SUI rallies, DeFi value locked doubles in a month

SUI rallied again to a one-month peak, breaking above $1.44. The platform is also drawing inflows into its DeFi sector. 

SUI is one of the unique platforms, offering a graph-like structure instead of a blockchain. The native SUI token broke out of its declining range, returning to the highest levels since April. It has peaked at $2.10 and the recent rally re-sparks hopes of a price discovery and a move to double-digit prices. 

The SUI rally coincided with a market-wide recovery, led by Bitcoin (BTC) moving above $63,800. For SUI, the main factor was the announcement of launching native USDC stablecoins in the near future. The announcement started the rally this week, also causing a drive against short positions. 

SUI has been hyped as one of the altcoins positioned to rally during a new market cycle. The asset will still need to compete with L2s and other liquidity hubs, which have already established their dominance in DEX trading, lending, and NFT activities. 

Open interest for the token expanded by 30% in the past week, up to $300M . After the latest price hike, SUI traders wiped out short positions for most of the past week. There was a marked shift to longs from September 19 onward, making up more than 55% of all derivative volumes. The shift also suggests SUI may reverse direction, if traders decide to liquidate longs. 

SUI trading volumes are relatively high at $709M in 24 hours, similar to the levels from the March and April rallies. The rapid asset expansion is also setting up expectations for a correction in the short term. 

Token unlock may depress the SUI price

The recent SUI rally was heating up for as long as three weeks. The latest drive to $1.41 precedes a known unlock event that will dilute the circulating supply. 

SUI has a total supply of 2.69B tokens, with a total supply of 10B. Until 2027, token unlocks will continue with regular new inflows. Currently, only 28% of the supply is unlocked, with most of it having flowed into the markets. 

The next unlock will expand the circulating supply by 64.19M SUI, or 2.40% of the total supply. It is uncertain if the recipients will sell the coins, but the market may potentially have to absorb $82.81M after the October 1 unlock.

SUI relies on marketing to grow

The recent SUI rally follows a period of social media marketing, aiming to elevate the network to compete with the current top chains. SUI launched relatively late in 2023, when most of the positions were taken by L2 and traffic was already established on Ethereum, Solana, BNB Chain and a few others. 

The SUI team will not give up and the asset keeps growing its influence on X. The token is also widely distributed, with top addresses only containing 15% of the supply. The network, however, is not as transparent as Ethereum or L2s, with no data on fees. SUI is not EVM compatible and will explore alternative methods for onboarding stablecoins . As of September, SUI carries more than $377M in the form of stablecoins, mostly on lending protocols. 

The SUI ecosystem reports $830.78B in value locked, expanding from $500M in August. For now, the protocol is not considered undervalued, as its market cap above $3.6B is much higher than the value locked on the protocol. 

The ecosystem hosts the NAVI protocol, a collateralized lending facility offering loans against SUI, USDC, USDT, WETH, and WBTC. The chain also hosts DEXs and smaller lending hubs, but NAVI still controls more than 40% of the liquidity. 

Most of the recent ecosystem expansion comes from NAVI, which only held around $140M in value locked as of August 6. 

SUI claims to have up to 1.6M daily active accounts, a level similar to TRON’s high-traffic network. There is no specific data on user count for apps, though Navi Protocol has reported up to 10K daily active users. 

The biggest problem for SUI is the rapidly expanded supply. In 2023, the project started off with around 500M tokens, going through its biggest cliff unlock in April. SUI expanded its supply from around 1B tokens to 2.3B in a single event. Currently, the supply is growing more gradually, but will still grow to 3.63B in a year.

Cryptopolitan reporting by Hristina Vasileva