The Rise of DeFi on Sui: Ethereum’s Next Challenger?

Once considered a “backup” for Aptos in the Move blockchain ecosystem, Sui initially struggled with ongoing token sales, drawing comparisons to Ripple’s trajectory. Recently, however, Sui has shown a powerful return, establishing a stronghold in DeFi with ambitions to rival Solana.

With the entry of Movement, our view of public chains now includes a richer, Move-powered landscape where DeFi and Meme projects are pivotal battlegrounds. Let’s take a closer look at Sui’s strategic development and where it currently stands.

Breaking Away from Token Sales to Build a Robust Chain

Although recognized as a “water-themed” chain, Sui’s recent token price rally is attributed to the Sui Foundation’s pledge to halt token sales and Sui’s aggressive expansion in DeFi. Despite missing trending features like staking and restaking, Sui has developed strong foundations in lending, swapping, and other essential DeFi services. Flagship projects like NAVI and Cetus are drawing attention.

According to DeFiLlama, Sui’s ecosystem has surpassed 500,000 daily active addresses, with DeFi TVL (Total Value Locked) approaching $1 billion. In Sui’s mid-year DeFi report, trading volume was noted to have surged by 3,689% in the first half of the year. Although it’s still far from Ethereum’s scale, Sui’s growth curve is striking.

Overall, Sui’s DeFi ecosystem is rapidly advancing, powered by both technical innovation and market demand. With its diverse DeFi offerings and growing ecosystem, Sui demonstrates significant growth potential and market traction.

For instance, NAVI is currently the largest DeFi project in Sui’s ecosystem, focusing on lending and liquid staking. By August 2024, NAVI had amassed $200 million in TVL, integrating with over 20 DeFi projects within Sui’s ecosystem and planning to onboard 30–50 additional projects in the coming year.

Another key player in Sui’s DeFi ecosystem is its native liquidity layer, DeepBook. Launched last year, DeepBook aims to enhance DeFi protocols on Sui with perpetual futures, lending, and payment applications. Many Sui-based DeFi applications, including Aftermath, Cetus, KriyaDEX, Turbos, and Typus, have integrated DeepBook into their suites.

DeepBook’s complex Central Limit Order Book (CLOB) system optimizes liquidity and efficiency across Sui’s DeFi ecosystem, enabling traders to execute orders at fair prices with reduced slippage. This boosts user experience and attracts more participants.

Additionally, DeepBook is Sui’s first native liquidity layer, supporting token trades with functionalities like liquidity pool creation, deposit and withdrawal processing, and asset exchanges.

Official Support and Wealth Effect

Unlike the early days of decentralized projects, today’s Layer1&2 competition focuses on ecosystem enablement and legitimacy, with a critical emphasis on securing official support.

The Sui Foundation is rolling out ecosystem expansion initiatives, such as the Sui Builder House World Tour, which aims to attract global developers into the Sui ecosystem. Additionally, the GrantHub program has already funded 86 projects.

The Sui Builder House World Tour features sessions with experts, ecosystem projects, partners, and Sui engineers, including workshops and demos. In Kyoto, a creativity competition highlighted talented teams demonstrating high levels of innovation within a set timeframe.

These hands-on initiatives foster collaboration through in-person exchanges and presentations, creating deeper ties within the developer community.

Additionally, the Sui Foundation has made direct investments in several meme projects, amplifying the wealth effect. For example, Scallop announced a Sui Foundation investment on October 10, 2024. Meme tokens such as HIPPO, BLUB, and FUD experienced over 10x gains in just two months, while the SUI token itself hit an all-time high, with a surge exceeding 400%. Such performance has attracted widespread investor attention, further fueling interest in meme projects.

Some of Sui’s meme projects have also gained traction across community and media channels. For instance, the meme project FUD was mentioned on Twitter by Mysten Labs co-founder Adeniyi Abiodun, lending credibility and visibility to these meme tokens within the industry.

New Entrants and Competitive Dynamics

Traditionally dominated by Aptos and Sui, the Move ecosystem recently welcomed a disruptive newcomer: Movement. Quickly gaining traction, Movement has emerged as the latest prominent chain leveraging the Move language.

Sui and Movement take different approaches to implementing Move. For example, Sui introduced immutable states to Move, aiming to replicate a UTXO-like programming model.

In 2024, the Move language received a major upgrade, introducing new functionalities such as method syntax, positional fields, and loop labels. These additions make smart contract development more flexible, allowing developers to write more streamlined and maintainable code.

Sui’s Mysticeti mechanism enables a single validator to sign blocks while appointing multiple leaders, a distinct approach compared to Movement’s Block-STM mechanism, which facilitates parallel processing.

Specifically, Block-STM combines preordered block processing with Optimistic Software Transactional Memory (STM) to enable concurrent execution. By grouping transactions into blocks and leveraging a predefined order, it dynamically detects dependencies and avoids conflicts. This structure allows transactions to be split across processing threads, optimizing parallel execution.

Block-STM’s core lies in its low-overhead, cooperative scheduler, which prioritizes lower-priority transactions for execution and verification. This design enables Block-STM to sustain efficient parallel execution, even under high-demand conditions.

Conclusion

As an early Move-based blockchain, Sui has revitalized its presence in DeFi. As an early adopter of the Move-based blockchain, Sui has reenergized its standing in DeFi. Despite currently ranking only tenth in TVL among Layer 2 solutions, Sui’s potential is evident as it strategically leverages Ethereum’s limitations. With a concentrated push in DeFi innovation, Sui is positioning itself for a remarkable comeback.