A deeper look at the reasons behind Sui’s surge in liquidity

The stablecoin supply on Sui has surged nearly 100 times in more than a year, from $5.4 million to $490 million - the fastest growing public chain in Web3

With over 1.7 million daily active users, Sui is growing faster than Ethereum and competing with Aptos, thanks to high-speed DeFi, institutional adoption, and aggressive liquidity incentives.

As capital inflows accelerate, is Sui positioning itself as the next blockchain to dominate stable digital assets? Let’s take a deeper look.

Table of contents:

1. introduce

2. Overview of Suis object-based model

3. SZNSs Indexing Solution

4. Growth Trajectory and Ecosystem Composition

5. In-depth analysis of major local stablecoins

6. Stablecoin Supply Growth and Use Cases

7. Stablecoin Liquidity in Sui DeFi

8. Owner Distribution and Concentration

9. Beyond DeFi: Real World Use Cases

10. Comparative Analysis: Sui and Other L1 Blockchains

11. in conclusion

introduce

Since its founding in 2022 by former Meta engineers, @SuiNetwork has grown into a high-throughput, low-latency Layer 1 blockchain that prioritizes scalability, low fees, and user-centric design.

Its core technology - the next-generation Mysticeti consensus protocol, derived from Narwhal (memory pool Tusk (consensus) - enables efficient transaction ordering and strong data availability. Sui has attracted widespread attention from institutional investors and the DeFi community.

With new protocols launched every month and the user base expanding through DeFi, games, and digital payments, stablecoins are the backbone of SUIs ecosystem.

Let’s take a deep look at the SUI ecosystem and its development

Key Highlights

• Market funding ($SUI stablecoin): from $5.42M in January 2024 to $555.15M in February 2025.

• Stablecoin Adoption: Owns 5+ major tokens (native and cross-chain stablecoins), with native stablecoins accounting for 80.1% of Sui’s total supply.

• Ecosystem Growth: Hackathons, developer grants, and a slate of gaming and payments projects showcase Sui’s broader vision.

2. Overview of Sui’s Object-Based Model

2.1 Conceptual Differences from Account-Based Systems

In a typical blockchain like Ethereum or BNB Chain, each account holds a static balance that is updated through a credit/debit system recorded in the ledger. In contrast, Sui adopts an object-based model where each item - user wallet, token, NFT - exists as an object with unique properties and ownership. Key implications for stablecoins include:

• Object versioning: Each transaction creates a new version of the affected object, preserving a full audit trail of state changes.

• Complex transfers: Partial transfers may result in the creation of a new object (representing the portion transferred) while updating the balance of the original object.

• Ownership transfer: Transferring a stablecoin means transferring ownership of an object (or a newly created sub-object), rather than updating a single “balance” field.

These principles underpin Sui’s renowned flexibility and scalability, but they also require advanced indexing techniques to accurately track stablecoin supply, distribution, and historical balances.

How Object Versioning and Partial Transfer Work in Sui

Below is a conceptual diagram showing how a partial transfer of a stablecoin (or any Sui-based token) creates a new object version and ownership change.

• Original object (Object 0):

• The balance is 100 tokens (e.g., stablecoins).

• Owned by Alice (indicated internally by the owner field in the object).

Partial transfer of 30 tokens:

• Instead of simply deducting 30 tokens from Alice’s balance and adding them to Bob’s, Sui modifies Object 0, reducing its balance to 70, and creates a new object (ObjectX) with a balance of 30.

• Ownership of ObjectX is assigned to Bob, while Object 0 remains owned by Alice (now a new version, Object 0*).

Version management:

• Object 0* is an updated version (version 2) of the original token object, while ObjectX is a completely new object.

• The original version of Object 0 remains in the historical storage for audit purposes, but its state has been superseded by Object 0*.

3. SZNS’s indexing solution

SZNS is a data solutions provider that specializes in the unique object-based structure of the Sui blockchain. Unlike traditional account-based blockchains, where balances are stored in a single ledger entry, Sui represents assets as objects, meaning that each transaction updates and creates a new version of an object, rather than just changing the balance of a wallet.

This object-centric model creates fundamental challenges for tracking and aggregating stablecoin balances, as stablecoin supply and liquidity are not neatly stored in a single contract, but rather distributed across multiple object states. SZNS addresses these challenges by dynamically reconstructing token balances and indexing liquidity across multiple DeFi protocols on Sui.

At a high level, SZNS addresses these challenges through a multi-layered approach:

Object-level balance reconstruction

• Scan all objects associated with your wallet and keep only the latest version, so you can view your balance in real time.

• Past states and old versions are archived for historical queries (e.g., checking balances at a specific block height).

Unified DeFi liquidity mapping

• Identify custom DeFi structures such as pool objects, lending certificates, or escrow contracts.

• Normalizing properties (reserves, LP shares, fees) into a standard internal data model makes it easier to compare liquidity across multiple protocols.

Exception handling

• Support for special cases such as locking (locking) or entrusting (staking) stablecoins.

• Introducing specialized logic for protocols with non-standard object structures ensures minimal data loss.

By aggregating data from these index pipelines, SZNS can reliably present the latest stablecoin metrics - key to understanding ecosystem liquidity flows and user behavior.

Step by step explanation

Data Ingestion

SZNS continuously monitors new transactions, block data, and state changes on the Sui blockchain. Relevant information (e.g., object creation, ownership change, balance update) is extracted to the indexer.

Object Level Scanner (Balance Reconstruction)

The indexer queries all objects owned by each wallet. Only the latest version of each object ID is kept in the live index. Older versions of each object are archived for historical lookups or forensic analysis (e.g., to see what balance a wallet had at a specific block number or date).

DeFi Liquidity Mapper

Identify protocol-specific object types related to DeFi:

• The pool object of DEX.

• The loan certificate of the lending platform.

• Escrow contracts for dedicated yield farms or IDO platforms. Normalize data to a standard internal model for comparison across DeFi protocols. For example, “pool reserve” may be stored differently on two DEXs, but SZNS normalizes it to [tokenA_reserve, tokenB_reserve].

Exception Handler

• Locking or staking tokens so they cannot be transferred until a future date.

• Delegating or staking tokens, either in a dedicated contract or in a staking module.

• Any protocol-specific special cases (e.g., “heavy rebase” stablecoins, partially collateralized structures). These anomalies are flagged and properly categorized to ensure they do not inflate or misrepresent a user’s tradable stablecoin balances.

Final aggregation and API

The data from the previous steps is aggregated into a single repository. End users (wallet browsers, analysis dashboards, DeFi applications) can query the SZNS API to obtain:

• Real-time stablecoin balances.

• Liquidity across DEXs, lending pools, and yield farms.

• Historical status (for example, a users balance on a specific date).

4. Growth trajectory and ecosystem composition

Market Trends

From $5.42 million to $555.15 million, in just over a year, the total market capitalization of stablecoins on Sui highlights the strong growth of the ecosystem.

This growth is a reflection of Suis technological advantages and user-friendly design:

• Scalability: High throughput and low finality times make Sui an ideal platform for stablecoin issuers seeking a seamless user experience.

• Institutional Confidence: Funds like VanEck and other large capital allocators have given positive reviews on Sui’s performance.

• Diversified application scenarios: In addition to DeFi, stablecoins on Sui have also gained increasing attention in games, cross-border payments, and NFT markets.

5. In-depth analysis of major local stablecoins

Sui ranks seventh in 24-hour trading volume, ahead of Hyperliquid and Avalanche.

From $5.4 million to $490 million, in just over a year, the total market capitalization of stablecoins on Sui highlights the strong growth of the ecosystem.

Suis ecosystem is experiencing rapid growth, driven primarily by a surge in new accounts, strong DeFi adoption, and increased trading activity. I once spoke with the head of SUIs ecosystem, and he said that SUI is vigorously incentivizing the development of the DeFi ecosystem.

While DeFi is booming, driven by rising TVL, there has been a temporary slowdown in the creation of NFTs and tokens, but this is due to market trends.

• User Growth: 7.5 million new accounts in 7 days (+104.91%), showing strong adoption momentum.

• DeFi: TVL reached $1.26 billion, with Suilend leading at $387.5 million (will intersect with stablecoin supply).

• Sustained network activity: Total transactions reached 8.49 billion, up 11.8 million in 24 hours.

• Stablecoin dominance in the DEX pool: USDC/SUI (volume $46.9 million) is the most actively traded pair.

• NFT and token activity declined: New NFTs fell 47.98% and new tokens fell 5.8%

In addition, Sui has surpassed Ethereum in terms of daily active addresses and is gradually approaching Aptos. Its steady growth highlights the continued adoption in the DeFi, gaming, and stablecoin sectors, making it a strong L1 competitor.

• Sui’s rapid growth: Sui’s daily active addresses reached 1.7 million, surpassing Ethereum (440,600) and gradually approaching Aptos (1.1 million), which marks the increase in adoption.

• Stronger Market Position: Sui ranks third among the fastest-growing blockchains, ahead of major competitors such as BNB Chain, Base, and Arbitrum.

• Competing with the leaders: Although Solana (5.3 million) and Near (3.3 million) hold the lead, Sui’s steady growth showcases its growing influence in the blockchain space.

Sui Stablecoin Supply Overview

The total market capitalization of the Sui stablecoin is $495.1 million, an increase of $15.82 million (+3.30%) in 7 days, reflecting strong growth and sustained demand.

The steady rise in the total market value of stablecoins starting in 2025 indicates increased market confidence in the Sui stablecoin ecosystem. In addition to USDC, the diversification of stablecoins such as FDUSD and AUSD is also gradually gaining attention.

USDC’s Dominance: USDC remains the most dominant stablecoin on Sui, accounting for 47.47% of the market share, highlighting its role as the preferred source of liquidity.

Significant growth performers:

• First Digital USD (FDUSD) has increased by 24.35% in the past 7 days, showing an increase in adoption.

• Ondo US Dollar Yield (USDY) is trading at $1.09, up 0.93% in 7 days, indicating strong yield-seeking demand.

Underperforming Stablecoins:

• Tether (USDT) is down -11.16% over the past 7 days, losing $1.86 million in market capitalization.

• Bucket Protocol (BUCK) fell -3.18%, likely due to liquidity fluctuations.

Below is a detailed analysis of the three largest native stablecoins — AUSD, USDC (Sui native), and USDY — as well as FDUSD and BUCK.

4.1 Supply Growth

Stablecoin supply on Sui is surging, driven primarily by DeFi protocol demand, institutional trust, and ecosystem incentives. Lending markets like Suilend and yield farms on Cetus are driving adoption, while Circles USDC issuance increases credibility. AUSD and USDY thrive with strong DeFi incentives, attracting liquidity and capital inflows.

FDUSD (market cap over $120 million) and BUCK (market cap over $39 million) are also notable stablecoins but are less covered in the current analysis.

Strong supply growth was driven primarily by protocols:

• DeFi protocol demand – Lending markets (e.g., Suilend) and DEX yield farms (e.g., Cetus) have significantly driven the demand for stablecoins.

• Brand Trust Partnerships – USDC on Sui enjoys institutional trust due to direct issuance from Circle, while AUSD and USDY foster strong DeFi communities and incentive programs.

• Ecosystem Incentives – Protocols based on Sui offer aggressive annualized percentage rates (APR) and liquidity mining rewards, driving capital into stablecoins.

• AUSD and USDY focus mainly on DeFi, providing liquidity incentives and encouraging capital inflows.

6. Stablecoin growth and use cases, as well as anchoring mechanisms

AUSD

Anchoring mechanism: algorithm + mortgage

• AUSD uses a hybrid approach. A portion of the supply is backed by a basket of crypto assets (usually including SUI tokens) stored in a dedicated vault, while the algorithmic portion stabilizes short-term price fluctuations.

• If the price deviates from $1, an on-chain auction or “stability module” can rebalance AUSD by buying and selling collateral.

Mortgage Model:

• Often over-collateralized, requiring users to deposit more than $1 in collateral for every AUSD minted.

• Vaults may accept mainstream assets bridged on Sui (e.g., BTC, ETH) or native SUI.

Main use cases:

• Lending: Depositors lock up collateral to mint AUSD; borrowers can borrow AUSD based on their holdings.

• Yield Farming: AUSD liquidity pools often offer attractive APYs, especially on new or smaller DEXs that compete for liquidity. Growth drivers:

• Suilends high returns,

• Frequent trading incentives on DEX,

• Cross-promotion activities with other DeFi dApps (e.g., early user rewards AUSD).

USDC (Sui)

Anchoring mechanism: Fiat currency support (Circle)

• USDC is redeemable 1:1 with U.S. dollars, which are held in regulated bank accounts or short-term Treasury bills.

• Circle’s comprehensive compliance and licensing framework extends to USDC on Sui, reducing credit and regulatory risks.

Regulatory Compliance:

• Circle’s brand has built trust among institutional players.

• KYC/AML procedures can be integrated, making it suitable for enterprise-level or B2B use cases.

Main use cases:

• Payment systems: Merchants, payroll systems, and cross-border remittances can use Sui’s throughput to complete settlements in seconds with minimal fees.

• Institutional DeFi: Lower risk protocols or prime brokerage services welcome USDC due to its stable peg and brand reputation.

• Bridging: Since Circle issues USDC on multiple chains (Ethereum, Solana, Sui), large amounts of capital can flow seamlessly through official bridging solutions - further increasing liquidity. Growth drivers:

• Trusted Brand (Circle),

• Sui’s fast finality and low fees,

• Partnerships with dApps that provide enterprise-friendly products (e.g., advanced compliance, custody solutions).

USDY

Anchoring mechanism: Crypto collateral

• The $1 peg is maintained through over-collateralization of stable or blue-chip crypto assets (e.g., SUI, BTC, ETH).

• Smart contracts automatically liquidate positions if the collateralization ratio falls below a safety threshold, helping to maintain the peg.

Strong annualized yield:

• It is particularly popular on DEXs such as Cetus, offering up to 30%-50% APY yields for liquidity providers on USDY trading pairs.

• Some yield farming strategies allow for dual rewards (USDY + the protocol’s native governance token).

Main use cases:

• High-yield liquidity provision: USDY generally offers the most attractive yields for those users who can accept the risk of crypto-collateralized anchoring.

• Trader Leverage: Traders can deposit crypto assets, mint USDY, and use the minted stablecoin to enter other positions, effectively leveraging their portfolio. Growth Drivers:

• Aggressive liquidity mining,

• Cooperation with yield aggregation platforms (e.g., SuiYieldFarm),

• Get bridging solutions to bring in additional collateral from other chains (e.g. BTC, ETH).

FDUSD

Although not widely tracked in analytics, FDUSD is a fast-rising stablecoin with a market cap of over $120 million:

Anchoring mechanism and collateral:

It may be fiat-backed or fiat-like reserves, but the specifics vary based on the disclosures of the issuing entity.

Adoption factors:

• Could potentially see widespread use in Sui-based gaming ecosystems or dedicated DeFi protocols working directly with FDUSD issuers.

• Depending on user adoption data, integration with payment solutions focused on the Asian market is possible.

BUCK

• With a current market cap of around $39 million, BUCK is a smaller but notable stablecoin that uses a hybrid model:

Hybrid Collateral:

• Some are fiat-like and some are crypto-backed. Some speculate that it contains algorithmic elements, but official documents have not fully confirmed it.

Main use cases:

• Initially used for dedicated yield farming programs or as a reward token for certain Sui-based P2E (play to earn) platforms

Growth Potential:

• If BUCK develops deeper partnerships with major DEXs or lending protocols, it could see similar growth as AUSD or USDY.

7. Stablecoin Liquidity in Sui DeFi

5.1 Total Value Locked (TVL) Distribution

Here is the TVL distribution of the three main stablecoins in Sui’s leading DeFi protocol — AUSD, USDC, and USDY:

5.1.1 Observation

• AUSD is mainly locked in SUILEND (75.80%) due to its high annualized lending yield (about 11.19%).

• USDY is primarily used in CETUS (86.55%) due to the attractive yield farm annualized yield (about 46.92%).

• USDC is evenly distributed among CETUS, SUILEND, and NAVI, showing a wider acceptance and usage pattern.

5.1.2 Protocol Overview

@CetusProtocol : Leading DEX on Sui, known for its advanced AMM features and liquidity mining projects.

@suilendprotocol

: A powerful lending platform that attracts stablecoin deposits with unique incentives.

@navi_protocol : Offers a modest annualized rate of return (~5%), attracting more conservative liquidity providers.

5.2 Liquidity Fragmentation and Emerging Solutions

• Fragmentation: Different stablecoins often thrive in different “pockets” of liquidity that are driven by different yields.

• Aggregation Platforms: New yield optimization tools (e.g., SuiVault, SuiYieldFarm) are emerging, allowing users to automatically compound interest across multiple protocols.

• Cross-protocol collateral: Some lending markets now accept multiple stablecoins as collateral against each other, potentially reducing fragmentation over time.

8. Distribution and concentration of holders

EOA (Externally Owned Address)

Despite the growth in total supply, stablecoin ownership remains highly concentrated in a few addresses:

• AUSD: Largest holder (Wallet A): 47.4% of EOA supply held. Behavior: Mainly deploys funds in Suilend to take advantage of high annualized yields.

• USDC (Sui): Largest holder (Wallet D): 16.6%. Next five holders: ~25% of total. Behavior: Actively providing liquidity on multiple DEXs (e.g. Cetus, Navi, etc.).

• USDY: Two wallets (Wallet B, Wallet C): 94% in total. Action: Yield farming on CETUS, taking advantage of the protocol’s 46.92% annualized yield.

9. Beyond DeFi: Real-World Use Cases

While DeFi remains the core driver of stablecoin adoption, Sui is actively expanding into gaming and payment solutions — both of which are major areas of stablecoin usage.

7.1 Games: SuiPlay 0x 1 Case Study

@SuiPlay aims to integrate Suis blockchain technology into mainstream PC and console games.

Key elements:

• NFT and Token Rewards: Assets acquired by players through gaming can be converted into NFTs or tokenized as credit on Sui.

• Stablecoin Exit Mechanism: Players who wish to cash out or convert these rewards into fiat currency can do so using stablecoins such as USDC, AUSD, or USDY.

• Comparison with Steam: Steams 132 million monthly active users far exceed the current Web3 game market (the Web3 game market in 2024 is about 31.8 billion US dollars, compared to the overall PC game market of 60.84 billion US dollars).

• Future Potential: Partnerships with large publishers could potentially attract millions of players, each of whom would need stablecoins to make transactions or cash out rewards.

• Example: A popular role-playing game might issue NFT-based skins that can be instantly sold for AUSD or USDC (Sui), connecting real-world value to in-game achievements.

7.2 Payments and Financial Inclusion

Sui co-founder Kostas Krypto demonstrated a SMS-based transaction mechanism for the unbanked:

• SMS transaction mechanism: Users with basic mobile phones can send/receive stablecoins by sending specific commands or codes. The system checks the users Sui wallet object through an off-chain or lightweight on-chain service and then executes the transaction.

• Underbanked regions: Regions such as Sub-Saharan Africa or Southeast Asia may see increased adoption of stablecoins as a remittance and peer-to-peer payment option. This reduces reliance on traditional wire or remittance operators, which often charge higher fees and have slower settlements.

• Issuer Opportunities: Local stablecoin issuers (e.g., AUSD, USDC on Sui) can integrate with local telecom companies or non-governmental organizations (NGOs) to provide a stable medium of exchange for daily transactions. Partnerships with microfinance institutions or local cooperatives can promote financial inclusion by facilitating lending through stablecoins.

10. Comparative Analysis: Sui and Other L1 Blockchains

While this report focuses on Sui, a brief comparison chart helps to contrast Sui’s stablecoin growth with other major L1s like Ethereum, Solana, and Avalanche:

Key Takeaways:

• Ethereum: The largest stablecoin ecosystem, but also has the highest fees.

• Solana: Scalable but historically faced reliability challenges.

• Avalanche: Strong cross-chain bridging (e.g., subnets), but weaker overall DeFi momentum than Ethereum.

• Sui: The combination of low fees, a user-friendly developer ecosystem, and a rapidly growing stablecoin market lays the foundation for widespread adoption of gaming and payments.

11. Conclusion

Sui has evolved from a preliminary L1 blockchain to a rapidly growing ecosystem in which stablecoins play a vital role.

• Exponential market capitalization growth: from $5.42 million to $555.15 million, reflecting strong DeFi and institutional interest.

• Object-based nuance: Despite the added complexity of the index, tools like SZNS make data insights into stablecoin metrics reliable.

• DeFi dominance: High-yield protocols (Suilend, Cetus) drive stablecoin capital flows, often leading to whale concentration.

• Expanding into gaming and payments: Projects like SuiPlay 0x 1 and SMS-based transactions are opening the door to mainstream and underbanked markets.

• Future potential: Ongoing improvements — aggregation platforms, multi-chain collateralization, micropayment systems — may further expand the use of stablecoins.

As Sui continues to expand and explore new areas, stablecoins will continue to play a core role in enabling liquid, stable on-chain commerce.

The next phase of Sui’s development could see it become the blockchain of choice for global payments, gaming economies, and innovative DeFi products — all driven by a stablecoin that provides trust and liquidity.

Original link