1/16) SUI has a great design, except for its token economics:
SUI claims to have a capped supply of 10B, with 52% being "unallocated" till 2030
The problem is that over 8B SUI is being staked right now!
Over 84% of the staked supply is held by founders! SUI is centralized: 🧵
2/16) The founders control the MAJORITY of supply without lock-ins & ZERO legal guarantees!
The legal fine print protects them, as the truth is sobering
That is what makes the below chart published by the SUI foundation a lie:
The staked SUI implies there is no lock-in at all!
3/16) All of the legal documentation confirms this
As it allows SUI to basically do whatever it wants with this allocation at any time
Making much of their communication extremely deceptive; in light of these facts
A clear lack of disclosure coupled with lies & unbridled greed
4/16) We demanded that SUI disclose their addresses & they refused
They did reveal that this SUI was sitting with custodians; specifically BitGo, Anchorage & Coinbase Prime
This, however, implies that someone does have LEGAL ownership over that entire "unallocated" supply!
5/16) These custodians have to work with legal entities, as my firm @cybercapital does with Bitgo
They do not enforce vesting periods; they enable centralized parties to hold their crypto securely
This obfuscates the centralization, as such parties use multiple staking services
6/16) We do not even know if the foundation or the for-profit (Mysten Labs) controls this stake!
It could even be some random individual, we really have no idea, without further disclosure from the Core team
This is completely unacceptable for a project that raised over $330M!
7/16) Out of that 10B total supply; 160M went to their for-profit (Mysten Labs) & 600M is for "early contributors"
Close to 1.5B went directly to VCs as well...
Add to that over 1B in "stake subsidies" that go back to the founders, as they already control the MAJORITY of stake!
8/16) There was also no public sale at all (100% pre-mine)
It is all so damm greedy, a trend in crypto economics over last few years
SUI is one of the worst examples, especially due to the "unallocated" part of the supply
They should not have been able to get away with this!
9/16) That is why I wrote this, as we have to up our standards for the sake of the industry
Special thanks to @Lennard_Mulder, one of the @cybercapital researchers; I recommend giving him a follow
As this critique is based on his work, he gets full credit for these discoveries
10/16) To say this is gross is an understatement
The sheer greed of SUI's distribution is mindblowing
As SUI still refuses to give full disclosure on the MAJORITY of SUI supply...
This presents us with extreme risk, as the SUI leadership effectively controls network consensus
11/16) While also being able to crash the market overnight if they decide to sell
Though from a game theoretical perspective, it makes more sense to slowly bleed retail investors dry by selling gradually
This might explain the "capped" supply; SUI is not built for the future!
12/16) In this case, I will not criticize SUI without offering a solution
The solution is simple: BURN the unallocated supply!
A radical solution, burning over half of the supply, worth over a billion dollars, is borderline insane!
It would be an incredibly bullish signal!
13/16) Another solution is to turn control of that supply over to a treasury
Controlled by SUI's decentralized on-chain governance
That would also satisfy me & comes with the added benefit of still putting that capital to work
As this gives additional competitive advantages
14/16) SUI might actually be worth saving
The object-centric model allows for more control & local sharding
There is also a novel solution to state bloat: As objects require users to lock SUI, & if objects are destroyed, the SUI is released!
Highly scalable with parralization!
15/16) That is what makes the SUI's supply distribution so tragic
As the tech behind SUI is very promising!
Things are rarely black & white in crypto; nothing is all good or all bad
SUI is a permissionless & public blockchain with a predatory supply distribution, good & evil!
16/16) The truth is that SUI's supply distribution makes SOL look like a saint & ETH a heavenly angel
We can be conflicted about such a story
There is a redemption path SUI could still walk down
All it would take is surrendering control of the "unallocated" supply; BURN IT! 🔥
Sector:
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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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