Sui Blockchain token unlock nears as Navi Protocol TVL soars

Sui Blockchain, the Ethereum alternative launched with a lot of fanfare a few months ago, is struggling to gain traction and is continually diluting its token holders. The network’s next dilution will happen on Friday when it will unlock another huge tranche of 1 million SUI tokens worth over  $465k. 

According to TokenUnlocks, Sui has unlocked over 38.6 million tokens in the past 12 months, equivalent to 4.8% of the total supply. Worse, only 8% of all the SUI tokens have been unlocked since the network was launched in 2022. 

There are now over 3.83 billion SUI tokens still locked. According to the vesting schedule, these unlocks will happen through 2030. This means that existing Sui token holders can expect substantial dilution in the next few years. 

Token unlocks are highly dilutive since they add more tokens into circulation. They are often compared to when companies sell more stocks in a bid to raise cash. Most tokens mitigate the impact of  regular unlocks by incorporating the burning mechanism. Burning is a process where tokens are stored in an inaccessible vault.

Meanwhile, Sui has also  not gained  huge traction among developers, even after its parent company raised over $300 million in 2022. It also inked a major marketing deal with Red Bull Oracle Racing. Data by DeFi Llama shows that there are now just 18 DeFi projects in the ecosystem. Combined, these DeFi applications have a total value locked (TVL) of more than $49 million. 

The biggest DeFi dApps in Sui’s ecosystem are NAVI Protocol, Cetus, OmniBTC, KriyaDEX, and Scallop Lend. In the past few weeks, these dApps’s TVL has jumped by double-digits, which is a good thing. NAVI Protocol’s TVL has jumped by over 267% in the past 30 days.

The challenge for Sui is how to gain traction among developers in a highly competitive industry. It is competing with other layer 1 networks like Hedera Hashgraph, Ethereum, and Tron.It is also battling with other layer-2 networks like Arbitrum, Optimism, Base, and Polygon. All these factors explain why the SUI token price has crashed by over 60% from its peak.