Year to date, Sui (SUI +0.06%) is up almost 300%, and now ranks among the top 15 cryptocurrencies in terms of market cap.Although it has attracted enormous attention from crypto insiders, it's still under the radar of most investors.
And that presents an interesting opportunity, because Sui is the sort of promising young cryptocurrency that has real potential to become a millionaire maker.
The next Ethereum?
The first thing you need to know about Sui is that it is a Layer-1 blockchain network, just like Ethereum (ETH 1.03%). This means that Sui is a building block for all products and services that can be built on top of a blockchain, including those related to decentralized finance (DeFi) and blockchain gaming. However, since Sui only launched in May 2023, its overall blockchain ecosystem is considerably smaller than Ethereum's.
Image source: Getty Images.
What makes Sui so compelling is that it is faster, cheaper, and easier to use than Ethereum. In fact, Sui is even faster than Solana, which is generally acknowledged to be the fastest Layer-1 blockchain. According to investment company 21Shares -- the same company that partnered with Ark Invest on the launch of new spot Bitcoin and spot Ethereum exchange-traded funds (ETFs) -- Sui can process 297,000 transactions per second, compared to 65,000 for Solana.
And that's one of the reasons I think Sui has the potential to challenge Ethereum one day as the premier Layer-1 blockchain. If that happens, it could send Sui skyrocketing in value. Right now, Sui has a $9 billion market cap, while Ethereum has a nearly $400 billion market cap. So, theoretically, Sui has plenty of upside ahead.
Rapidly improving performance metrics
Sui attracted little attention from many investors until this year. That's when the metrics for the Sui blockchain started to explode. Total value locked (TVL), which is a measure of how much value is locked on the blockchain, soared through the $1 billion mark. The total number of daily active accounts broke through the 25 million mark. And the launch of a major new blockchain upgrade suddenly gave Sui the potential to process 297,000 transactions per second.
CRYPTO: SUI
Key Data Points
Not surprisingly, the combination of so many good things happening at one time also coincided with the first real attention from institutional investors. In August, 21Shares produced a highly detailed report on Sui with the headline: "Is Sui a Solana Killer?" The primary thesis was that Sui is now on track to overtake Solana, which is currently viewed as the biggest rival to Ethereum.
And, around the same time, Grayscale Investments launched the Grayscale Sui Trust as a way for accredited investors to invest in Sui.
What needs to happen next?
To turn a $1,000 investment into a $1 million investment, you'd need to see a 1,000-fold return on your money. One way to think about that is that you would need to see the price of Sui soar from its current value of about $3 to $3,000.
Sound familiar? That's exactly what Ethereum did between 2016 and 2021. In February 2016, Ethereum was still trading for the bargain basement price of $3, as investors struggled to wrap their heads around the concepts of smart contracts and Layer-1 blockchain networks. By May 2021, Ethereum was trading over the $3,000 mark.
Obviously, a lot needs to go right for Sui for a similar scenario to happen. It needs to build and scale at a very rapid rate. It needs to expand its developer network. And it needs much more attention from big Wall Street institutions. It's still way too early to be talking about a spot Sui ETF, but the new Grayscale Sui Trust is a good first step.
Although Sui could break into the mainstream, just remember: A number of high-profile Layer-1 blockchains have attempted to take on Ethereum, but failed. So it won't be easy. But I'm extremely bullish on Sui's prospects.
