Sui technology offers efficient and cost-effective transactions with high scalability. However, there are concerns about the centralization of Sui. This article, written by Justin Bons, the founder of Cyber Capital, discusses these concerns.
Sui’s design is excellent, except for its tokenomics. Sui claims to have a total supply limit of 10 billion tokens, with 52% remaining “unallocated” until 2030. However, the problem is that over 8 billion Sui tokens have already been pledged, and over 84% of the pledged supply is held by the founding team. This means that Sui is undoubtedly centralized, as the founders control a large portion of the supply without any lock-up periods or legal guarantees.
In fact, the legal documents confirm this, allowing the Sui team to do whatever they want with this portion of Sui tokens. Their communication has been deceptive, lacking disclosure and full of lies and greed.
We have previously requested Sui to disclose their addresses, but they refused. However, they did reveal that these Sui tokens are held by custodial institutions, namely BitGo, Anchorage, and Coinbase Prime. This implies that someone has legal ownership over the entire “unallocated” Sui supply. These custodial institutions must cooperate with legal entities, as seen in the collaboration between Cyber Capital and BitGo.
In other words, we don’t even know if it’s the foundation or the for-profit organization Mysten Labs that controls this portion of the pledged Sui. Without further disclosure from the core team, we cannot know for sure.
For a project that has raised over $330 million, this is completely unacceptable.
Furthermore, out of the total supply of 10 billion tokens, 160 million tokens are allocated to the for-profit organization Mysten Labs, 600 million tokens are allocated to “early contributors,” and nearly 1.5 billion tokens flow directly to venture capital firms. On top of that, there are over 1 billion tokens in “staking subsidies” that will ultimately return to the founding team, as they effectively control the majority of the staked shares.
Meanwhile, Sui has not conducted any public sales (100% pre-mined), which has been a trend in the crypto economics of recent years. Sui is one of the worst examples of this trend, especially considering the “unallocated” portion of the supply.
That’s why I wrote this article. We must raise the standards for the entire industry. Describing Sui’s token distribution as “excessive” is an understatement.
So far, Sui has refused to disclose information about the majority of its token supply, which poses a high risk as the leadership of Sui effectively controls the network consensus. They not only have the power to manipulate consensus but can also cause a market collapse overnight if they decide to sell. From a game theory perspective, they are more likely to slowly exploit retail investors’ interests through gradual selling.
To address this, I propose a radical solution: the destruction of the “unallocated” Sui supply. This would mean destroying more than half of the supply, worth over $1 billion. It may sound crazy, but it would send an incredible positive signal.
Another solution is to transfer control over this portion of the supply to a treasury address controlled by the Sui chain’s governance system. The advantage is that this funding can still be utilized, bringing more competitive advantages to Sui.
Sui’s technology itself has great potential. Its object-oriented model allows for more control and regional sharding. It also proposes a novel solution to the problem of state bloat, where Sui is released when objects are destroyed, combined with parallel processing to achieve high scalability.
In the cryptocurrency field, few things are absolute, and nothing is perfect. Sui is a permissionless public blockchain with a predatory token distribution model. Good and bad coexist. It is shocking that Sui’s token distribution makes Solana look like a saint, and Ethereum seems like an angel.
Given this situation, we inevitably feel conflicted. However, Sui still has a chance to take the right path. They just need to relinquish control over the “unallocated” supply and destroy it.
Related reports:
– XOCIETY joins Sui chain: partnering with Mysten Labs to bring 3A games into Web3.
– Scallop airdrop for Sui lending protocol! Claim your tokens here. SCA surged to $1.7.
– Sui’s TVL ranks first among DeFi protocols, NAVI Protocol native token soon to be listed.
Note: The translation may differ slightly from the original article due to stylistic choices and to ensure clarity and coherence in English.