Sui's Q1 Wrapped: BitcoinFi, MEV, and Scaling

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Summarize Report

• 1. Significant Infrastructure Improvements:

  • Mysticeti v2: Introduced “fast path” execution for low-contention transactions, significantly reducing latency and validator load.

  • Move VM 2.0: Enhanced execution speed (30–65% speedups), improved composability, memory management, and modular architecture for complex applications.

  • Pilotfish Execution Sharding: Enables horizontal scalability, distributing execution across multiple nodes to achieve up to 10x throughput improvement.

  2. Ecosystem Growth & BTCfi Emergence:

  • BTCfi Sector Expansion: Dramatic growth from <$100M to over $4.5B TVL, driven by BTC staking, lending, and yield primitives.

  • Integration of BTC Assets: Sui introduced wrapped BTC variants (LBTC, WBTC, stBTC) through strategic partnerships (Babylon Labs, Lombard Protocol, Cubist, Satlayer), with over $111M in wrapped BTC already flowing into Sui-native protocols.

  3. Suilend’s Rapid Growth & Innovation:

  • Achieved $15M annualized revenue within one year, with 70% allocated to the SEND treasury.

  • Launched STEAMM, combining AMM and lending protocols to maximize capital efficiency by generating yield on idle liquidity.

  4. Aftermath Finance’s New Offerings:

  • Developed MetaStables, enabling asset-backed stablecoin minting (mUSD, mETH), solving liquidity fragmentation issues with oracle-based pricing (e.g., Pyth).

  • Introduced a fully on-chain perpetual DEX on testnet, enhancing Sui’s derivatives ecosystem.

  5. Walrus Decentralized Storage Network:

  • Raised $140M from Standardcrypto, providing decentralized storage with data availability use cases (similar to Celestia/EigenDA).

  • Tokenomics focus on community incentives (43%), core contributors (30%), and structured incentives for network health and stability.

  6. Innovative Fee Market & Economic Models:

  • Implemented localized object-based fee markets, enabling parallel transactions without global fee congestion, allowing applications to dynamically price fees independently.

  • Adopted canonical balance accumulators, simplifying composability, parallel execution, and improving developer efficiency compared to Ethereum or Solana models.

  7. Multi-Signature Accounts and MEV Mitigation:

  • Flexible weighted multisig scheme with heterogeneous key support, improving wallet security and flexibility.

  • Introduced MEV-aware optimizations (SIP-19 and SIP-45), prioritizing transactions via gas auctions, soft bundles, and consensus amplification, enhancing fairness and reducing congestion risks.

  • Block streaming implementation provides low-latency MEV opportunities, democratizing access to transaction ordering.

  8. Developer Experience (DevX) Improvements:

  • Launched Move Registry for safer dependency management and app modularity.

  • Introduced transaction debugging tools (PTB replay and Move tracing) for improved developer productivity.

  9. Growing Institutional Interest:

  • Notable institutions (Grayscale, Franklin Templeton, VanEck, Libre, Ant Financial) increasingly adopting Sui, evidenced by tokenized funds, ETNs, and Canary Capital’s ETF filing, signaling rising institutional confidence.

  These advancements position Sui Network to handle high-frequency, sophisticated financial use cases efficiently while fostering increased developer engagement and institutional adoption.

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Introduction

Since our last deep dive into Sui’s architecture, ecosystem, and token economics, the network has undergone a series of critical upgrades across its infrastructure and application stack. In this follow-up, we analyze key ecosystem developments spanning BTCfi primitives, Suilend’s growth trajectory, and Aftermath Finance’s expanding footprint.

On the infrastructure side, the rollout of Mysticeti v2 introduces a “fast path” for low-contention transactions, substantially reducing latency and rebalancing validator workloads. In parallel, Move VM 2.0 delivers notable execution improvements via advanced composability, arena-based memory management, and modular architecture and enhancements aimed at supporting more complex and dynamic on-chain logic.

Sui’s scaling roadmap also progresses with Pilotfish execution sharding, designed to enable true horizontal scalability and elastic validator configurations. These advancements are further reinforced by the implementation of localized object-based fee markets and MEV-aware optimizations, including prioritized transaction submission and consensus block streaming.

Ecosystem Updates

DEX volume on Sui has consolidated from the highs of the previous quarter, but we can see an uptick after Walrus’s WAL token went live on March 27, 2024.

BTCfi on Sui

BTCfi has recently become an emerging niche on Sui, bringing lending, staking, and yield primitives to Bitcoin, traditionally viewed as passive collateral. According to DeFiLlama, the broader BTCfi sector has grown from under $100M to over $4.5B in TVL across restaked, anchored, and decentralized BTC variants.

In late 2024, Sui announced partnerships with Babylon Labs and Lombard Protocol to introduce native BTC staking via LBTC, Lombard’s liquid staking token minted directly on Sui and Cubist to help with key management for deposits, minting, bridging, and staking. A few weeks later, in December 2024, the Satlayer partnership opened BTC restaking opportunities for LBTC and WBTC. Prior to that, the Lorenzo protocol introduced stBTC on Sui, a Babylon-powered liquid staking token designed for BTC yield aggregation, integrated with DeFi protocols like Cetus and Navi. In early February 2025, Sui Bridge added support for wrapped BTC assets like WBTC and LBTC. Since then, over 587 BTC have flowed into Sui DeFi.

To date, over $111M in wrapped BTC has been deposited across Sui-native protocols such as Suilend, Navi, and Cetus.

Checking in on Sui’s DeFi Protocols

Suilend

Suilend reported $15 million in annualized revenue in February 2024, within less than a year of operation, with 70% of this revenue flowing into the SEND treasury. The treasury was initially bootstrapped with 1.2 million SUI from “mdrop” penalties.

Suilend also launched STEAMM. Steamm is an Automated Market Maker (AMM) with an integrated money market component designed to maximize capital efficiency by depositing idle liquidity into lending markets. The protocol features a composable architecture that supports various quotation systems, including constant-product quoters, stablecoin-specialized quoters, and dynamic fee quoters based on market volatility. By allowing unused funds to generate yield in lending markets while remaining accessible for trades, Steamm improves capital efficiency and provides additional yield for liquidity providers through its bToken mechanism.

Aftermath

MetaStables, incubated by Aftermath on Sui, is a vault system that lets users deposit assets, bridged or native, to mint stablecoins like mUSD (USD-pegged) and mETH (ETH-pegged), with plans for future meta coins like mBTC. It uses oracle-based exchange rates (e.g., Pyth) for slippage-less trades between vault assets, sidestepping the inefficiencies of AMM slippage, and supports lending deposited assets for boosted yields. The idea with MetaStables is to tackle liquidity fragmentation by pushing meta tokens while earning users mPOINTS.

In addition to MetaStables, Aftermath launched a Perp DEX on testnet. It is a fully on-chain perps order book on Sui.

Walrus Goes Live

Walrus launched its mainnet on March 27, 2025, and announced a fundraising of $140M led by Standardcrypto.

Walrus is a decentralized storage network built on top of Sui, designed to store a wide range of data, from NFT assets and AI model weights to blockchain archives and website content. It can also function as a data availability layer for rollups, similar to Celestia or EigenDA. While Walrus leverages Sui for metadata and governance, it offloads storage duties to a separate set of nodes, avoiding overhead on Sui validators.

At the core of Walrus is Red Stuff, a two-dimensional encoding protocol that enables efficient, one-pass file encoding with robust data recovery. The system is secured through a staking-based incentive model using WAL tokens, where nodes are rewarded for uptime and correct data handling and penalized for faults or malicious behavior. Here is a breakdown of WAL’s tokenomics.

1. Community Reserve: 43%
2. Core Contributors: 30%
3. Walrus User Drop: 10%
4. Subsidies: 10%
5. Investors: 7%

Tech Updates

Sui Core Developments

Mysticeti V2 Updates

We covered Mysticeti v1 in great detail in our previous report, Sui Network: Demystifying the Monolithic Contender. It eliminated the need for block certification by embedding commit rules directly into the DAG structure. This allowed each block to be committed in the minimum theoretical latency of three message rounds, cutting consensus latency on Sui from ~1900ms (under Bullshark) to ~390ms. Additionally, it reduced CPU load on validators by requiring just a single signature per block, which improves execution throughput and responsiveness.

Mysticeti-FPC (v2) extends Mysticeti-C (v1) by introducing a “fast path” for transactions that don’t require full consensus, especially common cases like coin transfers or NFT mints, where only assets owned by a single address are involved. Rather than running a separate protocol like FastPay or Sui Lutris, Mysticeti-FPC embeds fast-path logic into the same DAG, avoiding extra messaging, redundant cryptographic operations, and post-consensus checkpointing.

Move VM 2.0 Enhancements

Sui’s Move VM v2 is a ground-up optimization focused on execution efficiency and system composability. Core changes include arena allocation, package caching, and low lock contention, all aimed at reducing latency under load. With pointer referencing across packages, including system-level access, internal calls are now significantly faster.

The VM also introduces multi-stage ASTs for verification, optimization, and execution, along with cross-package virtual table resolution and updated linkage logic, streamlining modular development. Early benchmarks show 30–65% speedups across execution paths. This will allow Sui to scale with Move VM v2 toward more complex, high-throughput use cases.

Execution Sharding with PilotFish

Pilotfish is a horizontally scalable execution engine that breaks the bottleneck of Sui’s original single-machine execution model. Traditionally, a Sui validator was monolithic, handling consensus, data fetching, and state execution on a single machine, constrained by vertical scaling limits in compute, memory, and storage.

Pilotfish decomposes this monolith into three distinct layers:

• Primary: A central coordinator that handles transaction ordering and consensus.
• SequencingWorkers (SWs): Scalable nodes responsible for ingesting and routing transactions.
• ExecutionWorkers (EWs): Horizontally distributed machines that store shards of on-chain state and perform the actual execution.

Pilotfish’s sharded workload distribution:

• Each transaction is routed to a specific SW.
• Each on-chain object (i.e., state) is mapped to a specific EW.

Transactions that require access to objects across multiple shards are resolved through a coordinated data exchange, a pull-based model where EWs request remote state on demand. This maintains consistency without sacrificing parallel execution, tightly aligned with Sui’s lazy consensus design, where consensus is achieved over batch metadata instead of full transaction data.

This enables parallelism without shared memory, allowing compute-heavy workloads to scale linearly with available hardware. Benchmarks show Pilotfish achieving up to 10x throughput gains using 8 EWs compared to the baseline execution engine.

Horizontal scaling can pave the way to true elasticity in validator infrastructure. Unlike vertical scaling, where hardware cost and provisioning delays impose hard ceilings, horizontal scaling lets validators elastically spin up general-purpose machines (e.g., 32-core servers on AWS or GCP) to handle spikes in demand. Validators can then transition to more cost-effective bare metal if sustained traffic persists.

The implications are threefold:

1. Validator operations become hardware-agnostic: no need for niche, high-end configurations.
2. Infrastructure provisioning becomes elastic and programmatic: autoscale based on demand.
3. Design space opens up for Sui-native innovations like package-specific fee markets or priority queues, enabled by Sui’s object-centric state model.

This would position Sui as one of the few execution environments to absorb consumer-grade transaction throughput without adding more centralization or affecting latency.

Implementation of Object-Based Local Fee Markets

In our deep dive, we mentioned how Sui uses multi-dimensional reference gas pricing that separates fees into two main components: computation fees and storage fees. Now we will look into how Sui’s local fee markets work in the context of Sui objects.

Sui implements an object-based local fee market mechanism, distinct from Ethereum but more like Solana’s fee structures. Sui sets fees based on the specific demand associated with individual objects or assets. Each asset or application on Sui has an independent fee market, enabling localized adjustments without network-wide impacts.

In contrast, Ethereum operates a unified global fee market, where every transaction contributes to overall network congestion, causing higher fees across the chain during periods of increased demand. Similarly, Solana uses a localized fee market system, adjusting fees around specific contested state objects or accounts.

Sui takes the localization concept further by associating fees directly with objects rather than states. By linking fees to specific objects, Sui processes transactions in parallel, involving different assets without fee interactions or congestion spillover. This isolation means applications experiencing heightened activity, even if other applications on Sui are already high in activity. For example, a popular trading pair on a DEX can independently adjust fees according to its needs. This way, Sui’s local fee markets with object-level granularity are more fair to its user base and more efficient to its developer base.

Canonical Balance Accumulators

Sui’s canonical balance accumulators use an object-based design, with balances being on-chain Move objects. These are not abstractions inside a contract—they’re standalone, verifiable state objects. This setup enables transaction-level parallelism since execution depends only on access to specific objects, not shared global storage.

Ethereum uses centralized mappings in ERC-20 contracts to track balances. Every transfer hits shared state, which blocks parallelism and ties composability to contract-specific logic. Each token is its own implementation, often with integration edge cases.

Solana handles balances through token accounts, which helps with parallel execution. But developers need to specify all accounts upfront for every transaction. This introduces friction in building modular systems and limits flexibility under dynamic conditions.

Sui simplifies this. Standardized balance objects and managers like “BalanceManager” give protocols a clean way to track and modify balances without owning the state. Execution scales horizontally by default, and balance logic is portable across modules without wrapping it in custom interfaces. It’s cleaner to build with and unlocks object-level fee markets, isolation, and composability without coordination overhead.

Multi-Signature Account Implementation

Sui’s multisig implementation is built around a weighted, k-of-n signing model. Each signer is assigned a weight, and a transaction executes once the combined weights meet or exceed a predefined threshold. This allows for flexible signing policies, like requiring 2 of 3 signers, or enforcing that one key always signs alongside others for 2FA-like setups.

What makes Sui’s approach different is that it supports heterogeneous key schemes within the same multisig. You can mix Ed25519, secp256k1, and secp256r1 keys in a single auth object, which opens up more composable wallet and custody designs without needing specialized tooling.

Unlike threshold signatures, which compress approvals into a single opaque signature, Sui’s multisig surfaces which keys signed which approvals. This improves auditability and coordination across parties, without the complexity of MPC setups. It’s simpler to reason about, easier to rotate participants, and works natively with the Sui transaction model.

MEV Developments on Sui

Prioritized Transaction Submission

At the execution level, Sui resolves conflicts on shared objects through gas-based prioritization. Priority Gas Auctions (PGAs) serve as the main coordination layer. Since Sui’s execution is object-centric and transactions modifying the same object must serialize, PGAs function as a congestion pricing mechanism, particularly valuable during object hotspots or volatile DEX conditions.

SIP-19 introduces soft bundles of off-chain assembled transaction groups submitted as a unit. These enable backrun auctions (e.g., via Shio), where searchers can bid to attach their transaction to a bundle with high execution probability.

SIP-45 adds consensus amplification. Transactions with gas prices exceeding k x RGP are submitted multiple times by different validators, effectively amplifying their presence in consensus. This reduces jitter caused by validator desync or leader rotation and ensures gas price accurately reflects inclusion priority, discouraging spam and improving fairness.

Mysticeti Block Streaming

One of the most interesting upgrades underway is block streaming. Full nodes will be able to subscribe to consensus blocks directly, giving them sub-200ms latency access to pending transactions before they’re finalized. This reduces the advantage of co-located searchers and democratizes access to MEV opportunities.

Unlike off-chain relays, this is permissionless and open. It also provides third-party nodes a deterministic view of transaction ordering, allowing for speculative execution, arbitrage, and backrun logic to operate near real-time.

Time-lock encryption is on the roadmap to help with harmful MEVs, and MEV Revenue Distribution models are also being explored. Incentives will flow to validators, apps, and users, not just searchers.

DevX Updates

Sui’s has a few DevX improvements lined up. The Move Registry formalizes dependency management by enabling named, versioned imports of on-chain packages, eliminating brittle address-based linking. Key frameworks and libraries are being open-sourced with registry support, allowing developers to compose and upgrade apps safely. Then, we have Programmable Transaction Block (PTB) replay with Move tracing to bring deep debugging support, letting developers step through transaction execution and pinpoint failure states in multi-call flows.

Conclusion

Quite a few things stood out with Sui in the last quarter. Mysticeti v2 and Pilotfish aren’t just routine upgrades, they will change how Sui handles transactions under load and how validators run their infra. Move VM 2.0 also brings a lot of quality-of-life improvements for devs building more modular apps. Together, they push Sui toward a setup that can actually support high-frequency use cases without blowing up coordination overhead.

On the ecosystem side, BTCfi is clearly becoming a wedge and something institutions may prefer. Protocols like Suilend and Aftermath are experimenting with new primitives that feel native to Sui’s architecture, object-based stablecoins, AMM-lending hybrids, meta-tokens, etc. The interesting part now is seeing how fee markets behave when demand spikes, whether MEV tools like soft bundles or block streaming get picked up by searchers, and how infra like Pilotfish changes validator economics in practice. We’ve also noticed increased institutional interest, with the Canary Capital ETF S-1 filing in Q1 2025 building on previous news with leading financial institutions including Grayscale, Franklin Templeton, VanEck, Libre, and Ant Financial. They have all launched investment products or initiatives on the Sui Network, ranging from tokenized funds to exchange-traded notes (ETNs).