On April 21, Sui Network unveiled the tokenomics (token economies) of its token SU in order to prepare the deployment of the mainnet of its layer 1 and the launch of its presale.
If you want to know more about the SUI ecosystem, we invite you to consult our fundamental analysis article complete.
The economy of Sui based on three groups of participants which interact within the ecosystem and contribute to its proper functioning:
SUI users: creators and exchangers of tokens
Users are at the heart of Sui Network’s economy. They create, modify or transfer tokens and use decentralized applications (dApps) on the Sui protocol. They are the ones who “consume” the services and are responsible for the activity (network effect).
SUI holders: support for validators
Holders of tokens SU play a crucial role in the governance and network security.
They can delegate their funds to validators Or pay a fee to interact with assets and available apps on the blockchain. Their investment and commitment guarantee the sustainability and stability of the ecosystem.
SUI network validators: transaction and execution management
THE validators are the guardians of the blockchain Sui. They ensure the processing and execution of transactions, thus guaranteeing the security and integrity of the network.
In exchange for their services, they receive rewards in the form of SUI tokens to maintain their infrastructure and continue to protect the ecosystem.
What is the use of the SUI token?
The token SU token is at the heart of the ecosystem, it fulfills four functions that contribute to the performance and growth of the network:
Staking with a validator to secure the network
SUI tokens can be staked with a validator in order to strengthen network security. This practice encourages token holders to get involved in the governance blockchain and supporting validators responsible for processing transactions and executing operations.
Sui Network uses a delegated proof-of-stake (dPoS) consensus mechanism, originally introduced by layer 1s Steam, BitShares And EOS (of Dan Larimer) then taken up by many blockchain projects in order to allow users to delegate the responsibility of validating blocks to competent validators.
Payment of gas fees for transactions and execution of smart contracts
SUI tokens are also used to pay the fees for gas necessary for the execution of transactions and other operations on the blockchain. These fees allow remunerate the validators for their work and to ensure the sustainability of the network.
Sui’s gas pricing mechanism achieves several goals that are crucial to the proper functioning and security of the ecosystem: providing users with low transaction fees And predictablethereby promoting a smooth and accessible user experience, while encouraging adoption of the platform.
Finally, Sui’s Gas Pricing Mechanism Helps Prevent Spam Attacks and denial of service (DoS). By assigning a cost to each transaction, it discourages malicious actors from overloading the network with unnecessary or malicious transactions.
Note : SolanaA monolithic layer 1 competitor made the choice when it was launched to drastically lower gas costs in order to allow people to save money, result: the network suffered large peaks in traffic (up to 400,000 transactions per second) and the network is crashed several times, which is why it is important to set transaction fees high enough to avoid crashes.
Use as a native asset for on-chain transactions
SUI tokens serve as native assets for transactions made on the blockchain main (layer 1). They facilitate exchanges between users and applications, thus increasing the fluidity and speed of operations within the ecosystem.
Right to participate in governance
Finally, holders of SUI tokens have the right to participate in the governance of Sui Network. They can thus influence important decisions concerning the development and evolution of the network, contributing to its growth and long-term success.
Sui’s Storage Fund
THE Sui Storage fund (Sui’s Storage Fund) is a major innovation that aims to ensure fairness in transaction fees and the future-proofing of the blockchain. Aware that the network is constantly evolving and that today’s validators won’t necessarily be the ones storing data in the futureSui has implemented a mechanism to fairly distribute storage costs among users.
To resolve this problem, Sui’s Storage fund redistributes past transaction fees to future validators. Users pay in advance for data processing and storage, and storage fees are deposited into the Fund.
These funds are taken into account when distributing rewards staking and are used to adjust the share of rewards given to validators. If storage requirements are high, validators receive additional rewards to cover additional costs, and vice versa when needs are low. Thus, validators are properly compensated for data storage costs.
A fee model designed for “temporary” data storage
Sui’s storage model also includes a “delete option” allowing users to get a refund of storage costs when they delete data previously stored on the channel.
Users are expected to delete data when their storage is no longer profitable, thus avoiding infinite growth in storage needs. Sui therefore offers the best of both worlds: the ability for users to store data on-chain while integrating a market mechanism to ensure that only data worth storing is actually kept on Sui.
Want to know more about Sui? https://coinacademy.fr/sui-sui-fondamental/
The article Sui Network unveils its tokenomics before the launch of its layer 1 appeared first on Corner Academy