SUI is a native asset on the Sui network and is designed to support the operation and development of the Sui ecosystem. The total supply of SUI tokens is capped at 10,000,000,000 (ten billion tokens). At mainnet launch, some SUI tokens will become liquid assets and the remainder will be unlocked over the next few years or distributed as staking rewards.
Four major uses of SUI tokens
1. Participate in the proof of equity mechanism
SUI token holders can pledge SUI to participate in the Sui network's equity proof mechanism, which can help maintain the security and stability of the network and obtain corresponding rewards.
2. Pay the gas bill
When performing and storing transactions or other operations on the Sui network, gas fees are paid, and SUI tokens are the payment asset for these gas fees. This makes SUI an important part of network operation.
3. Multifunctional Liquid Assets
The SUI token can be used as a versatile and liquid asset for a variety of applications, including the standard functions of a currency (such as unit of account, medium of exchange, or store of value) as well as more complex functions enabled by smart contracts, interactions within the Sui ecosystem. Operability and composability.
4. Governance
SUI token holders can participate in the governance of the Sui network, including on-chain voting on issues such as protocol upgrades. This makes the SUI token play an important role in the development of the network.
SUI Token Supply and Currency Dynamics
Since the supply of SUI tokens is limited, if Sui unlocks many use cases and millions of users migrate to the platform, the same number of tokens will be needed for more economic activities in the long run. Additionally, the existence of storage funds creates an important monetary dynamic, whereby higher on-chain data demand translates into larger storage funds, thereby reducing the amount of SUI in circulation.
Storage funds: an efficient and sustainable economic mechanism
Sui includes an efficient and sustainable economic mechanism for funding data storage, considering Sui's ability to store arbitrarily large amounts of on-chain data.
Storage fund design
When users make a transaction on Sui, they pay up front for computing and storage. Storage fees are deposited into a storage fund that is used to adjust the future share of staking rewards allocated to validators. This design provides a viable business model for future Sui validators.
Storage Fund Rewards
Sui’s delegated proof-of-stake (PoS) mechanism calculates total pledges as the sum of user pledges and SUI tokens deposited in the storage fund. Therefore, the storage fund receives a corresponding share of the overall staking rewards based on its share corresponding to the size of the total staking.
Specifically, storage funds have three key characteristics:
Funding source: The storage fund is funded by past transactions and serves as a vehicle to move gas fees between epochs, ensuring that future validators are compensated for storage requirements made by past users.
Capital Preservation: Storage funds only pay out returns on their capital and do not distribute their principal. This ensures that the fund never loses its capitalization and can survive indefinitely.
Deletion option: If you delete your data, you'll receive a partial refund for the storage fee you originally paid. This ensures that storage charges are paid for the life of the data and will be refunded once the data is deleted.
deposit fund mechanism
The size of the storage fund remains constant within each epoch and changes at epoch boundaries based on net inflows accumulated throughout the epoch. Inflow and outflow correspond to:
Storage fees paid for transactions executed from the current epoch.
Returns from the fund are reinvested into new principal.
A partial refund of storage fees paid by users who have their data associated with past transactions removed.
Storage fund incentives
The Savings Fund introduces a variety of beneficial incentives into the Sui economy:
Incentivize users to delete data: Users can receive a refund on storage fees when the cost of storing this data exceeds the value gained from retaining the data on-chain.
Applying deflationary pressure: Increased activity leads to greater storage requirements, causing more SUI to be removed from circulation.
Improved capital efficiency: This is the economic equivalent of a leasing model, where users pay for storage through periodic payments.
Conclusion: The SUI token plays multiple roles in the Sui network. It is not only an asset for paying gas fees, but also an important part of participating in the proof-of-stake mechanism, governance and multi-functional liquidity assets. The design of the storage fund further ensures the sustainability and economic efficiency of the network, laying a solid foundation for the future digital asset ecosystem.