Ethereum (ETH 1.47%) remains one of the great all-time crypto investments. If you had invested in Ethereum way back in 2015 when things were just getting started, you'd be up a head-spinning 63,500% today.
So it's perhaps no surprise that the arrival of what some are calling the next Ethereum is cause for celebration in the crypto world. We've seen that already with the likes of Solana and Avalanche -- both were tagged as potential Ethereum killers almost as soon as they launched. And we are starting to see the same phenomenon with Sui (CRYPTO: SUI), a highly touted Layer-1 blockchain that just launched in May.
What is Sui?
Sui is a super-fast, super-scalable proof-of-stake Layer-1 blockchain with a nearly impeccable pedigree. Many of the developers at Sui worked on Diem, the big blockchain project from Meta Platforms. And the founders of Sui have already lined up more than $330 million in venture capital from some high-profile names, including Coinbase Ventures.
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The big draw right now seems to be Sui's transaction processing speed. The blockchain claims to be able to process up to 300,000 transactions per second (TPS), which is way beyond what even Solana (65,000 TPS) can offer. Moreover, the developer team behind Sui claims the blockchain is optimized for digital assets and the brave new world of Web3, due in large part to the programming language they use.
How high can Sui go?
A little market cap comparison will give you a good idea of how high Sui could soar. Right now, it has a market cap of slightly over $500 million. So if it does a 10 times return on investment, it would give Sui a market cap of approximately $5 billion -- that's Solana and Avalanche territory. Currently, Solana has a market cap of $7.7 billion, and Avalanche's is $4.7 billion.
But let's say Sui eventually replaces Ethereum simply based on its superior performance characteristics. That's when things will really get interesting. Ethereum has a market cap of more than $200 billion right now, so if Sui ever catches up to Ethereum, that would be a 400-fold return on investment. You can start to see why investors love the concept of the next Ethereum -- the numbers get very big quickly.
In many ways, this same logic has already played out with Aptos (APT +0.79%), which was introduced in October 2022. Aptos was the other major blockchain project spun out of Diem, and like Sui, it came with an impeccable pedigree, top developer talent, and high-profile venture capital backing. Despite practically launching into the eye of a tornado (the FTX debacle in November 2022), Aptos is now up a staggering 125% year to date and is already one of the top 40 cryptos in the world by market capitalization.
But do we really need another Ethereum?
The big question, of course, is whether the blockchain world needs another Ethereum. At one time, we did, because Ethereum was still a slow, old-fashioned proof-of-work blockchain. But then came The Merge last year, and as a result, I'm not convinced we really need another Ethereum. Many speed and performance issues have now been addressed, and Ethereum pulled off The Merge without a hitch.
So for Sui to hit all its grandiose growth targets, many things would have to go right. For one, developers would have to perceive a real need to abandon Ethereum and switch to another blockchain for all their future development projects. I don't think that's going to happen. Moreover, Sui would have to beat out not just Ethereum but also a long list of previous Ethereum-killers, including (but not limited to) Solana, Avalanche, and now Aptos. That's a big ask.
It's still Ethereum, and it's not even close
For now, I cannot recommend Sui as a long-term investment. It's certainly interesting because of its price (still trading for around $1) and pedigree. But I just don't think faster speeds are enough to win over developers, users, and investors.
At the end of the day, people want to see what's built on top of the platform, and right now, you just can't beat Ethereum, which is dominant in many key areas of the blockchain world. Ethereum is still the world's premier Layer-1 blockchain. As a result, I remain bullish on Ethereum, both short-term and long-term.
