The State of Stablecoins on Sui

Author

Irwyn Liong
February 25, 2025

Overview Of Sui

Sui has quickly emerged as a leading blockchain platform, founded in 2022 by former Meta engineers with a vision to prioritize people over platforms through secure, accessible, and decentralized digital ownership. With low fees, high scalability, and robust security, Sui has fostered a strong developer community, driving adoption through hackathons, accelerator programs, and growing trading volumes. Its breakthrough scalability is powered by Mysticeti, a next-generation consensus mechanism built on Narwhal and Tusk, optimizing transaction ordering, data availability, and network resilience. As market sentiment remains bullish, industry leaders like VanEck anticipate further growth and adoption, solidifying Sui as a key L1 blockchain contender.

Sui Object-Based Model

Before diving into the Sui stablecoin ecosystem, let’s look at how data is structured and recorded on Sui compared to traditional account-based blockchains like Ethereum.

Source: Artemis

  • In an account-based model, each transaction records a debit and credit between two wallet addresses.

  • This means every transfer updates balances at fixed wallet addresses, making it straightforward to track token balances and transaction flows.

  • Indexing on these blockchains is relatively simple because all balance changes are ledger-based and tied to static accounts.

Sui takes a fundamentally different approach by representing everything—from wallet addresses to tokens—as objects. This presents unique challenges in data indexing and aggregation.

Source: Artemis

  • Every transaction updates all involved objects, rather than modifying a static balance at an address.

  • Instead of a ledger entry showing a debit and credit, Sui modifies object states, meaning balances are stored and tracked as evolving object versions.

  • Unlike traditional account-based models, objects in Sui can change not only in value but also in ownership between accounts. This means that a modification to an object may include both a value update and an ownership transfer, creating a new version of the object that reflects these changes.

  • For instance, a stablecoin transfer doesn’t just update a “balance” field at a wallet address—it creates a new version of the token object with updated metadata. i.e. from object0 to object0*

  • Since every wallet is also an object, the transaction effectively modifies multiple objects at once, requiring more complex indexing strategies.

In addition, if there is a partial transfer, the token object will update its balance, i.e. object0 to object0*, and emits a new object (objectA) to reflect the partial balance.

Source: Artemis

Understanding this distinction is key to interpreting on-chain data for stablecoins in Sui’s ecosystem. Here at Artemis, we believe in an increasingly fundamentally driven world, using a first-principles approach to uncover true data for everyone on-chain. This is why we approached SZNS Solutions for Sui stablecoin data.

How SZNS Solutions Tackles It

To address these challenges, SZNS has developed a comprehensive data solution that abstracts these complexities, allowing for efficient aggregation of balances and liquidity across the ecosystem. Let’s dive into their methodology:

Reconstructing Token Balances In Sui

Since balances are not stored in a single contract field, SZNS reconstructs them dynamically by scanning for all objects owned by a given address and filtering out historical versions to keep only the most recent state. By aggregating the values of these latest token objects, SZNS accurately computes real-time balances while ensuring past states can be reconstructed for historical tracking.

However, this process is far from straightforward. Because each object update creates a new version, historical balance tracking requires indexing thousands of object transitions to map changes over time. Additionally, edge cases—such as locked, delegated, or staked assets—must be accounted for to ensure non-tradable balances are properly classified.

Indexing Liquidity In DeFi Protocols

DeFi liquidity on Sui is highly fragmented, with each protocol implementing different object types to manage liquidity pools. Instead of relying on standardized smart contracts like EVMs, SZNS must first identify how each protocol structures liquidity—whether through Pool objects, staking contracts, or other custom implementations.

Once the relevant liquidity objects are identified, SZNS extracts key attributes such as reserves, LP shares, and fees, mapping them into a unified structure that allows for cross-protocol comparisons. However, since not all DeFi platforms adhere to a standard liquidity pool model, custom exception handling is required to track liquidity stored in alternative object types like escrow contracts or lending pools. This flexible indexing framework ensures that all liquidity sources are accurately represented.

Now that we’ve established where our data comes from, let’s break down some interesting insights into the Sui’s stablecoin ecosystem and what drives these distributions.

So… What’s Up On Sui Stablecoin Ecosystem?

*note: all data are collected as of 18 Feb 2025

Sui’s remarkable growth over the past year highlights its potential as a major player in the blockchain space. The network’s stablecoin market cap has surged from $5.42M in Jan 2024, to an impressive $555.15M in Feb 2025, reflecting the ecosystem's rapid adoption and increasing prominence.

With a diverse portfolio of stablecoins, including 5 native and bridged tokens, Sui caters to a broad range of on chain functionalities for DeFi applications. The ecosystem's appeal is further amplified by the presence of native stablecoins like USDC, which have gained significant traction due to their sheer popularity as a stablecoin. Lets take a look at the composition of stablecoin supply on Sui:

Source: Artemis and Suiscan

From the breakdown of stablecoin supply on Sui, native stablecoins accounts for 80.1% of the total stablecoin supply on the network. For the purpose of this research article, we will only focus on the native stablecoins.

1. Sui Stablecoin Marketmap

Sui's stablecoin ecosystem has rapidly gained momentum, establishing itself as a vital component of its flourishing decentralized finance (DeFi) landscape. To better understand its growth and composition, we put together a market map of Sui’s stablecoin ecosystem:

Source: Artemis

Sui’s stablecoin market map reveals a thriving DeFi ecosystem, with stablecoins deeply integrated into DEXs, lending platforms, and liquidity protocols. Key players like Cetus, Bluefin and Suilend facilitate stablecoin trading, borrowing, and yield generation, making them essential for on-chain liquidity. New protocols such as Metastable which provides 0 slippage fees when swapping stablecoins, can potentially bring the ecosystem to the next level.

2. Native Sui Stablecoins

Source: Artemis

*note: we currently don’t track FDUSD and BUCK which has about $120M+ and $39M+ market cap on SUI stablecoin ecosystem.

A look at the native stablecoin supply growth on Sui reveals an exponential increase, signaling the rapid expansion and adoption of its DeFi ecosystem. Over the past year, the supply of native stablecoins has surged, reflecting a strong demand for on-chain liquidity, lending, and trading. This growth aligns with Sui’s rising TVL, increasing user activity, and deeper integrations across DeFi protocols. As more stablecoin issuers recognize Sui’s scalability, low fees, and fast transactions, the ecosystem continues to attract capital inflows and new financial applications, cementing its position as a booming hub for stablecoin-driven DeFi innovation.

3. TVLs In Protocols

Source: Artemis

The bar charts reveal how AUSD, USDC, and USDY are distributed across different DeFi protocols. One standout observation is that 75.80% of AUSD is deposited in SUILEND, significantly higher than the 40.32% of USDC in SUILEND. We also see that 86.55% of USDY is held in CETUS, highest between the 2 protocols.

This raises two questions:

  • Why is AUSD’s percentage allocation to SUILEND higher than that of USDC?

Source: Suilend

A closer look at SUILEND’s APRs provides a compelling explanation. The lending rates on SUILEND show that AUSD offers an APR of 11.19%, making it one of the most attractive yield-generating stablecoins on the platform. In contrast, USDC’s APR sits at just 6.06%, making it relatively less appealing for depositors seeking yield.

  • Why is CETUS the highest TVL protocol of USDY?

Source: Cetus

Source: Navi

A key reason behind CETUS’s dominance is its high APY of 46.92%, which significantly outperforms Navi’s 5% APY, as seen from the above figures. This substantial difference in yield incentives likely attracts more liquidity providers to deposit USDY into CETUS, explaining its higher TVL share compared to other protocols.

4. Top Holders(EOAs)

The holder distribution of stablecoins on Sui reveals significant concentration in a small number of wallets, suggesting that a few key players dominate liquidity in the ecosystem.

Source Artemis

Source: Artemis

Source: Artemis

Stablecoin Distribution: Large Holders And Yield-Driven Liquidity Allocation

From the above pie charts, there is a clear pattern with large holders strategically allocating funds to high-yield DeFi protocols. The top AUSD holder, WalletA (47.4%), primarily interacts with SUILEND, taking advantage of its high lending APY. Similarly, USDY is highly concentrated, with WalletB and WalletC controlling 94% of all USDY held in EOAs, with WalletB actively farming liquidity on CETUS. Meanwhile, USDC has a more diverse distribution, though its largest holder, WalletD (16.6%), frequently engages with CETUS, adding and removing liquidity to optimize yield farming. These patterns highlight the influence of yield incentives in shaping stablecoin allocation, with liquidity gravitating toward protocols offering the most attractive returns.

What’s In For SUI’s Stablecoin Future

Outside of DeFi, Sui has cast a wider net—particularly in gaming and payments. One notable project is SuiPlay0x1, which aims to attract traditional console and PC gamers by offering rewards for gameplay that seamlessly integrate into the Sui network. This approach mirrors platforms like Steam, which reportedly has around 132 million active monthly users—indicating a potentially vast market that’s yet to interact with blockchain services. The PC gaming market, estimated at $60.84 billion in 2024, far outstrips the $31.8 billion crypto-specific gaming segment. By bridging this gap, Sui stands to capture a large, untapped audience, introducing them to Web3 through fun, familiar gaming experiences.

Source: SuiPlay

For stablecoin issuers, tapping into such a large and diverse user base is a rare opportunity. Gamers earning NFT-based or tokenized rewards will need a straightforward way to exchange or “lock in” their winnings—precisely where stablecoins can shine. When stablecoin issuers choose to go native on Sui, they position themselves as the default medium of exchange for these in-game assets, ensuring stable, real-world value for gamers while stimulating ongoing demand for the issuer’s token. The result is a flywheel situation: a vibrant new user demographic for the stablecoin, and a fast, convenient reward-cashing method for gamers exploring blockchain features for the first time.

Beyond gaming, Sui’s focus on payments opens another major avenue for stablecoin usage. In January 2025, Sui cofounder Kostas Krypto showcased a demo enabling SMS-based transactions on the Sui network. This advancement holds enormous promise for regions with limited internet connectivity, where mobile coverage is more common than broadband access. Integrating SMS transactions with a native stablecoin empowers underbanked and unbanked populations to securely transfer value, further driving the adoption of digital assets. By becoming native on Sui, stablecoin issuers can lead in these emerging markets, unlocking new revenue streams and significantly broadening their user base.

Source: Kostas Kryptos’ X

Final Thoughts

Sui’s rapid rise as a blockchain ecosystem has set the stage for an evolving and increasingly dynamic stablecoin landscape. With deep liquidity pools, strong DeFi adoption, and expanding real-world applications, Sui is proving itself as a serious contender in the broader Web3 economy. The data highlights clear trends—yield incentives drive capital flow, liquidity remains concentrated in a few major players, and DeFi remains the primary use case for stablecoins on Sui. However, as the network continues to expand into gaming and payments, new opportunities for stablecoin integration are emerging, bringing a broader, more diverse user base into the mix. Whether through high-yield lending, liquidity farming, or seamless on-chain transactions, stablecoins are poised to be a core pillar of Sui’s financial infrastructure, shaping the future of decentralized commerce and beyond.

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