In-depth exploration of Sui's liquidity surge
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In-depth exploration of Sui's liquidity surge
Sui's next phase of development may position it as the preferred blockchain for global payments, gaming economies, and innovative DeFi products
Navigating Web3 tides with focused insightsAuthor:@nihaovand
The stablecoin supply on Sui has surged nearly 100-fold in just over a year, growing from $5.4 million to $490 million—the fastest-growing Web3 blockchain.
Sui's daily active users exceed 1.7 million, growing faster than Ethereum and competing with Aptos, driven by high-speed DeFi, institutional adoption, and aggressive liquidity incentives.
As capital inflows accelerate, is Sui positioning itself as the next dominant blockchain for stable digital assets? Let’s dive in.
Table of Contents:
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Introduction
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Overview of Sui's Object-Based Model
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SZNS' Indexing Solution
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Growth Trajectory and Ecosystem Composition
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In-Depth Analysis of Major Native Stablecoins
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Stablecoin Supply Growth and Use Cases
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Stablecoin Liquidity in Sui DeFi
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Holder Distribution and Concentration
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Beyond DeFi: Real-World Use Cases
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Comparative Analysis: Sui vs. Other L1 Blockchains
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Conclusion
1. Introduction
Since its founding in 2022 by former Meta engineers, @SuiNetwork has evolved into a high-throughput, low-latency Layer 1 blockchain prioritizing scalability, low fees, and user-centric design.
Its core technology—next-generation Mysticeti consensus protocol derived from Narwhal (mempool) and Tusk (consensus)—enables efficient transaction ordering and robust data availability. Sui has attracted significant attention from institutional investors and the DeFi community.
With new protocols launching monthly and user base expanding through DeFi, gaming, and digital payments, stablecoins are central to Sui's ecosystem.
Let’s take a deep dive into Sui’s ecosystem and its development.
Key Highlights
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Market Cap ($SUI Stablecoins): Grew from $5.42 million in January 2024 to $555.15 million in February 2025.
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Stablecoin Adoption: Features over five major tokens (native and cross-chain stablecoins), with native stablecoins accounting for 80.1% of Sui’s total supply.
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Ecosystem Growth: Hackathons, developer rewards, and a series of gaming and payment projects demonstrate Sui’s broader vision.
2. Overview of Sui's Object-Based Model
2.1 Conceptual Differences from Account-Based Systems
In typical blockchains like Ethereum or BNB Chain, each account holds a static balance updated via ledger-based credit/debit entries. In contrast, Sui uses an object-based model where every item—user wallets, tokens, NFTs—exists as an object with unique properties and ownership. Key implications for stablecoins include:
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Object Versioning: Each transaction creates a new version of affected objects, preserving a full audit trail of state changes.
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Partial Transfers: A partial transfer may create a new object (representing the transferred portion) while updating the original object’s balance.
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Ownership Transfer: Transferring stablecoins means transferring ownership of the object (or newly created sub-object), rather than modifying a single “balance” field.
These principles underpin Sui’s renowned flexibility and scalability, but they also require advanced indexing techniques to accurately track stablecoin supply, distribution, and historical balances.
How Object Versioning and Partial Transfers Work in Sui
The diagram below illustrates how a partial transfer of a stablecoin (or any Sui-based token) creates new object versions and ownership changes.
Original Object (Object0):
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Balance of 100 tokens (e.g., stablecoins).
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Owned by Alice (represented internally via owner field).
Partial Transfer of 30 Tokens:
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Instead of simply deducting 30 tokens from Alice’s balance and crediting Bob, Sui modifies Object0 to reduce its balance to 70 and creates a new object (ObjectX) with a balance of 30.
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Ownership of ObjectX is assigned to Bob, while Object0 remains owned by Alice (now a new version, Object0*).
Versioning:
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Object0* is the updated version (version 2) of the original token object, while ObjectX is a completely new object.
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The original version of Object0 remains in historical storage for auditing purposes but is effectively “replaced” by Object0*.
3. SZNS' Indexing Solution
SZNS is a data solutions provider specializing in handling Sui blockchain’s unique object-based structure. Unlike traditional account-based blockchains where balances are stored in single ledger entries, Sui represents assets as objects, meaning each transaction updates and creates a new version of an object instead of merely changing a wallet’s balance.
This object-centric model presents fundamental challenges for tracking and aggregating stablecoin balances, as stablecoin supply and liquidity are not neatly stored within a single contract but distributed across multiple object states. SZNS addresses these challenges by dynamically reconstructing token balances and indexing liquidity across multiple DeFi protocols on Sui.
At a high level, SZNS tackles these challenges through a multi-layered approach:
Object-Level Balance Reconstruction
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Scans all objects associated with a wallet and retains only the latest version to provide real-time balance views.
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Past states and older versions are archived for historical queries (e.g., checking balances at a specific block height).
Unified DeFi Liquidity Mapping
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Identifies custom DeFi structures such as pool objects, lending receipts, or custody contracts.
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Normalizes attributes (reserves, LP shares, fees) into a standardized internal data model, simplifying cross-protocol liquidity comparisons.
Exception Handling
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Supports special cases such as locked (staked) or delegated (bonded) stablecoins.
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Introduces dedicated logic for protocols with non-standard object structures, ensuring minimal data loss.
By aggregating data from these indexing pipelines, SZNS can reliably present up-to-date stablecoin metrics—critical for understanding liquidity flows and user behavior within the ecosystem.
Step-by-Step Explanation
Data Ingestion
SZNS continuously monitors new transactions, block data, and state changes on the Sui blockchain. Relevant information (e.g., object creation, ownership change, balance update) is extracted into the indexer.
Object-Level Scanner (Balance Reconstruction)
The indexer queries all objects owned by each wallet. Only the latest version of each object ID is retained in the “real-time” index. Older versions of each object are archived for historical lookups or forensic analysis (e.g., viewing a wallet’s balance at a specific block number or date).
DeFi Liquidity Mapper
Identifies protocol-specific object types related to DeFi:
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Pool objects for DEXs.
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Lending receipts for lending platforms.
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Custody contracts for dedicated yield farms or IDO platforms. Data is normalized into a standard internal model for cross-DeFi protocol comparison. For example, “pool reserves” might be stored differently across two DEXs, but SZNS standardizes them as [tokenA_reserve, tokenB_reserve].
Exception Processor
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Locked or staked tokens that cannot be transferred until a future date.
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Delegated or bonded tokens held in dedicated contracts or staking modules.
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Any protocol-specific edge cases (e.g., “rebase” stablecoins, partially collateralized structures). These exceptions are flagged and properly classified to ensure they do not inflate or misrepresent users’ tradable stablecoin balances.
Final Aggregation & API
Data from the above steps is aggregated into a single repository. End users (wallet explorers, analytics dashboards, DeFi apps) can query SZNS’ API to access:
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Real-time stablecoin balances.
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Liquidity across DEXs, lending pools, and yield farms.
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Historical states (e.g., a user’s balance on a specific date).
4. Growth Trajectory and Ecosystem Composition
Market Trends
From $5.42 million to $555.15 million in just over a year, the total market cap of stablecoins on Sui highlights strong ecosystem growth.
This growth reflects Sui’s technological advantages and user-friendly design:
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Scalability: High throughput and low finality times make Sui an ideal platform for stablecoin issuers seeking seamless user experiences.
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Institutional Confidence: Funds like VanEck and other large capital allocators have given positive assessments of Sui’s performance.
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Diverse Use Cases: Beyond DeFi, stablecoins on Sui are gaining traction in gaming, cross-border payments, and NFT markets.
5. In-Depth Analysis of Major Native Stablecoins
Sui ranks seventh in 24-hour trading volume, surpassing Hyperliquid and Avalanche.
From $5.4 million to $490 million in just over a year, the total market cap of stablecoins on Sui underscores strong ecosystem growth.
Sui’s ecosystem is experiencing rapid growth, primarily driven by a surge in new accounts, strong DeFi adoption, and increased transaction activity. In conversations with Sui’s ecosystem lead, it was mentioned that Sui is aggressively incentivizing DeFi ecosystem development.
While DeFi thrives amid rising TVL, NFT and token creation have seen a temporary slowdown due to broader market trends.
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User Growth: 7.5 million new accounts added in 7 days (+104.91%), indicating strong adoption momentum.
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DeFi: TVL reached $1.26 billion, led by Suilend at $387.5 million (which intersects with stablecoin supply).
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Ongoing Network Activity: Total transactions reached 8.49 billion, with 11.8 million added in the last 24 hours.
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Stablecoin Dominance in DEX Pools: USDC/SUI (volume: $46.9 million) is the most active trading pair.
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NFT and Token Activity Decline: New NFTs down 47.98%, new tokens down 5.8%.
Additionally, Sui has surpassed Ethereum in daily active addresses and is gradually approaching Aptos. Its steady growth highlights increasing adoption across DeFi, gaming, and stablecoins, making it a strong L1 contender.
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Sui’s Rapid Growth: Sui’s daily active addresses reached 1.7 million, exceeding Ethereum (440,600) and nearing Aptos (1.1 million), signaling increased adoption.
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Stronger Market Position: Sui ranks third among fastest-growing blockchains, ahead of major competitors like BNB Chain, Base, and Arbitrum.
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Competing with Leaders: While Solana (5.3 million) and Near (3.3 million) lead, Sui’s consistent growth demonstrates its rising influence in the blockchain space.
Sui Stablecoin Supply Overview
Total market cap of stablecoins on Sui stands at $495.1 million, up $15.82 million (+3.30%) in the past 7 days, reflecting strong growth and sustained demand.
Since the beginning of 2025, the steady rise in total stablecoin market cap indicates growing market confidence in Sui’s stablecoin ecosystem. Beyond USDC, diversification into stablecoins like FDUSD and AUSD is gaining attention.
USDC’s Dominance: USDC remains the leading stablecoin on Sui, capturing 47.47% of market share, highlighting its role as the preferred liquidity source.
Notable Performers:
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First Digital USD (FDUSD) grew 24.35% over the past 7 days, showing increased adoption.
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Ondo US Dollar Yield (USDY) trades at $1.09, up 0.93% over 7 days, reflecting strong demand for yield-bearing assets.
Underperforming Stablecoins:
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Tether (USDT) declined by -11.16% over the past 7 days, losing $1.86 million in market cap.
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Bucket Protocol (BUCK) fell by -3.18%, likely due to liquidity fluctuations.
Below is a detailed analysis of the three largest native stablecoins—AUSD, USDC (Sui-native), and USDY—as well as FDUSD and BUCK.
5.1 Supply Growth
Stablecoin supply on Sui is surging, driven by DeFi protocol demand, institutional trust, and ecosystem incentives. Lending markets like Suilend and yield farms on Cetus are fueling adoption, while Circle’s issuance of USDC enhances credibility. AUSD and USDY thrive on strong DeFi incentives, attracting liquidity and capital inflows.
FDUSD (market cap over $120 million) and BUCK (market cap over $39 million) are also notable stablecoins, though less covered in this analysis.
Strong supply growth is primarily protocol-driven:
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DeFi Protocol Demand – Lending markets (e.g., Suilend) and DEX yield farms (e.g., Cetus) significantly drive stablecoin demand.
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Brand Trust & Partnerships – USDC on Sui benefits from institutional trust due to direct issuance by Circle, while AUSD and USDY cultivate strong DeFi communities and incentive programs.
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Ecosystem Incentives – Sui-based protocols offer aggressive APRs and liquidity mining rewards, driving capital inflows into stablecoins.
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AUSD and USDY focus heavily on DeFi, offering liquidity incentives to encourage capital inflow.
6. Stablecoin Growth, Use Cases, and Peg Mechanisms
AUSD
Peg Mechanism: Algorithmic + Collateralized
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AUSD uses a hybrid approach. Part of the supply is backed by a basket of crypto assets (typically including SUI tokens) held in dedicated vaults, while the algorithmic component stabilizes short-term price fluctuations.
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If the price deviates from $1, on-chain auctions or a “stability module” rebalance AUSD by buying or selling collateral.
Collateral Model:
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Typically over-collateralized, requiring users to deposit more than $1 in collateral for every AUSD minted.
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Vaults may accept mainstream bridged assets on Sui (e.g., BTC, ETH) or native SUI.
Primary Use Cases:
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Lending: Depositors lock collateral to mint AUSD; borrowers can borrow AUSD against their holdings.
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Yield Farms: AUSD liquidity pools often offer attractive APRs, especially on newer or smaller DEXs competing for liquidity.
Growth Drivers:
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High yields on Suilend,
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Frequent trading incentives on DEXs,
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Cross-promotions with other DeFi dApps (e.g., early user rewards in AUSD).
USDC (Sui)
Peg Mechanism: Fiat-backed (Circle)
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USDC is redeemable 1:1 for USD held in regulated bank accounts or short-term U.S. Treasuries.
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Circle’s comprehensive compliance and licensing framework extends to USDC on Sui, reducing credit and regulatory risk.
Regulatory Compliance:
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Circle’s brand builds trust among institutional players.
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KYC/AML procedures can be integrated, making it suitable for enterprise or B2B use cases.
Primary Use Cases:
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Payment Systems: Merchants, payroll systems, and cross-border remittances can settle in seconds with minimal fees using Sui’s throughput.
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Institutional DeFi: Due to its stable peg and brand reputation, lower-risk protocols or prime brokerage services welcome USDC.
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Bridging: Since Circle issues USDC across multiple chains (Ethereum, Solana, Sui), large capital can flow seamlessly via official bridge solutions—further increasing liquidity.
Growth Drivers:
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Trusted brand (Circle),
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Sui’s fast finality and low fees,
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Partnerships with dApps offering enterprise-friendly products (e.g., advanced compliance, custody solutions).
USDY
Peg Mechanism: Crypto-Collateralized
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Maintains a $1 peg through over-collateralization of stable or blue-chip crypto assets (e.g., SUI, BTC, ETH).
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Smart contracts automatically liquidate positions if collateral ratios fall below safety thresholds, helping maintain the peg.
Strong APRs:
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Especially popular on DEXs like Cetus, offering up to 30%-50% APR for USDY liquidity providers.
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Some yield farm strategies allow dual rewards (USDY + protocol’s native governance token).
Primary Use Cases:
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High-Yield Liquidity Provision: For users comfortable with crypto-collateralized peg risks, USDY typically offers the most attractive returns.
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Trader Leverage: Traders can deposit crypto assets, mint USDY, and use the minted stablecoin to enter other positions, effectively leveraging their portfolio.
Growth Drivers:
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Aggressive liquidity mining,
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Partnerships with yield aggregation platforms (e.g., SuiYieldFarm),
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Integration with bridging solutions bringing additional collateral (e.g., BTC, ETH) from other chains.
FDUSD
Though not widely tracked in this analysis, FDUSD is a rapidly rising stablecoin with a market cap exceeding $120 million:
Peg Mechanism & Collateral:
Likely fiat-backed or quasi-fiat-reserved, though specifics vary based on issuer disclosures.
Adoption Factors:
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Potentially widely used in Sui-based gaming ecosystems or dedicated DeFi protocols directly partnered with the FDUSD issuer.
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Based on user adoption data, may be integrated with payment solutions targeting Asian markets.
BUCK
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Currently valued at around $39 million, BUCK is a smaller but notable stablecoin using a hybrid model:
Hybrid Collateral:
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Partially fiat-like backed, partially crypto-backed. Some speculate it includes algorithmic elements, though official documentation does not fully confirm.
Primary Use Cases:
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Initially used in dedicated yield farming programs or as a reward token on certain Sui-based P2E (play-to-earn) platforms.
Growth Potential:
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If BUCK establishes deeper partnerships with major DEXs or lending protocols, it could see similar growth to AUSD or USDY.
7. Stablecoin Liquidity in Sui DeFi
7.1 Total Value Locked (TVL) Distribution
Below is the TVL distribution of the three main stablecoins—AUSD, USDC, and USDY—across leading DeFi protocols on Sui:
7.1.1 Observations
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AUSD is primarily locked in SUILEND (75.80%), driven by high lending APR (~11.19%).
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USDY is mainly used in CETUS (86.55%), due to attractive yield farm APR (~46.92%).
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USDC is more evenly distributed across CETUS, SUILEND, and NAVI, indicating broader acceptance and usage patterns.
7.1.2 Protocol Overview
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@CetusProtocol: Leading DEX on Sui, known for advanced AMM features and liquidity mining programs.
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@suilendprotocol: A robust lending platform attracting stablecoin deposits through unique incentives.
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@navi_protocol: Offers moderate APR (~5%), appealing to more conservative liquidity providers.
7.2 Liquidity Fragmentation and Emerging Solutions
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Fragmentation: Different stablecoins often thrive in separate liquidity “pockets” driven by varying yields.
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Aggregation Platforms: New yield optimization tools (e.g., SuiVault, SuiYieldFarm) are emerging, enabling automatic compounding across multiple protocols.
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Cross-Protocol Collateral: Some lending markets now accept multiple stablecoins as collateral for one another, potentially reducing fragmentation over time.
8. Holder Distribution and Concentration
EOA (Externally Owned Accounts): Despite overall supply growth, stablecoin ownership remains highly concentrated among a few addresses:
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AUSD: Top Holder (Wallet A): 47.4% of EOA supply. Behavior: Primarily deploys funds in Suilend, leveraging high APRs.
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USDC (Sui): Top Holder (Wallet D): 16.6%. Next five holders: ~25% combined. Behavior: Actively provides liquidity across multiple DEXs (e.g., Cetus, Navi).
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USDY: Two Wallets (Wallet B, Wallet C): Together hold 94%. Behavior: Engages in yield farming on CETUS, utilizing the protocol’s 46.92% APR.
9. Beyond DeFi: Real-World Use Cases
While DeFi remains the core driver of stablecoin adoption, Sui is actively expanding into gaming and payment solutions—both key areas for stablecoin usage.
9.1 Gaming: The Case of SuiPlay0x1
@SuiPlay aims to integrate Sui’s blockchain technology into mainstream PC and console games.
Key Elements:
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NFTs and Token Rewards: Assets earned by players can be represented as NFTs or tokenized as credits on Sui.
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Stablecoin Exit Mechanism: Players wishing to cash out or convert rewards into fiat can use stablecoins like USDC, AUSD, or USDY.
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Comparison with Steam: Steam’s 132 million monthly active users vastly exceed the current Web3 gaming market (~$31.8B in 2024 vs. $608.4B for PC gaming overall).
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Future Potential: Partnerships with major publishers could attract millions of players, each needing stablecoins for transactions or reward monetization.
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Example: A popular RPG might issue NFT-based skins that can be immediately sold for AUSD or USDC (Sui), linking real-world value to in-game achievements.
9.2 Payments and Financial Inclusion
Sui co-founder Kostas Krypto demonstrated a text-message-based transaction mechanism designed for the unbanked:
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SMS Transaction Mechanism: Users with basic phones can send/receive stablecoins by sending specific commands or codes. The system checks the user’s Sui wallet object via off-chain or lightweight on-chain services before executing the transaction.
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Underbanked Regions: Sub-Saharan Africa or Southeast Asia may see increased adoption of stablecoins as remittance and peer-to-peer payment options, reducing reliance on traditional wire transfers or money transfer operators that charge higher fees and have slower settlement.
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Issuer Opportunities: Local stablecoin issuers (e.g., AUSD, USDC on Sui) can partner with local telecom companies or NGOs to provide a stable medium of exchange for daily transactions. Collaborations with microfinance institutions or local cooperatives could promote lending via stablecoins, advancing financial inclusion.
10. Comparative Analysis: Sui vs. Other L1 Blockchains
While this report focuses on Sui, a brief comparison table helps contextualize Sui’s stablecoin growth against major L1s like Ethereum, Solana, and Avalanche:
Key Takeaways:
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Ethereum: Largest stablecoin ecosystem, but highest fees.
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Solana: Good scalability, but historically faced reliability issues.
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Avalanche: Strong cross-chain bridging (e.g., subnets), but weaker overall DeFi momentum compared to Ethereum.
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Sui: Combines low fees, user-friendly developer ecosystem, and rapidly growing stablecoin market, laying the foundation for broad adoption in gaming and payments.
11. Conclusion
Sui has evolved from an emerging L1 blockchain into a rapidly growing ecosystem where stablecoins play a critical role.
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Exponential Market Cap Growth: From $5.42 million to $555.15 million, reflecting strong DeFi and institutional interest.
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Object-Based Nuances: While the architecture increases indexing complexity, tools like SZNS make reliable data insights on stablecoin metrics possible.
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DeFi Dominance: High-yield protocols (Suilend, Cetus) drive stablecoin capital flows, often resulting in whale concentration.
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Expansion into Gaming and Payments: Initiatives like SuiPlay0x1 and SMS-based transactions open doors to mainstream and underbanked markets.
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Future Potential: Ongoing improvements—aggregation platforms, multi-chain collateral, micropayment systems—could further expand stablecoin use cases.
As Sui continues to expand into new frontiers, stablecoins will remain central to enabling liquidity and stable on-chain commerce.
The next phase of Sui’s development may position it as the go-to blockchain for global payments, gaming economies, and innovative DeFi products—all powered by stablecoins that provide trust and liquidity.
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