K33: SUI Could Soon Become Solana's Main Competitor
Sui Could Be Solana's Fiercest Competitor, K33 Research Says
Solana is currently considered the top Layer 1 network after Ethereum, but analysts at crypto research firm K33 Research speculate that the Sui Network might eventually challenge this position.
David Zimmerman, K33's DeFi analyst, argues in a research report released Wednesday that Sui's performance relative to Solana, combined with its architecture and upcoming gaming console, could make it a major contender among "alternative L1s." Zimmerman states:
"Solana often steals the spotlight in the L1 battle, SOL/ETH is up 6% since the start of August, but SUI/SOL has risen 115% in the same timeframe."
While acknowledging that SUI's recent strong performance – the network's native token SUI has gained 36% over the past week – might be due to a broader market "price mispricing," he argues that SUI "does" have the right elements in place to support the recent price surge.
The Sui blockchain aims to simplify and improve the creation of applications and functionalities within the Web3 ecosystem. Its model is based on the Move programming language, enabling parallel transaction execution. On September 17th, stablecoin issuer Circle announced the upcoming launch of its native USDC stablecoin on Sui, indicating further adoption and support for the blockchain by major industry players.
Zimmerman explains that Sui has all the necessary technical prowess to compete with Solana. Sui can theoretically process 297,000 transactions per second (TPS), compared to Solana's 65,000 TPS. According to CoinGecko data, Solana has reached a peak of 3,000 TPS, while Sui peaked at 854 TPS in July 2023.
Source: K33 Research
Zimmerman states, "Sui has already demonstrated impressive technology, arguably the most impressive in the space. However, we have yet to see it outperform Solana in practice and metrics like daily average TPS." He believes this situation could change soon if Sui continues to attract users and funds into its ecosystem.
SuiPlay0x1 Gaming Console
Another major bullish factor for Sui is the upcoming release of a handheld gaming console called "SuiPlay0x1", developed and distributed by Mysten Labs, the main developer behind Sui. Pre-ordered devices are set to start shipping in 2025. Notably, the console will also come with a native "Eternals" NFT that grants users exclusive rewards, similar to Solana's first smartphone Saga.
K33's Zimmerman draws a parallel between SuiPlay0x1 and Solana's Saga. Saga users received airdrop rewards far exceeding the phone's cost. He states that this is the real value proposition for speculators.
Source: SuiPlay0x1
Token Supply Concerns
Zimmerman identifies a major hurdle that could impact Sui's long-term price trajectory: token supply. He notes that Sui launched in May 2023 when "low circulating supply/high fully diluted valuation (FDV) token economics were rampant."
Only 27% of Sui's total token supply is in circulation, exposing current investors to the potential risk of large sell-offs when future token unlocks occur. In comparison, 80% of Solana's total supply is already circulating.
Source: K33 Research
However, Zimmerman states that Sui can reasonably chase Solana in the so-called "L1 battle," while Ethereum's position remains unthreatened for now. Zimmerman writes:
"Sui has a lot going for it in the crowded L1 landscape. The market still largely views L1s outside of Ethereum as 'Ethereum competitors'…In a post-US Ethereum Spot ETF world, we have placed Ethereum in its own category."
