Sui's Aggressive Advances: Leveraging ETFs to Compete with Wall Street, but Resilience Remains a Key Test Behind Ecosystem Expansion.

Author: Jae, PANews

At the start of 2026, Sui opened the year with a 30% surge in one week, marking a "green start".

While most Layer 1 public chains are still battling for TPS and ecosystem size, Sui is awaiting its ticket to the Wall Street arena. Grayscale and Bitwise, the world's largest crypto asset managers, recently submitted applications to the U.S. SEC for a Sui spot ETF. This means that the SUI token will soon be evaluated in institutional asset baskets on par with BTC and ETH.

However, beneath the glamorous narrative of Sui's transformation from a "Silicon Valley darling" to a "Wall Street upstart," it is also undergoing a severe test: can it embrace traditional capital while becoming a trustworthy ecosystem foundation for the market?

Multiple metrics are showing exponential growth, with a large influx of new users.

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

Since its mainnet launch in May 2023, its TVL (TVL) has surged 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, currently standing at only around $1 billion, falling below half its previous value.

In terms of public chain fees, Sui has grown from the initial $2 million to approximately $23 million, an increase of 11.5 times.

In terms of throughput, Sui's peak daily throughput is 66.2 million transactions, and its daily throughput has remained relatively stable at over 4 million transactions in the past year. These massive throughput figures demonstrate that Sui has achieved horizontal scaling, sufficient to support high-intensity, large-scale user and application requests.

In terms of user activity, Sui's daily active users (DAU) initially numbered only tens of thousands, but then surged, peaking at 2.5 million in April 2025. Although it has recently declined somewhat, the monthly average remains at a healthy level. Currently, its average DAU remains around 600,000.

It's worth noting that the percentage of returning users has remained consistently above 20% , demonstrating high user engagement. Since 2025, a large number of new users have been continuously joining the Sui ecosystem.

These data form the basis for Sui's ability to attract institutional capital. It is no longer just a public blockchain network with technology, but a mature economy that carries real traffic and assets.

Multiple SUI spot ETFs have submitted applications, opening the doors to Wall Street.

The application for the SUI spot ETF will further broaden the access path for compliant funds to Sui and enhance institutional recognition.

On December 5, 2025, Grayscale officially filed its S-1 registration statement with the SEC, applying to transform its Sui Trust into a spot ETF. According to the disclosed documents, the Grayscale Sui Trust (SUI) ETF plans to list on the New York Stock Exchange (NYSE Arca), and the fund will directly hold SUI tokens, pegging its net asset value per unit to the market price of SUI. More importantly, this application includes a staking mechanism, meaning that while providing investors with price exposure, this ETF can also generate additional intrinsic returns through validator rewards on the underlying public blockchain, 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, with plans to list on Nasdaq and select Coinbase as the custodian. Bitwise had previously included SUI in its "Bitwise 10 Crypto Index ETF," and this independent filing for a spot ETF signifies that SUI has officially joined the ranks of institutional-grade asset baskets alongside BTC, ETH, SOL, and others.

Unlike its previous cautious stance, the change in SEC leadership has created a more relaxed regulatory environment for the approval of altcoin ETFs. This change has accelerated the approval of several altcoin ETFs and has gradually moved the launch of Sui ETFs from a market vision to a substantive timeline.

The institutional preference for Sui is no accident. Its core competitiveness lies in its rich application scenarios, especially its scalability in payment, gaming and DeFi protocols.

Furthermore, market consensus on the value of SUI tokens is shifting from short-term speculation to long-term allocation. As of January 7th, the market capitalization of SUI tokens exceeded $7 billion, with a fully diluted valuation (FDV) of nearly $19 billion. Although approximately 62% of the tokens are still locked, the market smoothly absorbed over $60 million worth of token unlocks in early 2026 without any dramatic price sell-offs. The arrival of the Sui ETF will lower the entry barrier for traditional wealth management institutions, significantly improve the liquidity of SUI tokens, and thus reshape its valuation logic.

The upcoming launch of a private transaction feature may trigger commercialization demand.

While institutional capital is entering the market, Sui is also attempting to address another obstacle for public blockchains in the B2B payment sector. While all other public blockchains are touting the transparency and verifiability of their on-chain data, Sui is taking the opposite approach.

As privacy gains a foothold in the crypto arena, Adeniyi Abiodun, co-founder and chief product officer of Mysten Labs, announced on December 30, 2025, that the Sui network will launch native private transaction functionality in 2026. This is not an optional plugin, but a low-level capability integrated into the consensus layer and object model. The initial goal of this feature is to achieve privacy by default; that is, when users make payments or transfers, the transaction amount and counterparty information will, by default, only be disclosed to the sender and receiver, remaining invisible to onlookers.

This feature could generate significant commercial demand. While traditional public blockchains ensure fairness through transparency, they severely hinder entities that need to protect trade secrets and individual users who need to protect their privacy. Sui's privacy solution aims to provide end-to-end confidentiality through zero-knowledge proof technology while maintaining high throughput.

Sui's most notable feature for its private transaction functionality is its compliance-friendly design. Unlike privacy coins such as Monero, Sui introduces a selective transparency mechanism.

• Audit hooks: Agreements allow specific transaction details to be disclosed to regulatory agencies or authorized auditors under certain compliance processes;
• KYC/AML Integration: Allows financial institutions to perform necessary anti-money laundering checks while ensuring privacy protection;
• Quantum-resistant primitives: Considering the potential threat of quantum computing to elliptic curve cryptography algorithms, Sui plans to introduce post-quantum cryptography standards such as CRYSTALS-Dilithium and FALCON in its 2026 upgrade to ensure that private data stored on the chain remains unbreakable for decades to come.

These technological components allow Sui to be positioned as a "regulated privacy finance network," thereby attracting banks and business entities that are highly sensitive to data.

However, this positioning is a double-edged sword. It attempts to attract traditional financial institutions that are sensitive to data, but it may also raise questions from pure cryptographers. An even greater challenge lies at the technical level: integrating zero-knowledge proofs and even quantum-resistant encryption algorithms while maintaining high TPS.

Ecological projects upgrade liquidity infrastructure

In the fierce competition of L1 blockchains, liquidity depth remains a core indicator determining the viability of a public blockchain. In recent months, Sui ecosystem projects have frequently made moves to improve liquidity efficiency and optimize their architecture.

As the protocol that has long held the top spot in the TVL rankings within the Sui ecosystem, NAVI Protocol officially launched Premium Exchange (PRE DEX) on December 29, 2025. This move signifies that NAVI is evolving from a single lending protocol into a full-stack DeFi infrastructure.

PRE DEX focuses on building a premium discovery mechanism. In the current crypto market, many protocol tokens exhibit significant price discrepancies at different stages. PRE DEX attempts to provide a pricing platform for these assets through a market-driven algorithm.

For institutional investors and multi-wallet users, PRE DEX will significantly improve management efficiency. The system allows users to efficiently configure and aggregate assets from multiple chains and protocols within a single interface, reducing the friction costs associated with cross-protocol operations.

With the launch of PRE DEX, asset pricing within the Sui ecosystem is expected to become more efficient, especially when dealing with high-value or low-liquidity assets, PRE DEX may become a liquidity hub.

The two financing events at the end of 2025 may indicate that Sui's ecosystem liquidity management is entering a stage of AI-driven and dynamic management.

In December 2025, Magma Finance announced the completion of a $6 million strategic financing round, led by HashKey Capital. Magma is dedicated to solving the problems of liquidity fragmentation and capital inefficiency in the Sui ecosystem.

The protocol's technical architecture incorporates an Adaptive Liquidity Market Maker (ALMM) model. Unlike the traditional Centralized Liquidity Market Maker (CLMM) model, ALMM utilizes an AI strategy layer to analyze market volatility in real time. When the market experiences sharp fluctuations, the AI automatically adjusts the distribution of asset prices and rebalances the capital of liquidity providers (LPs) to active trading ranges.

In this way, Magma will not only provide traders with lower slippage but also generate higher real returns for LPs. Simultaneously, the AI will monitor the mempool to prevent MEV attacks.

Ferra Protocol completed a $2 million Pre-Seed funding round in October 2025, led by Comma3 Ventures. Ferra launched the first DLMM (Dynamic Liquidity Market Maker) DEX on the Sui mainnet, with its innovation lying in its high degree of modularity and complexity.

Ferra not only integrates the CLMM and DAMM (Dynamically Adjusted Market Maker) models, but also introduces dynamic bonding curves, which will further enable the fair launch and liquidity bootstrapping of new tokens . Ferra's vision is to become a dynamic liquidity layer on Sui, so that funds are no longer static deposits, but become "living water" that flows freely with market sentiment and demand.

The DeFi ecosystem is facing internal problems, with leading projects embroiled in governance and trust crises.

However, Sui's expansion on its public chain has not been without its challenges. SuiLend, the largest lending protocol on Sui, was recently accused of a buyback scam, casting a shadow over its DeFi ecosystem and prompting the community to reflect on the misalignment of incentives on public chains.

SuiLend, as the leading lending protocol on the Sui chain, once boasted a total lending volume (TVL) approaching $750 million, accounting for 25% of the entire chain. However, behind these impressive figures, the performance of its token SEND has been consistently disappointing. Despite generating an annualized revenue of $7.65 million in 2025 and claiming that 100% of protocol fees would be used for token buybacks, the price of SEND has plummeted by over 90% in the past year.

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

According to KOL Crypto Fearless, SuiLend has been labeled ST by Bybit, and the community has questioned whether the buyback program involved insider trading, becoming a disguised way for the team to unload their holdings. Especially during the IKA liquidation incident, SuiLend forcibly deducted 6% of the principal from users without utilizing its insurance fund, further damaging community trust. Furthermore, the protocol's continued operation relies heavily on millions of dollars in monthly subsidies from the Sui Foundation.

This has drawn accusations from the community that the buyback strategy is a scam. The community generally believes that the buyback strategy is merely a drop in the ocean; while it superficially reduces the token supply, it fails to offset the high token emissions and selling pressure from early VCs.

This case serves as a wake-up call for the Sui DeFi ecosystem: without genuine user growth and a sustainable model, token buybacks may merely be a facade to mask a hollowed-out system. In addition to metrics such as TVL and revenue, the market should also pay attention to aspects like the protocol's community governance and incentive structure.

For Sui, the path to Wall Street is certainly alluring, but ensuring its own foundation remains solid and reliable may be a much longer journey. The explosion of data has proven its technological potential, but trust is the foundation of survival. Sui needs to complete the difficult transformation from a technological experiment to a mature economy, maintaining its innovative edge and reasonable valuation while making trust the core piece of the value growth puzzle.