Issue #2 - Mysten Labs
The blockchain era of “read/write/own” implies users have full control over usage, transmission, and storage of their data, but technical bottlenecks make it cost-prohibitive (in many cases) to mint and store assets more sophisticated than static JPEGs. Major players like Coinbase and OpenSea use a less-than-perfect workaround by hosting metadata off-chain with decentralized storage providers like IPFS, but the result is a disjointed environment of on-chain storage, decentralized files, and centralized APIs—limiting composability.
Mysten Labs’ Sui blockchain enables dynamic assets to live directly on-chain without the need for a third-party storage solution due to its object-centric data model, scalable transaction processing, and secure smart contract language and execution environment. As a result, applications can seamlessly upgrade, bundle, and mutate NFTs.
We believe Sui’s dynamic capabilities will help unlock web3 adoption starting with gaming applications and eventually bleeding into “real life” social metaverse applications. As Chris Dixon from a16z notes: “The next billion-player game could be an instant game that combines similar multiplayer social mechanics with frictionless, drop-in gameplay. The potential market is all the gamers who are currently over-served by consoles and gaming PCs, as well as those who don’t self-identify as ‘gamers,’ but would play if the right game and friends were just a click away” .
Ultimately, blockchain interoperability might better serve the metaverse than standardization of existing centralized platforms which face a natural innovator’s dilemma to protect their walled gardens.
Disclaimer: The views expressed in this publication are those of the author alone and do not purport to reflect those of the Mysten team. Readers are advised that Platoon Digital is a participant in Mysten Labs’ Series B preferred stock and token warrant offering and operates a full node.
We believe Mysten has one of the most talented product teams in crypto, bringing track records of successful innovation and execution. Mysten Labs’ founding team previously led the crypto R&D arm of Meta, where they helped build the Diem blockchain, the Diem Payment Network, the Move Virtual Machine and smart contract language, and several state-of-the-art consensus algorithms. We expect that Mysten’s strong core developer team will drive continuous innovation, unlocking future TAM expansion and greater monetization opportunities.
Evan Cheng is a co-founder of Mysten Labs. He was formerly Director of Blockchain Engineering at Facebook Novi and Director of Engineering at Facebook. He is co-creator of the low-level virtual machine (LLVM), which generates the low-level machine code running on Apple devices, as well as much of Google, Nvidia, and Intel. Evan has a reputation as a maverick, criticizing issues with core functions that have been accepted as standards and then leading a team of developers to execute on a re-platforming. He is an advisor to blockchain companies including Chainlink, Zilliqa, Sommelier, and PARSIQ.
Sam Blackshear is a programming language theorist with a PhD in static analysis and the creator of the Move programming language. At Facebook, he leveraged that training to build scalable, automated bug-finding tools like Infer, a multi-language static analysis tool that intercepts critical bugs before they get shipped to users. He was eventually tasked with figuring out the Diem project’s gameplan for smart contracts.
George Danezis is Chief Scientist at Mysten Labs and a Professor of Security and Privacy Engineering at University College London. He co-founded chainspace.io in 2018, which Facebook Novi acquired in 2019 for the Diem payment system. He has been a technical advisor for a number of Blockchain and privacy technology companies including Nym Technologies, Vega Protocol, Celestia, Privitar and Spherical Defense.
Adeniyi Abiodun is Chief Product Officer at Mysten and also joins from Facebook Novi. He previously served as Head of Product for VMware Blockchain and Architect for Oracle’s blockchain cloud platform.
Kostas Chalkias is Co-founder and Chief Cryptographer at Mysten Labs. He previously led cryptography at Facebook for Diem, Novi, and WhatsApp and R&D at R3 for the Corda blockchain and Conclave SGX.
Koh Kim is Head of Ecosystems at Mysten Labs, where she leads marketing and partnerships with a particular eye toward web3 gaming. She previously co-led the gaming business development team at Google Play.
Series A: Mysten Labs raised a $36M Series A led by a16z with participation from a number of investors including Redpoint, Lightspeed, and Coinbase Ventures. Notably, two of the Diem co-founders, Morgan Beller and Kevin Weil, participated via NFX and Scribble Ventures, respectively.
Series B: Mysten Labs raised a $300M Series B co-led by FTX and Jump. Platoon Digital participated in this round along with follow-on investments from a16z, Lightspeed, and Coinbase.
Users: Sui is still in early development, but awareness is starting to accelerate with 66K Twitter followers growing at 12K per month over the past 4 months and 101K Discord members. We expect these trends to accelerate as Sui nears mainnet .
Nodes: After launching devnet just a few months ago, Sui already has 17K+ nodes across 60 countries .
Scalable Transaction Processing
Mysten created Sui from scratch after trying to develop blockchain-based products at Facebook and concluding that existing infrastructure could not scale to its ~1.5 billion MAUs. The team’s “first principles” approach to R&D over 3-4 years culminated in an innovative solution to the standard consensus bottleneck.
Consensus Bottleneck: Traditional blockchains require that all transactions are totally ordered via consensus and processed in sequential blocks. As a result, transaction processing is slow and relies on peripheral solutions to scale (e.g., rollups).
Hybrid Solution: Sui’s object-centric data model makes it explicit when an object is owned/shared or mutable/immutable and what dependencies exist between transactions. As a result, the network can distinguish between simple transactions that should bypass consensus and complex transactions that require consensus, enabling parallelization of transaction processing.
Simple transactions on owned objects only require partial ordering.. Instead, these transactions bypass consensus and are verified optimistically and committed individually and in parallel. The lack of a memory pool means there is only minimal interaction between validators, which leads to lower latencies compared to traditional blockchains. The protocol achieves throughput of 160K TPS with 100-200ms of latency in lab environments .
Complex transactions on shared objects require total ordering via consensus. These transactions are committed in parallel with a consensus protocol that achieves throughput of 125K TPS with 2s of latency in lab environments. For more details, we recommend Evan Cheng’s recent Twitter thread .
Note: As of Mar 19, 2022, an unoptimized single-worker Sui authority running on an 8-core M1 Macbook Pro executes and commits 120K TPS.
Horizontal Scaling: Equally important is that Sui validators can scale out horizontally by adding more machines per validator . This enables the network to increase processing capacity in periods of high demand and avoid congestion pricing, unlike traditional blockchains that process transactions sequentially and use a single machine per validator .
Move Language: Safe Smart Contracts
Blockchain-based smart contracts now power a variety of decentralized applications; however, they are still far from trustless with over $1.65B lost in DeFi exploits since the start of 2022 . A more secure and accessible smart contract language is key to real-world adoption of blockchain-based smart contracts and decentralized applications.
At Meta, Sam Blackshear looked at how to design languages and programs such that automated tools can easily detect bugs, end users can easily reason about their programs, and programs can easily compose with one another. He invented Move, a language for secure, sandboxed, and formally verified programming. Mysten is now free to make its cross-platform vision a reality since it no longer operates within a strict mandate set by Meta.
Safe: Move programmers write code and formally specify key safety invariants (e.g., conservation of value). The combo of Move language semantics and static tools like the Move Prover guarantees the enforcement of these invariants and prevents costly execution errors (e.g., reentrancy attacks, poison tokens, spoofed token approvals). This is accomplished through static checks or “type checking” at compilation time . We believe formally verifiable smart contracts will increasingly be expected for some of the most substantial use-cases .
Cross-platform: Developers want to participate in ecosystems where they can reuse their expertise across many areas and do so safely. Unlike the EVM, the core Move language is minimal and blockchain-agnostic with no notion of accounts, transactions, cryptography, or consensus baked into the core language. This means different blockchains can make their own independent design choices while sharing contracts, tools, and expertise. This includes Move-powered blockchains like Sui, Aptos, 0L, and Starcoin, as well as soon-to-be or potential Move VM-compatible blockchains like Sommelier, Celo, Solana, Polkadot, Near, and Flow .
Sui’s approach to enforcing robust safety at the language level with static typing and formal verification is critical in the web3 environment where code takes direct custody of assets, and a small bug can lead to catastrophe.
Anecdotally, we see Move gaining traction among Solana’s Rust developers and believe that Sui will benefit from Move’s positioning as a complement (or competitor) to Solidity and the EVM.
SUI tokens are capped at 10B and serve the standard functions with respect to fees, staking, collateral, and governance.
Gas Price Mechanism: End users want their transactions processed at a reasonable speed and cost while validators to optimize their bottom line. These incentives conflict when block space is a scarce commodity. In response, Sui’s novel gas price mechanism incentivizes validators to submit their true reservation prices at the start of each epoch and honor those commitments throughout the epoch. There are three mechanisms that incentivize validators to set fair prices.
Gas Price Survey: The goal is set a minimum reference price under which a quorum of validators will readily process transactions. This is done by individually polling validators at the start of each epoch, aggregating the results, and then setting the network-wide reference price at the 2/3’s percentile by stake.
Tallying Rule: The goal is to incentivize validators to honor quotes submitted in the gas survey by encouraging them to honor their submitted quotes with extra rewards and penalizing them with reduced rewards when they fail to honor their submitted quotes.
Incentivized Stake Reward Distribution Rule: The distribution of staking rewards is adjusted for each validator with information from the gas price survey and tallying rule. This is like Solana’s “Vote Credit” system.
Storage Fund: While the gas price mechanism incentivizes validators to set prices fairly and keep user transactions cheap, the goal of the Sui storage fund is to adequately compensate them for their storage costs as demand for on-chain data storage increases .
Indirect Reward Model: Governance sets storage prices at the true dollar-cost of on-chain data storage. When storage requirements are high, it indirectly increases validators’ share of stake rewards when storage requirements are high and decreases it when low. It does the opposite when storage requirements are low.
Token Burning: The storage fund grows as more data is stored on-chain, removing SUI from circulation.
Rebates: Data storage is costly for validators. Users are incentivized to delete data that only requires temporary storage (e.g., data pertaining to a redeemed ticket) in exchange for a rebate on their storage fees. This mechanism is designed to ensure that the storage fund is never depleted and that its size moves in line with the amount of data held in storage.
Web2 gaming is becoming increasingly difficult to differentiate. Game developers are now turning to blockchain technology to create new game play, ways for user engagement, and monetization by minting in-game assets (e.g., skins, weapons, land) as NFTs. Longer term, we see blockchain interoperability as a foundational infrastructure to facilitate the open metaverse.
Gaming: Sui offers seamless integration of dynamic assets into web3 applications. Its high throughput, low latency, and fast finality mean changes to asset status, balance, and ownership can happen in real-time with gameplay. For example, an in-game item can be minted as an NFT that evolves over time as its owner moves through levels and accomplishes new feats or buys new upgrades. Eventually, the player should be able to move his item out of one game and into another. New use-cases will create a virtuous cycle as superior user experience drives in-app purchases, inducing more game studios to build on Sui, leading again to better user experience and more in-app purchases. As an infrastructure and developer tools layer, we estimate that Mysten’s revenue TAM potential is approximately $20-40B or 10-20% of the $219B global video game market anticipated by 2024 , .
GTM Strategy: Mysten is partnering with both established game development studios like Netmarble F&C, Combat Lab, and Com2uS Studios, as well as successful web3-native game studios like Lucky Kat Studios (creator of Panzerdogs). The team is focused on the total user experience and has invested in partnerships with content creators like Concept Art House (content creator for Call of Duty, Fortnite, Hearthstone, League of Legends), payment providers like Circle and Six Clovers, and bridges like Wormhole and Axelar, which enable cross-chain token and NFT transfers. Thanks to the object-capable accounting enabled by Sui and Mysten’s wide variety of partnerships, game development studios like Combat Lab are exploring the ability to automatically track and share revenue with content creators in real-time based on the popularity of their content.
Social: Sui is uniquely suited for blockchain-based messaging applications and poised to capture some of the anticipated $57B global social networking app market by 2024 . Sui is designed to support social networks (e.g., “Suitter”), private messaging platforms (e.g., “Suignal”), and website/blog/rating platforms (e.g., Yelp, TripAdvisor). These features can be embedded in gaming applications or serve as standalone products augmented by collectible NFTs. Any chat messaging is fast because messages are low latency, simple transactions.
Rewards and Loyalty Programs: Sui’s scalable transaction processing and storage model will enable brands to engage and reward customers via mass airdrops, positioning it to capture share in the $121 billion global market for loyalty management tools and tech and transaction enablers .Companies like Cramium are already leveraging Sui to build scalable NFT distribution services for AdTech, so that brands can reach customers with promotions, exclusive content, and loyalty rewards programs .
DeFi: Sui enables low latency on-chain trading, which is critical for retail payments, micro-payments for gaming apps, proprietary trading and bridges between blockchains. Sui’s low latency should make it an ideal platform for building these types of applications. See DEXs like Ocean DEX and MovEX, as well as DEX aggregators like KX Finance , .
Sui’s unique object-centric data model enables state-of-the-art transaction processing coupled with a safe and flexible smart contract language and a sustainable economic model to tie it all together. The result of the team’s thoughtful “first principles” approach is a new blockchain that should push the boundaries of what is possible in web3 today.
We are excited to be a part of the Mysten ecosystem and look forward to updating you on future developments.
There is no data sharding now. Sui will go to mainnet with single-node validators and progress to sharding storage and execution as major post-mainnet upgrades. The team is prioritizing a faster path to launch and believe a single-node system will handle the early traffic and storage requirements .
Porting code from Diem-style Move to Sui-Move is straightforward. Sam Blackshear notes that a Sui developer managed to port a decentralized exchange from Diem-style Move to Sui-Move in ~1 hour .
By 2024, the global mobile gaming and video game markets are projected to reach $116B and $219B, respectively. These figures exclude revenue from in-game advertising which is anticipated to reach $56B.
This includes all the tools that retailers use to create customer loyalty, including rewarding customers with exclusive discounts, merchandise, or points that can be exchanged for rewards.