Thread by @Forgd_

@SuiNetwork recently announced the deployment of its Community Access Program that grants early contributors access to dicounted $SUI.

The #Suinami is at our doorstep, will you know how to swim?

A 🧵 by @giorgionchain

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#Sui is a low-latency, high-throughput permissionless L1 whose instant transaction finality makes it a prime candidate for on-chain use cases like #DeFi and #GameFi.
It focuses on horizontal scaling enabling parallel unrelated transaction processing

sui.io

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The Mysten Labs team, which comprises former Diem (@Meta) developers (@EvanWeb3, @EmanAbio, @b1ackd0g), secured backing from high-profile crypto VC funds (@a16zcrypto, @BinanceLabs, @cbventures, @circle), by raising millions in series A and B financing round

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1. COIN UTILITY

The $SUI coin serves four primary functions:

- Stake and delegate to participate in the PoS consensus
- Used to pay gas fees
- Unit of account, medium of exchange, or store of value
- Governance and on-chain voting

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2. GAS FEE MECHANISM

$SUI fees play an essential role in the ecosystem, acting as a coordination mechanism among validators pushing them toward honest behaviours, and convenient for users who deal with low and predictable gas fees (throughout a 24-h epoch)

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Sui’s gas pricing mechanism achieves three outcomes:

- Delivering users with low and predictable transaction fees
- Incentivizing validators to optimize their operations
- Preventing spam and denial of service attacks

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When transacting, a user pays:

- Computation fees → charged on all network operations and used to reward PoS validators/delegators
- Storage fees → used to shift stake rewards across time and compensate future validators for previously stored on-chain data storage costs

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2.1 COMPUTATION FEES

The computation price is determined through a three-step process operating across each epoch:

- Gas price survey
- Tallying rule
- Incentivized stake reward distribution rule

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Gas price survey

It collects validators' Reservation price – the minimum gas price at which they are willing to process transactions.

The protocol sets the Reference price to ensure at least 2/3 by stake validators can afford to charge such a price (BFT)

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Tallying rule

Validators check whether or not other validators have charged the actual prices in line with the one set during the Gas price survey.
The Tallying rule aims to create a community-enforced mechanism for encouraging validators to honour the Reference gas price

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Incentivized stake reward distribution rule

At the end of the epoch, the distribution of emissions across validators is adjusted using validators’ input from the Tallying Rule.
Each validator will receive boosted/slashed rewards accordingly

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Since users want to transact as quickly and efficiently as possible, they encourage this behaviour by prioritizing communication with the most responsive validators.

Such efficient operations are compensated with boosted rewards relative to less responsive validators

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An unresponsive validator is thus doubly exposed to the gas pricing mechanism: they loses directly through slashed rewards and indirectly through a reduced delegated stake in future epochs as stakers move their coins to more responsive validators

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2.2 STORAGE FEES

They accrue to the storage fund whose size influences future staking rewards.

It ensures that future validators are compensated for their storage costs by the past users who created those storage requirements in the first place

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The fund includes a deletion option by which users obtain a rebate whenever they delete their previously-stored on-chain data.

Storage fund inflows are designed to be always greater than outflows.

This guarantees the fund is never depleted

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You may find useful the below image that shows the coin flow among ecosystem participants/entities:

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3. DISTRIBUTION

The forecasted max supply of $SUI is 10B, and the distribution is as follows:

- 20% to Early Contributors
- 14% to Investors
- 10% to Treasury
- 6% to Community Access Program
- 50% to Community Reserve

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A share of $SUI’s total supply will be liquid at launch, with the remaining coins vesting over the coming years or distributed as future stake reward subsidies.

Sui recently announced that discord members registered before Feb 1st can benefit from discounted tokens sale

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4. VALUE CREATION

Sui can execute up to 120k transactions/second due to
high-throughput horizontal scaling.

Sui’s fast transaction finality and low-latency capacity enable a variety of Dapps

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Wrapping up the value created by the protocol:

- Highly scalable (horizontally)
- Fast transactions finality
- Very cheap to transact
- Multiple use cases leveraging (low-latency features)
- Predictable gas fees
- Rebase option

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4. VALUE CAPTURE

We expect there to be low circulating supply due to staking. The more people interact with the platform, more fees are spent, resulting in an increase in validators' earnings, leading to an increase in staking incenitve and thus $SUI buy pressure

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Lastly, the storage fund creates deflationary pressure over the $SUI coin in that increased activity leads to more storage requirements and more $SUI removed from circulation

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5. ECOSYSTEM USERS

- Users → they create and transfer digital assets or communicate with Dapps
- Coin holders → delegate coins to validators to participate in the Delegated PoS mechanism.
- Validators → carry out transaction processing and execution on the platform

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Why do they use Sui?

- Users → high transaction finality, good UI/UX, and low fees
- Coin holder → staking rewards
- Validators → staking rewards (computation and storage), governance rights

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6. TOKEN DEMAND DRIVERS

- Governance rights → validators vote on the protocol’s development
- Staking rewards → allows users to earn more $SUI while staking their assets to secure the protocol
- Speculation → driven by the team’s and investors’ recognizability

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7. BENCHMARK

@Aptos_Network and Sui share many similarities. The founders of both protocols came from Meta and use the Move programming language. Aptos uses the core Move's global storage, while Sui uses its own

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Aptos doesn't have a concept of objects, instead, it uses an address-centric model like @ethereum. Any Sui address can own an unlimited number of the same type of resource. Sui reportedly handles 120,000 transactions per second, while Aptos can supposedly handle 160,000

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8. CONCLUSIONS

Sui could have a lot of potential, and many blockchain proponents seem to approve of its technological and roadmap.

Sui will have to compete fiercely with other L1 blockchains and continuously develop its ecosystem if it hopes to gain wider popularity

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Given the designed PoS system, a large portion of the total supply is expected to be locked out of circulation reducing selling pressure on the coin, and since the supply is finite, increased network activity will significantly increase demand for the coin

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Sui's incentive mechanism anchors stakeholders' behaviours to the protocol's objective functions that aim to create a general commonwealth and push users toward value-aligned activities

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You can read the full detailed breakdown here: tokenomicsdao.substack.com/p/tokenomics-1…

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