According to analysts at K33 Research, Solana may currently be the best alternative layer 1 network after Ethereum, but Sui Network could eventually rival it.
In a September 18 research note, K33 DeFi analyst David Zimmerman said Sui’s performance compared to Solana, combined with its architecture and upcoming gaming console launches, could make it a top contender among “alternative L1s.”
“Solana often gets the spotlight in the L1 wars, but while SOL/ETH is up 6% since the August open, SUI/SOL is up 115% over the same period,” Zimmerman said.
While he acknowledged that Sui’s recent market performance — the network’s native Sui (SUI) token is up 36% in the past week — could largely be down to broader “mispricing,” he said SUI “definitely” has the right ingredients to support its recent price gains.
On September 17, stablecoin issuer Circle announced the launch of its USD Coin (USDC) on the Sui Network, signaling further adoption and support for the network from major industry players.
Zimmerman explained that Sui has all the technical oomph to be a Solana competitor. Sui boasts a theoretical maximum of 297,000 transactions per second (TPS), while Solana’s theoretical maximum is 65,000.
Solana vs. Sui Theoretical TPS. Source: K33 Research
In particular, there is a big difference between the theoretical maximum TPS of a network and the TPS that can actually be achieved. According to CoinGecko data, Solana’s highest “real” TPS is close to 3,000, while Sui’s highest TPS reached a peak of 854 in July 2023.
“Sui has built an impressive technology, probably the most impressive in the space, but we have yet to see it actually surpass Solana in terms of metrics like average daily TPS,” he said, adding that this could soon become a plausible scenario if Sui can continue to attract users and capital to its ecosystem.
Zimmerman argued that there is one major obstacle that affects long-term price movements: token supply.
He said Sui launched in May 2023, when low float and high fully diluted value (FDV) token economics were “prevalent.” As a result, only 27% of Sui’s total token supply is in circulation, leaving current investors potentially exposed to significant sell-offs when token unlocks occur in the future.
By comparison, 80% of Solana’s total token supply is currently in circulation.
Sui token economics contrasts with Solana. Source: K33 Research
SuiPlay0x1 Game Console
Another major strong product from the Sui network is the launch of a portable gaming console called SuiPlay0x1, which will be developed and distributed by Sui’s main developer, Mysten Labs.
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The console, which is expected to launch sometime next year, will likely feature native “Eternals” non-fungible tokens (NFTs) that will potentially provide users with exclusive rewards.
Zimmerman compared Sui’s console to Solana’s first mobile device, the Saga, whose airdrop rewards far outweighed the initial cost of the device itself.
“Here lies the real value of the console for speculators.”
But Zimmerman said that while Sui could reasonably outperform Solana in the so-called “L1 war,” Ethereum is not in immediate danger.
“Sui has a lot to offer in a competitive L1 environment. The market still sees L1s other than Ethereum as ‘Ethereum competitors’. (…) In the post-US spot ETH ETF world, we put Ethereum in its own category,” he said.
Sui is a layer 1 blockchain and smart contract platform that aims to simplify and improve the creation of applications and features in the Web3 ecosystem. The model is based on the Move programming language and enables parallel transaction execution.
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