daily active addresses have surpassed one million, far exceeding Solana's early performance. This user growth reflects the gradual maturity of the Sui ecosystem, potentially attracting more developers and users to participate.
2. Technological Advantages: Sui's TPS peak of 297,000 significantly outpaces Solana's 65,000. This indicates that Sui possesses stronger processing capabilities at the technical level, especially in high-frequency trading and complex application scenarios.
3. Market Demand: With the continuous development of emerging markets like NFTs, DeFi, and MEME, Sui is striving to seize this growth opportunity, particularly in the MEME token boom, where its daily addition of tokens shows exponential growth.

Is Now the Right Time to Invest in SUI?

1. Short-Term Volatility: The recent surge of the SUI token has been remarkable, rising 256% from August 5 to September 23. Such significant short-term fluctuations come with risks, potentially exposing investors to pressures from market sentiment changes.
2. Liquidity Risk: SUI's circulating market capitalization is approximately $4.1 billion, but 21% of tokens remain locked. This implies that future token releases could exert selling pressure on the market, affecting price stability.
3. Market Competition: Sui faces competitors, including Base, Ethereum L2, and TON, among others. While Sui has certain technological advantages, whether it can stand out in intense market competition remains uncertain.

Risks Associated with SUI Token

1. Scarcity of Ecosystem Projects: Currently, Sui has yet to form an ecosystem of DApps with wealth effects and a broad user base like Solana. This may impact user activity and long-term value creation capabilities.
2. Insufficient Social Media Influence: Although Sui has garnered some attention in the industry, it lacks a "star spokesperson" like SBF from FTX, which may somewhat limit its social media outreach and market recognition.
3. Volatility of On-Chain Data: Sui's active user count has experienced significant explosive growth, and whether this boom-and-bust trend can be sustained remains to be seen. A decline in user activity could impact investor confidence in SUI.

Outlook

Overall, Sui shares many similarities with Solana in terms of technical performance, on-chain activity, and social media influence, especially given the recent strong performance in the token market. However, it is essential to note that Sui has yet to exhibit the unique advantages that Solana had in 2021. The competition in the L1 and L2 tracks is intense, and whether Sui can continue to attract investor attention remains to be observed. Additionally, Sui's ecosystem development needs to introduce more influential DApps to achieve a wealth effect similar to Solana's.

While Sui may become the next public blockchain favored by the market, uncertainties still exist, and investors should maintain a cautious attitude and carefully consider their decisions.

Emily Thompson

Holds a degree in finance and has previously worked as an analyst at an investment firm on Wall Street, focusing on digital currency investments. The passion for blockchain stems from a deep understanding of financial markets, and extensive investment experience enables accurate assessment of a project's potential value, often providing unique insights for investors.