Solana may currently be the top alternative Layer 1 network after Ethereum, but analysts at cryptocurrency research firm K33 Research speculate that Sui Network may eventually challenge that status.
David Zimmerman, a DeFi analyst at K33, said in a research report released on Wednesday that Sui's performance relative to Solana, coupled with its architecture and upcoming game consoles, may make it a major competitor in "alternative L1s." Zimmerman said:
“Solana often steals the spotlight in the L1 battle, with SOL/ETH up 6% since opening in August, but SUI/SOL up 115% in the same period.”
While he admitted that SUI's recent outperformance - the network's native currency SUI has gained 36% in the past week - may be due to broader "price misvaluation" in the market, he said SUI "does" have the ability to support recent prices. The right factors for the rise.
Sui Blockchain aims to simplify and improve the creation of applications and functions in the Web3 ecosystem. Its model is based on the Move programming language, which enables parallel transaction execution. On September 17, stablecoin issuer Circle announced the upcoming launch of its native USDC stablecoin on Sui, indicating that the blockchain has further gained adoption and support from major industry players.
Zimmerman explained that Sui has all the necessary technical capabilities to become a competitor to Solana, with Sui theoretically capable of executing 297,000 transactions per second (TPS), compared to Solana's 65,000 TPS. According to data from CoinGecko, Solana actually reached a maximum of 3,000 TPS, while Sui reached a maximum of 854 TPS in July 2023.
"Sui has demonstrated impressive technology and is arguably the most impressive in the space," Zimmerman said. "However, we have yet to see it surpass Solana in terms of metrics such as practice and average daily TPS." He It is believed that this may happen soon if Sui can continue to attract users and funds into its ecosystem.
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ToggleSuiPlay0x1 Game Console
Another major bullish factor for Sui is the upcoming launch of a handheld game console called "SuiPlay0x1" , which will be developed and distributed by Mysten Labs, the main developer behind Sui. Deliveries of pre-order units will begin in 2025. It is worth noting that this game console, like Solana’s first smartphone Saga , will also come with a native “Eternals” NFT that allows users to obtain exclusive rewards.
K33's Zimmerman compares SuiPlay0x1 to Solana's Saga, where Saga users receive airdrop rewards that far exceed the cost of the phone. He said that for speculators, this is where the real value of the console lies.
Token supply issues
Zimmerman believes that Sui does have one major obstacle that will affect long-term price trends: token supply. He noted that Sui launched in May 2023, when low-volume/high fully diluted valuation (FDV) token economics were “all over the place.”
Only 27% of Sui's total token supply is in circulation, leaving current investors exposed to the risk of significant sell-offs that may occur when tokens are unlocked in the future. By comparison, 80% of Solana’s total supply is already in circulation.
However, Zimmerman said that Sui can reasonably catch up with Solana in the so-called "L1 battle" and that Ethereum's position will not be threatened for the time being. Zimmerman wrote:
“Sui has a lot to do in the fiercely competitive L1 landscape. The market still largely regards L1 other than Ethereum as a “competitor of Ethereum”... In the post-U.S. Ethereum spot ETF world, we have already seen Ethereum placed in its own category."
