Delayed redemption, team unlock, Sui ecological project’s first launch encounters setbacks
Sui ecological project faces setbacks during its first launch, including delayed redemption and team unlock.
Multiple IDO projects in the Sui ecosystem have fallen below their issuance prices, and new public chains are facing obstacles in ecosystem development.
By Jiang Haibo
Public chains have always led the narrative of blockchain. After Facebook’s Libra project was suspended, two new public chains based on the Move language, Aptos and Sui, have attracted widespread attention from the market. The multi-billion dollar first-level market valuation in the bear market, a $1,200 per hour salary for Move language developers, and generous airdrops and nearly free whitelist IEOs all demonstrate the appeal of Aptos and Sui.
However, after Aptos went live, its ecosystem was relatively scarce. Sui was highly anticipated before its mainnet launch, but as the first batch of projects were released, the heat of the ecosystem did not continue, and even extinguished the enthusiasm of many users.
Cetus price and TVL dropped by 30%, and the first LaunchBlockingd project Suia failed to issue
Cetus is a representative decentralized exchange (DEX) in the Sui ecosystem. It was selected as a second-round developer fund project for Sui, and the seed round was invested by OKX Ventures, KuCoin Ventures, Jump Crypto, Animoca Ventures, among others. Cetus has the function of concentrating Uniswap V3 liquidity. Before conducting IDO, it already had more than $20 million in liquidity. At the same time, there is also a LaunchBlockingd platform on Cetus, which can participate in IDO with $SUI or $CETUS.
The first cold water poured on the Sui ecosystem was Suia’s IDO. As the first IDO project on Cetus other than its own platform currency $CETUS, taking into account $CETUS was oversubscribed by 135 times and rose by about 3 times, even if Suia did not disclose Telegram and Discord community information, this IDO was highly concerned. As expected, Cetus users actively participated in Suia’s IDO, and the participation funds in the Sui and Cetus pools with a hard cap were 44.76 times and 18.95 times, respectively, and any excess participation funds will be refunded to users.
However, unlike the popularity of DEX, $SUIA fell below the IDO price in Cetus within a few minutes after its launch on centralized exchanges such as Kucoin, while the tokens of IDO users could not be claimed yet. Subsequently, the Cetus community was filled with information about Suia’s fraudulent behavior and rug-pulling, even though Cetus had opened up liquidity mining for CETUS-SUIA and SUI-SUIA trading pairs. However, $SUIA’s price fell below 50% of the IDO price on the first day after the start of trading.
As a result, the price of CETUS has been affected. According to official website data, a total of 47.39 million CETUS participated in this IDO, while according to CoinGecko data, only 80 million CETUS are in circulation, with a participation ratio of over 50%. Many users’ initial intention of holding CETUS was to participate in the IDO, but with no profit effect in the IDO and the situation of CETUS holdings falling, more and more users began to sell CETUS. As a result, the price of CETUS fell by 10% in just over an hour after it could be redeemed and by a total of 30% in the following two days. TVL on Cetus also fell from $30 million before the IDO to $21 million, a decrease of 30%.
Questioning of Cetus IDO Redemption Delay
Unlike the hot situation of the oversubscription of IDO on DEX by tens of times, SUIA went online on centralized exchanges such as Kucoin immediately after the IDO ended, and fell below the IDO price within a few minutes. Chain users holding a large amount of Sui and Cetus tokens only got a small amount of chips, while users on centralized exchanges could directly buy at a cheaper price, which formed a strong contrast between the two.
According to Cetus’ rules, SUIA’s token should be available for collection immediately at the end of the IDO. However, in the case of already falling below the issue price, $SUIA on Cetus was delayed by half an hour before it could be collected, and $SUI and $CETUS participating in the IDO could not be directly redeemed, which also caused strong questioning from the community. Some people believe that the Cetus team intentionally prevented IDO users from collecting tokens so that stakeholders such as the Cetus and SUIA teams could sell them on centralized exchanges first.
The Cetus team’s response to this was that “due to the heavy load, time is needed for calculation,” but not many users believed it. After this, the Cetus team claimed that the Telegram group was deleted because of “systematic violations of community rules,” and the Discord chat was set to slow mode.
IDO on Turbos and BlueMove also fell below the issue price
Similar to Cetus, Turbos Finance is also a DEX with centralized liquidity features and has the LaunchBlockingd platform. Turbos is invested by Jump Crypto and Mysten Labs. In the absence of top-tier institutional investment in the Sui ecology project, Turbos and Cetus with the current investment lineup have the background strength to become head projects in the Sui ecology.
However, the IDO performance of Turbos was also poor, with an IDO price of about $0.0055, which had fallen to $0.004 as of May 18. The community questioned that the team unlocked a large number of tokens after the IDO, and the Turbos team also stated on May 18 that it would return the funds raised in the IDO.
Similar IDO performances are not uncommon in Sui ecosystem projects, such as Alpha Sui’s IDO on the decentralized exchange BlueMove. Community users said that the project also did not have Telegram and Discord, and the $ALPHA token fell 70% after 1 minute of the completion of the IDO.
Sui ecosystem’s debut is not ideal, behind which is the general predicament of project development
From the experience of the past few years, DEXs may become the highest valued projects on public chains. If the valuation of DEXs is low, the ceiling of other projects on the public chain will not be too high. Currently, the performance of Cetus, Turbos, and Suia’s IDO projects is not optimistic, and there may be several reasons for this.
There are too many new public chains, and the ecosystem is difficult to develop. Whether it is the EVM chain launched by Filecoin and EOS recently, or Sui’s competitor Aptos, which has already been launched, there are no representative projects in the ecosystem, and there are multiple projects that have run away. The high valuation of public chains and the rarity of eco-projects in use form a contrast, like the “ghost towns” with high vacancy rates that appear in various places after the construction boom during the urbanization process.
Compared with the previous market rate, DeFi projects without profit expectations are no longer favored. In the absence of innovation in functionality, the threshold for the DeFi racetrack is not high and the competition is fierce. For example, on Arbitrum, multiple DEXs attracted hundreds of millions of dollars in TVL in a short period of time, but they were quickly forgotten because the projects themselves lacked core competitiveness.
The team’s token unlocking arrangements are inappropriate. From the situation of tens or even hundreds of times over-raising on-chain, IDOs in DEXs are still popular, while selling pressure is greater in centralized exchanges, forming a contrast. Suia’s documents show that the $SUIA tokens allocated to the team, early contributors, and the community will all be linearly unlocked from the beginning. Similarly, Turbos was also questioned for unlocking a large number of tokens by the team. In other projects, team tokens may not be unlocked at the time of launch.
Concentration of liquidity is not a panacea. Concentration of liquidity helps to improve capital efficiency and form a large amount of liquidity near the trading price with a small amount of capital. Both Cetus and Turbos have liquidity concentration functions, but compared with Ethereum, the volatility of tokens such as $SUI, $CETUS, $SUIA traded in the Sui ecosystem is greater than that of mainstream coins on Ethereum. According to the situation in the SUI/CETUS trading pair, a small amount of liquidity is concentrated near the trading price, and this part of the funds may be provided by professional liquidity providers and will be adjusted when the price fluctuates. In this case, other liquidity providers can only become followers, bear greater impermanent loss, and cannot obtain higher profits. With the opening of liquidity mining incentives, the TVLs on Cetus and Turbos are only 20 million US dollars and 6 million US dollars, respectively, and more than half of them are stablecoin trading pairs USDT/USDC.
In the development of public chains, developers, ecology, and users are a trinity, and each link is indispensable. An insufficient link will cause a negative cycle. For a new public chain, users are the weakest link. Projects can be obtained through Grants, but user stickiness needs to be cultivated for a long time. For new public chains like Sui, this is just the first step on a long journey.