Sui Ecosystem New Engine: What Do Liquidity Infrastructure Upgrades and DAMM Innovation Mean

At the beginning of 2026, the Sui network is undergoing a critical transition from technical validation to commercial breakthrough. Recently, the SUI token has experienced a price adjustment, with a circulating market cap of approximately $5.7 billion, but the ecological changes behind it are far more worth paying attention to than price fluctuations. From the influx of Wall Street capital to the launch of native privacy features, and to the iterative upgrade of liquidity infrastructure, all point to the same question: what does Sui really mean? It is not only a high-performance public chain but also an attempt to redefine the position of crypto assets within traditional finance.

Institutional Capital Entry: The Wall Street Story Behind Spot ETFs

The significance of Grayscale and Bitwise submitting Sui spot ETF applications to the SEC has gone beyond simple recognition of financial products. It marks that the SUI token is being evaluated by institutions on an equal footing with BTC and ETH.

In December 2025, Grayscale submitted an S-1 registration statement to the SEC, planning to transform the Sui Trust Fund into a spot ETF listed on the New York Stock Exchange. More importantly, this application incorporated a staking mechanism, meaning investors not only gain price exposure but also earn additional endogenous income through blockchain validator rewards. For traditional wealth management institutions seeking cash flow, this structure is highly attractive.

Bitwise’s subsequent independent declaration signaled that SUI has officially entered the institutional asset basket. The deeper implication of this change is that market consensus on SUI’s value is shifting from short-term speculation to long-term allocation. Although over 60% of tokens are still locked, the market has smoothly digested token unlocks worth tens of millions of dollars without severe sell-offs. The regulatory attitude shift of the SEC’s new leadership has accelerated the implementation of this process.

Explosive On-Chain Data, Hidden User Stickiness

Since the mainnet launched in May 2023, Sui’s ecological growth trajectory has shown clear exponential characteristics. TVL once peaked at $2.6 billion in October 2025. Although it has fallen back to around $1 billion due to market adjustments, this fluctuation itself reflects ongoing market attention to its ecosystem.

In terms of blockchain fees, Sui grew from an initial $2 million to about $23 million, an increase of over 10 times. Peak daily throughput reached 66 million transactions, with an average daily throughput over the past year remaining above 4 million, demonstrating its real horizontal scaling capability.

More noteworthy is the user dimension data. Daily active users surged from a few thousand at launch to a peak of 2.5 million in April 2025. Although recent figures have declined, the monthly average remains healthy, with current daily active users around 600,000. The proportion of old users has always maintained above 20%, revealing high user stickiness—users do not just flood in once and then disappear, but maintain a relatively stable return rate. These data form the core confidence for attracting institutional capital to Sui; it has evolved from a technically only public chain into a mature economy carrying real traffic and assets.

Privacy Transactions Launch, Opening Imagination Space for Traditional Finance

As the privacy track returns to the crypto stage, Sui has made an unconventional choice. Mysten Labs announced that native private transaction features will be launched in 2026. This is not an optional plugin but a core capability integrated into the consensus layer and object model. While most public chains still emphasize data transparency, Sui takes the opposite approach. What does this mean? It signifies an extreme emphasis on business secrets and privacy protection.

The core of this feature is default privacy—transaction amounts and counterpart information are only disclosed to the involved parties by default, invisible to outsiders. This is highly attractive to entities and individual users needing to protect trade secrets. While transparency on traditional public chains guarantees fairness, it also severely hinders the proliferation of commercial applications.

Sui’s technical solution uses zero-knowledge proofs to provide end-to-end confidentiality under high throughput constraints. More competitively, its compliance-friendly design—unlike pure privacy coins like Monero—introduces a selective transparency mechanism. The protocol allows transaction details to be opened to regulators or authorized auditors under specific compliance processes, while supporting KYC/AML integration, enabling financial institutions to perform anti-money laundering checks while maintaining privacy protections. Additionally, in the 2026 upgrade, Sui plans to incorporate post-quantum cryptography standards such as CRYSTALS-Dilithium and FALCON, ensuring that stored private data remains unbreakable for decades.

This positioning—“regulated privacy financial network”—attracts banks and commercial entities sensitive to data. But it is also a double-edged sword, potentially raising questions among pure cryptography advocates. The technical difficulty of integrating zero-knowledge proofs and post-quantum encryption while maintaining high TPS is not trivial.

DAMM, ALMM, and the Liquidity Revolution: What Does Ecological Infrastructure Upgrade Mean

Liquidity depth is a core indicator of a public chain’s vitality. The recent months’ frequent layout in this area reveals a deeper strategic shift—what does this mean? It signifies a shift from competing for application quantity to competing for capital efficiency.

NAVI Protocol launched Premium Exchange (PRE DEX) at the end of December, marking its evolution from a single lending protocol to a full-stack DeFi infrastructure. The core of PRE DEX is to build a premium discovery mechanism, providing a pricing platform for mispriced assets through market-driven algorithms. For institutional investors, this greatly improves the management efficiency of multi-chain, multi-protocol assets.

More noteworthy are two funding events indicating the technological direction. Magma Finance completed a $6 million funding round, with its adaptive liquidity market maker (ALMM) model representing a new generation of liquidity management ideas. Unlike traditional centralized liquidity (CLMM) models, ALMM uses AI strategies to analyze market volatility in real-time, automatically adjusting asset price distributions and rebalancing LP capital into active trading ranges. What does this mean? It means liquidity is no longer statically deployed but dynamically flowing like “living water” based on market sentiment. Meanwhile, AI monitors the mempool to prevent MEV attacks, offering traders lower slippage and creating higher real yields for LPs.

Ferra Protocol’s DLMM (Dynamic Liquidity Market Maker) DEX further deepens this trend. Its highly modular design integrates CLMM and DAMM models, introducing dynamic joint curves to enable fair token launches and liquidity guidance. What does DAMM mean? It means the market-making mechanism shifts from passive response to active market efficiency shaping, where capital is no longer passively deposited but a production factor flowing freely according to demand.

These innovations’ concentrated emergence indicates that the Sui ecosystem is shifting from a focus on TPS and application count to capital efficiency and liquidity depth. This transformation has profound implications for ecological sustainability.

Trust Crisis: Warnings from the SuiLend Incident for the Entire Ecosystem

However, behind these shining innovations, Sui is also facing severe tests. As the largest on-chain lending protocol, SuiLend’s TVL once approached $750 million, accounting for a quarter of the entire chain’s share, but its token SEND has always underperformed.

Although the protocol generated $7.65 million in annualized revenue in 2025 and claimed that 100% of protocol fees were used for token buybacks, the SEND token price has fallen over 90% in the past year. Despite executing buybacks worth $3.47 million (about 9% of circulating supply), this had little support for its market cap of only $13 million. The community questioned insider trading in buybacks, turning them into a tool for the team to offload. During the IKA margin call event, SuiLend forcibly deducted 6% of user principal without activating the insurance fund, further destroying community trust. More worryingly, the protocol’s operation mainly relies on monthly subsidies of several million dollars from the Sui Foundation.

This case reveals a deep problem: without genuine user growth and sustainable business models, buyback strategies are merely a façade covering hollowing out. The apparent token buybacks reduce supply but cannot offset high token emissions and early VC dumping pressure. For the Sui ecosystem, this is a wake-up call—data explosion has proven the technology’s potential, but trust is the foundation of survival.

From Technological Innovation to Ecosystem Maturity: A Difficult Transformation

For Sui, the path to Wall Street is full of tempting prospects, but ensuring a solid and reliable ecological foundation may be a longer journey. The influx of institutional capital, the launch of privacy features, and the upgrade of liquidity infrastructure have indeed driven vertical deepening of the ecosystem. But as warned by the SuiLend incident, these innovations can only truly translate into ecological value if supported by sound governance and sustainable incentive mechanisms.

Sui needs to complete its transformation from a technical laboratory to a mature economy, maintaining innovation sharpness and reasonable valuation while filling trust as a core piece of value growth. Liquidity innovations like DAMM imply improved capital efficiency, but the deeper meaning lies in whether the ecosystem can find a balance between efficiency and credibility. This is the real question Sui needs to answer.