The Sui project’s tokenomics have drawn scrutiny from both investors and market observers due to concerns that a large portion of SUI tokens are concentrated in the hands of investors and founders. Although the project officials insist that most of its circulating supply remains locked, they have not provided tangible proof to back up their statements. This lack of transparency has led to unease amongst stakeholders.
Over the last month, various X (formerly Twitter) users have voiced questions regarding Sui’s tokenomics. A particularly influential post by Justin Bons, founder of Cyber Capital, went viral, intensifying the scrutiny. Criticizing the Sui tokenomics, Bons accuses the founders of wielding control over more than 80% of the token supply.
1/16) SUI has a great design, except for its token economics:
— Justin Bons (@Justin_Bons) May 2, 2024
SUI claims to have a capped supply of 10B, with 52% being "unallocated" till 2030
The problem is that over 8B SUI is being staked right now!
Over 84% of the staked supply is held by founders! SUI is centralized: 🧵
On its official site, Sui offers an “estimate of the circulating supply over the next seven years.”
According to the chart, it shows only about half of the total 10 billion supply is scheduled for unlocking, leaving the fate of the remaining supply in question. The TokenUnlocks website interestingly categorizes this segment of the supply as “Unallocated Allocation.”
Bons points out that this 5 billion “unallocated” addition to the shares allocated for investors, the team, stake subsidiaries, and early contributors roughly calculates to an 80%+ centralized control over the tokens.
A key concern here is the absence of evidence that these tokens are securely locked in smart contracts, suggesting that the team could potentially access these tokens at any time. As Bons stressed, “There is no locking mechanism for this SUI on-chain at all; it can be moved!”
In response to these allegations, the Sui team released a statement addressing the “unallocated supply” concerns, stating that the remainder of the supply (5 billion SUI) is held by the Sui Foundation, which they claim is the largest holder of locked tokens. They assert that these tokens are earmarked to support developers, advance the Move programming language, enhance network security, and expand the ecosystem.
Moreover, the team declared that the locked tokens are secured by third-party custodians and cannot be moved until they are scheduled to be unlocked in accordance with Sui’s token emission schedule.
However, this response has sparked even more questions. As Bons highlighted, “Custodians do not usually provide lock-ins!” This statement forces users to rely on the foundation and custodians’ assurances that the tokens will not be unlocked unexpectedly.
Adding to the concerns, in April alone, the project’s circulating token supply doubled due to significant unlocks for investors and early contributors. Unsurprisingly, the token’s price experienced a sharp decline throughout April, plummeting nearly 50% from $2 to around $1 per SUI.
