The Rising Sui: Competing with ETFs on Wall Street, Ecosystem Expansion Still Faces Resilience Test

Author: Jae, PANews

At the start of 2026, Sui experienced a one-week surge of 30%, marking a “green opening” for the year.

While most Layer 1 public chains are still fighting over TPS and ecosystem numbers, Sui is waiting for its ticket to the Wall Street arena. The world’s largest crypto asset management firms, Grayscale and Bitwise, have recently submitted applications for Sui spot ETFs to the US SEC. This means that the SUI token will soon be evaluated alongside BTC and ETH in institutional asset baskets.

However, beneath the glamorous narrative of the “Silicon Valley darling” transforming into the “Wall Street newcomer,” Sui is also undergoing a severe test: can it embrace traditional capital while becoming a trustworthy ecosystem foundation?

Multiple data points show exponential growth, with a large influx of new users

Over the past two and a half years, the Sui ecosystem has shown exponential growth and strong user stickiness.

Since its mainnet launch in May 2023, its TVL has skyrocketed by approximately 32 times, reaching a peak of $2.6 billion in October 2025. However, due to the impact of the “10.11 flash crash,” Sui’s TVL has continued to decline and is now around $1 billion, falling below the half mark.

In terms of public chain fees, Sui grew from an initial $2 million to about $23 million currently, an increase of 11.5 times.

In throughput, Sui’s peak daily transaction volume reached 66.2 million, with daily throughput remaining stable above 4 million over the past year. These massive throughput figures confirm that Sui has achieved horizontal scaling, enough to support high-intensity, large-scale user and application requests.

Regarding user activity, early on, Sui’s daily active users numbered only tens of thousands, but this number surged sharply afterward, reaching a peak of 2.5 million in April 2025. Although there has been some recent decline, the monthly average remains healthy. As of now, the average daily active users are still around 600,000.

Notably, the proportion of old users remains stable above 20%, reflecting high user stickiness. Since 2025, a large influx of new users has continued to join the Sui ecosystem.

These data points form the basis of Sui’s appeal to institutional capital. It is no longer just a technically advanced public chain but a mature economy carrying real traffic and assets.

Opening the Wall Street door, multiple SUI spot ETF applications submitted

The application for a SUI spot ETF will further broaden the access path for compliant funds into Sui and strengthen institutional recognition.

On December 5, 2025, Grayscale officially submitted an S-1 registration statement to the SEC, applying to convert its Sui Trust Fund into a spot ETF. According to the disclosed documents, the Grayscale Sui Trust (SUI) ETF plans to be listed on NYSE Arca, with the fund directly holding SUI tokens, linking the net asset value to SUI’s market price. More importantly, this application includes a staking mechanism, meaning that while providing price exposure for investors, it can also generate additional endogenous income through validator rewards at the blockchain layer, which will be highly attractive to institutional investors seeking cash flow.

Bitwise followed suit, submitting a registration statement for the Bitwise SUI ETF to the SEC on December 19, 2025, planning to list on Nasdaq and choosing Coinbase as custodian. Bitwise had previously included SUI in its “Bitwise 10 Crypto Index ETF,” and this independent spot ETF application marks SUI’s formal entry into the institutional asset basket alongside BTC, ETH, SOL, and others.

Unlike previous cautious stances, the recent leadership change at the SEC has created a more relaxed regulatory environment for altcoin ETFs. This shift has accelerated the approval of several altcoin ETFs and gradually shifted the market outlook for Sui ETF from vision to concrete timetable.

Institutional favor towards Sui is not accidental. Its core competitiveness among many L1s lies in its rich application scenarios, especially in scalability for payments, gaming, and DeFi protocols.

Moreover, market consensus on SUI token value is shifting from short-term speculation to long-term allocation. As of January 7, SUI’s market cap exceeded $7 billion, with a fully diluted valuation (FDV) close to $19 billion. Although about 62% of tokens are still locked, the market has smoothly digested over $60 million worth of token unlocks early 2026 without severe price dumps. The arrival of Sui ETF will lower the entry barrier for traditional wealth management institutions and significantly improve SUI token liquidity depth, thereby reshaping its valuation logic.

Upcoming private trading feature may trigger commercial demand

Alongside institutional capital inflows, Sui is also trying to address another obstacle in B2B payments for public chains. While all chains promote transparency of on-chain data, Sui takes a different approach.

As the privacy track returns to the main stage of crypto, Mysten Labs co-founder and Chief Product Officer Adeniyi Abiodun announced on December 30, 2025, that Sui network will launch native private transaction functionality in 2026. This is not an optional plugin but a core capability integrated into the consensus layer and object model. The initial purpose of this feature is to achieve default privacy, meaning that during payments or transfers, transaction amounts and counterparty information will only be visible to sender and receiver by default, invisible to outsiders.

This feature could generate huge commercial demand. While traditional public chain transparency ensures fairness, it also severely hampers entities that need to protect trade secrets and individuals who value privacy. Sui’s privacy solution aims to maintain high throughput while providing end-to-end confidentiality through zero-knowledge proof technology.

The most notable feature of Sui’s private transaction capability is its compliance-friendly design. Unlike privacy coins like Monero, Sui introduces a selective transparency mechanism.

• Audit hooks: Protocols allow opening specific transaction details to regulators or authorized auditors under certain compliance processes;
• KYC/AML integration: Enables financial institutions to perform necessary anti-money laundering checks while preserving privacy;
• Post-quantum primitives: Considering the potential threat of quantum computing to elliptic curve cryptography, Sui plans to introduce post-quantum cryptography standards such as CRYSTALS-Dilithium and FALCON in its 2026 upgrade, ensuring stored privacy data remains unbreakable for decades.

These technical components position Sui as a “regulated privacy financial network,” attracting banks and commercial entities with high data sensitivity.

However, this positioning is a double-edged sword. It aims to attract traditional financial institutions concerned with data privacy but may also raise doubts among pure cryptography advocates. A more severe challenge is the technical difficulty: maintaining high TPS while integrating zero-knowledge proofs and post-quantum encryption algorithms.

Ecosystem projects upgrade liquidity infrastructure

In the fierce competition among L1s, liquidity depth remains a core indicator of a public chain’s vitality. In recent months, Sui ecosystem projects have been actively optimizing liquidity efficiency and architecture.

As a long-term leader in TVL within the Sui ecosystem, NAVI Protocol officially launched Premium Exchange (PRE DEX) on December 29, 2025. This move signifies NAVI’s evolution from a single lending protocol into a full-stack DeFi infrastructure.

PRE DEX focuses on building a premium discovery mechanism. Currently, many crypto protocol tokens exhibit significant price dislocation at different stages. PRE DEX aims to provide a pricing platform for such assets through a market-driven algorithm.

For institutional investors and multi-wallet users, PRE DEX will greatly improve management efficiency. The system allows users to efficiently configure and aggregate multi-chain and multi-protocol assets within a single interface, reducing friction costs of cross-protocol operations.

With PRE DEX’s launch, asset pricing within the Sui ecosystem is expected to become more efficient. Especially for high-value or low-liquidity assets, PRE DEX may serve as a liquidity hub.

The two funding events at the end of 2025 may indicate that Sui’s liquidity management is entering an AI-driven and dynamic phase.

In December 2025, Magma Finance announced a $6 million strategic financing led by HashKey Capital. Magma aims to solve liquidity fragmentation and capital efficiency issues within the Sui ecosystem.

Its protocol architecture introduces an Adaptive Liquidity Market Maker (ALMM) model. Unlike traditional centralized liquidity (CLMM), ALMM uses AI strategies to analyze market volatility in real-time. During sharp market fluctuations, AI automatically adjusts asset price distributions and rebalances LP capital into active trading ranges.

This approach not only offers traders lower slippage but also creates higher real yields for LPs. Meanwhile, AI monitors the mempool to prevent MEV attacks.

Ferra Protocol completed a $2 million pre-seed round in October 2025, led by Comma3 Ventures. Ferra launched the first DLM (Dynamic Liquidity Market Maker) DEX on Sui, with high modularity and composability.

Ferra integrates CLMM and DAMM (Dynamic Automated Market Maker) models and introduces dynamic joint curves, further empowering fair token issuance and liquidity guidance. Ferra’s vision is to become Sui’s dynamic liquidity layer, turning capital from static deposits into “living water” that flows freely with market sentiment and demand.

DeFi ecosystem faces internal crises, leading projects into governance and credit issues

However, Sui’s public chain expansion is not without challenges. The largest lending protocol on Sui, SuiLend, was recently accused of a buyback scam, casting a shadow over its DeFi ecosystem and prompting community reflection on misaligned incentives.

As a leading lending protocol on Sui, SuiLend’s TVL once approached $750 million, accounting for 25% of the entire chain. But behind these impressive numbers, its token SEND has performed poorly. Despite generating $7.65 million in annualized revenue in 2025 and claiming that 100% of protocol fees would be used for buybacks, the SEND token price has fallen over 90% in the past year.

Although since February 2025, SuiLend has conducted buybacks totaling $3.47 million (about 9% of circulating supply), this has not provided the expected price support for the small-cap asset SEND, which has a market cap just over $13 million.

Crypto influencer Jiami Wu Wei pointed out that SuiLend was labeled with a “ST” tag by Bybit, and the community questioned insider trading in buybacks, turning it into a way for the team to offload assets covertly. Especially during the IKA margin call incident, SuiLend’s refusal to activate insurance funds and its forced 6% principal deduction from users further damaged community trust. Additionally, the protocol’s ongoing operation mainly relies on monthly subsidies of several million dollars from the Sui Foundation.

This has sparked accusations of buyback scams within the community. Many believe that buyback strategies are merely a drop in the bucket; while they superficially reduce token supply, they do not offset the high token issuance and early VC dumping pressure.

This case serves as a warning to the Sui DeFi ecosystem: without genuine user growth and sustainable models, token buybacks may only be a house of cards hiding hollowing out. Beyond TVL and revenue metrics, the market should also pay attention to protocol governance and incentive structures.

For Sui, the road to Wall Street is tempting, but ensuring a solid and reliable foundation might be a longer journey. The data explosion has proven its technical potential, but trust remains fundamental for survival. Sui needs to complete a difficult transformation from technological experiment to mature economy—maintaining innovation and reasonable valuation while filling trust as a core component of value growth.