sui Network Tokenomics Raises Concerns with Founders’ 84% Control
Sui Network is currently celebrating the one-year completion of its mainnet launch. Over the past year, the Sui Network has transformed from a nascent ecosystem into a formidable Layer-1 decentralized platform. Earlier this week, Sui Network also partnered with Google Cloud to advance its AI and Web3 initiatives. However, Cyber Capital founder Justin Bons has doubts about the tokenomics used by sui Network, which has recently had a fairly large concentration in the hands of its founders.
Sui Network Founders Have 84% Control
Concerns about SUI’s token economy were expressed in a recent critique by Justin Bons. Despite its promising design, Bons noted significant issues with the token’s supply dynamics.
SUI advertises a limited supply of 10 billion tokens, with 52% of them designated as “unallocated” through 2030. However, the current staked amount exceeds 8 billion tokens, and 84% of the staked supply is controlled by the founders. This concentration of supply poses a centralization risk for token holders, compounded by lock-ins and a lack of legal guarantees.
Bons called the foundation’s published chart misleading, highlighting the discrepancy between SUI’s claims and the actual token distribution. He argued that the lack of lock-in provides founders with significant flexibility in managing token allocation, raising concerns about the transparency and integrity of SUI communications.1/16) SUI has a great design apart from the coin economy:
SUI claims limited supply of 10B, 52% of which will be “unallocated” by 2030
The problem is that there are currently over 8 billion SUIs staked!
More than 84% of Stack supply is held by founders! SUI is centralized:
— Justin Bons (@Justin_Bons) May 2, 2024
Founders Should Be Clean and Transparent
Bons also expressed concern about SUI’s lack of transparency regarding token distribution and ownership. Despite requests for clarification, SUI refused to provide detailed information about token addresses, raising questions about the project’s accountability.
While SUI has disclosed that its tokens are held by custodians such as BitGo, Anchorage, and Coinbase Prime, the lack of clarity regarding legal ownership of “unallocated” supply remains a significant issue. Bons highlighted the uncertainty about whether the foundation or the for-profit organization Mysten Labs controls this stake, and underlined that the Core team needs to provide further clarification.
Bons criticized the allocation of funds within the project, citing significant allocations to for-profit organizations, early contributors and venture capitalists. He expressed regret over the lack of a public sale and expressed concerns about the concentration of share subsidies in the hands of founders who currently control the majority of shares.
The lack of transparency and perceived greed in SUI’s token distribution model, particularly regarding “unallocated” supply, led Bons to condemn the project’s practices and call for greater accountability and ethical standards in the crypto economy.
Sui Network’s native cryptocurrency, SUI, recorded a 100% increase in daily trading volumes. As of writing, the SUI price is trading at $1.09, down 1.44%, and its market cap is $2.54 million.
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Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
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