Following the growth enmeshed by Crypto Airdrops in recent times, Ethereum Layer-2 infrastructure— Sui Blockchain has released Tokenomics about the project.
Sui Blockchain—Mysten Labs startup company has in the past one year of it’s testnet and mainnet launch raised over $300 million at $2 billion valuation with participation from Binance Labs, Coinbase Ventures, a16z crypto, Jump Crypto, Circle Ventures, and other prominent VC heavyweights.
Mysten Labs launched in 2021 and comprises former Meta employees who have previously worked at Novi research, the Diem blockchain, and the Move programming language. The company’s inaugural product will be Sui, a Proof-of-Stake based blockchain which will cater to developers and creators regardless of their background.
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“Sui marries the safe asset-centric features of Move with a new object-centric data model. This pairing enables new approaches to several blockchain scaling challenges and unlocks a more direct, accessible programming style for the next generation of smart contract developers,” said Sam Blackshear, Mysten’s co-founder.
According to a Twitter publication posted on SUI’s official page, the layer2 blockchain formation is streamlined to front run speed and low cost gas transactions on EVM. The goal of Sui’s tokenomics is a flourishing economy where: fees are low enough for people to use the chain.
The Sui community has grown immensely, so we recently published a blog that overviews the basics of Sui’s tokenomics to get everyone up-to-date.
?Let’s dive in? pic.twitter.com/eyIiCh9dH9
— Sui (@SuiNetwork) April 21, 2023
Apparently, the building costs are low plus predictable for a sustainable business model and the activity is high/reliable for operators to plan their budget.
However, The Sui economy has three main sets of participants: Users who create, change, or transfer digital assets or use apps on Sui; SUI holders who either stake funds to validators or pay fees to interact with assets and apps on-chain; validators who manage transactions processing and execution.
SUI participants interact in a variety of ways across the network, and that interplay informs the three core components of Sui’s tokenomics:
Proof-of-Stake Mechanism
Gas Mechanism
Sui’s Storage Fund
SUI tokens serve four purposes. They can be staked to a validator in order to secure the network which can be used to pay gas fees to execute transactions and other operations.
Sui tokens can be used as a native asset for on-chain transactions and it gives holders’ the right to participate in future governance. With Delegated Proof-of-Stake, Sui allows for the broadest possible participation of SUI holders in its operations.
Staked SUI is a proxy for voting power, providing the right degree of “skin in the game” – those who care most about Sui get a larger voice in its operations. Unfortunately, the SUI chain has rebutted it will not issue out SUI token airdrops to its community but will institute an ICO on whitelisted addresses— a situation which has been greeted with intense resentment on Crypto Twitter as many claim the chain rode on the hype around airdrops in 2022.
Consequently, the Sui’s gas pricing mechanism achieves several important outcomes; delivering users with low, predictable transaction fees and incentivizing validators to optimize their transaction processing operations and finally preventing spam and denial of service attacks.
Sui’s Storage Fund redistributes past transaction fees to future validators. Users pay fees for processing plus storage, which are then put into the fund. If storage needs are trending upwards validators receive additional stake rewards to cover the costs, and vice versa when needs are.