Sui technology itself has great potential, but its token economics and 52% of "unallocated" SUI are the biggest black boxes.
Written by: Justin Bons, Founder of Cyber Capital
Compiled by: Frank, Foresight News
Sui’s design is great, except for its token economics: SUI claims to have a total supply cap of 10 billion, of which 52% will be “unallocated” before 2030.
But the problem is that there are more than 8 billion SUIs staked, and more than 84% of the staked supply is held by the founding team. So in a way, SUI is undoubtedly centralized, that is, the founders control most of the supply, and there is no lock-up period or legal guarantee.
That is, legal loopholes protect them, which is why the liquid supply chart released by the Sui Foundation is a lie - it means that the so-called staked SUI has no lock-up period at all!
All legal documents confirm this, as it allows the Sui team to do whatever they want with their part of SUI, whenever and wherever they want.
Given these facts, much of their communications are extremely deceptive, presenting a glaring lack of disclosure coupled with lies and unbridled greed.
We previously asked the SUIs to disclose their addresses, but they refused. They did reveal that the SUIs are held by custodians, specifically BitGo, Anchorage, and Coinbase Prime.
However, this implies that someone does have legal ownership of the entire “unallocated” SUI supply. These custodians must work with a legal entity, as Cyber Capital and BitGo do.
In short, they do not enforce vesting periods, but rather enable centralized institutions to safely hold their cryptocurrencies, which confuses the issue of centralization as these institutions use multiple staking services.
This means that we don’t even know whether it is the foundation or the for-profit organization Mysten Labs that controls this part of the staked SUI. It may even be some random individuals behind it - without further disclosure from the core team, we really can’t know the details.
For a project that raised over $330 million, this is completely unacceptable.
In addition, of the total supply of 10 billion, 160 million were allocated to the for-profit institution Mysten Labs, 600 million were allocated to "early contributors", and nearly 1.5 billion went directly to venture capital firms...
Add to that over 1 billion in “staking subsidies” — these subsidies will ultimately go back to the founding team, as they actually control the majority of the staked shares.
At the same time, SUI had no public sale at all (i.e. 100% pre-mine), which has been a trend in cryptoeconomics over the past few years, and SUI is one of the worst examples, especially considering the "unallocated" portion of the supply.
This is why I wrote this article. We must raise the bar for the good of the entire industry. After all, describing Sui’s token allocation as “excessive” would be a huge understatement.
Sui has so far refused to disclose information about the majority of its token supply, which poses an extremely high risk as Sui’s leadership effectively controls the network consensus.
Not only can they manipulate consensus, but if they decide to sell, they can also crash the entire market overnight. However, from a game theory perspective, they are more likely to choose to slowly drain the interests of retail investors by gradually selling.
This may explain why SUI has a “capped supply”, but it is clearly not a project focused on the future.
Since I am going to criticize, I will also propose a solution. It is very simple: destroy the "unallocated" SUI supply:
This is a radical solution that is equivalent to destroying more than half of the supply, worth over $1 billion, which sounds crazy, but it will also send an incredibly bullish signal!
Another solution is to transfer control of this part of the supply to a treasury address controlled by the Sui on-chain governance system. The advantage is that this part of the funds can still play a role, bringing more competitive advantages to Sui.
Sui's technology itself has great potential. Its object-oriented model allows more control and local partitioning. Sui also proposed a novel solution to the state bloat problem - since the object requires the user to lock the SUI, the SUI will be released when the object is destroyed. This combined with parallel processing achieves high scalability.
In the field of cryptocurrency, few things are absolute and nothing is flawless. Sui is a permissionless public blockchain with a predatory token distribution method. There are both good and bad sides. Shockingly, SUI's token distribution makes SOL look like a saint and ETH look like an angel.
Faced with this situation, we can’t help but feel conflicted. However, SUI still has a chance to get on the right track. They just need to give up control of the “unallocated” supply and destroy it!
