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In Q1 2026, Sui made major on-chain headlines with four financial infrastructure upgrades, including ETF approvals, stablecoin solutions, margin trading, and a developer incentive program. Despite a 16% decline in DeFi TVL, Sui processed over $1 trillion in stablecoin volume since August 2025 and became the fifth crypto asset approved as a U.S. spot ETP in February 2026. The chain launched two stablecoin models—Ethena’s suiUSDe and Bridge’s USDsui—and DeepBook Margin, a full on-chain margin trading system. These upgrades aim to solidify Sui’s position as a financial layer for DeFi and institutional capital, amid ongoing DeFi exploit risks.

Article by ChandlerZ, Foresight News

In the first quarter of 2026, the total value locked (TVL) across the entire DeFi market declined by 16%. The collective performance of L1 tokens was even more concerning: according to 1kx data, despite accounting for 90% of the crypto market’s total market capitalization, L1 blockchains collectively generated only 12% of the market’s total fee revenue. Nearly all major L1 tokens posted negative annual returns, signaling that the market is voting with real capital to question the ability of L1s to capture value as an infrastructure layer.

As on-chain activity growth does not automatically translate into value appreciation for L1 tokens, the protocol layer—not the infrastructure layer—is capturing an increasing share of economic value. This forces every L1 to reconsider a fundamental question: What is the true foundation of a public blockchain’s long-term competitiveness?

In this environment, most public blockchains chose to cut costs and slow down development, waiting for market conditions to improve. Sui, however, took the opposite approach. Within a single quarter, Sui launched four major layers of financial infrastructure upgrades: approval of ETFs opening institutional access, the sequential rollout of two stablecoin pathways, enhancements to margin trading infrastructure, and the initiation of a developer incentive program.

According to official reports, since August 2025, Sui has processed over $1 trillion in stablecoin transfer volume, with a monthly peak of $229 billion in August 2025.

Behind this is a clear conviction: when market cycles suppress token prices, what truly builds long-term competitiveness is the robustness of the underlying financial infrastructure. While most blockchains are still debating whether to prioritize applications or infrastructure first, Sui has made its choice—build infrastructure first, and wait for the cycle to turn.

ETF breakthrough: Fifth cryptocurrency asset to receive U.S. approval

In January 2024, spot Bitcoin ETFs were approved; in mid-2024, Ethereum followed suit. In September 2025, XRP became the first approved spot ETF for a altcoin, and in October, Solana followed. In February 2026, SUI became the fifth cryptocurrency asset to receive SEC approval for a spot ETP in the United States. The first four on this list are all mature assets ranked among the top ten by market capitalization with years of trading history.

For a public blockchain that has been live on mainnet for less than three years, being included among them signals that traditional financial markets are beginning to view SUI as an asset class worthy of standalone allocation. Notably, in September 2025, the SEC approved universal listing standards, reducing the approval timeline for crypto ETFs from over 240 days to approximately 75 days—this institutional shift has created favorable conditions for the rapid approval of a SUI ETF.

Within one month, three SUI ETFs were launched, covering two exchanges and three issuers. During the same period, VanEck launched the SUI ETN (ticker: VESU) on the Deutsche B?rse Xetra, providing European investors with fully collateralized, compliant exposure.

On February 18, Grayscale’s GSUI and Canary Capital’s SUIS launched on the same day, with GSUI trading on NYSE Arca and SUIS listing on Nasdaq. Both products feature built-in staking functionality, a first among approved spot BTC and ETH ETFs. GSUI allocates 100% of its SUI holdings to on-chain staking, participating in validation through Sui’s delegated proof-of-stake mechanism, with a net staking yield of approximately 1.32% as of late March, a management fee of 0.35%, and no fees charged for the first three months or until assets under management reach $1 billion. SUIS reports a staking yield of approximately 7% and a management fee of 0.75%. The significant difference in yields between the two products stems primarily from distinct staking strategies and fee structures, allowing investors to choose based on their preferences for yield and risk.

On February 24, 21Shares’ TSUI launched on Nasdaq, offering pure spot SUI exposure without staking functionality, with a management fee of 0.30%, waived until October 2026. Previously, in December 2025, 21Shares launched the 2x leveraged SUI ETF (TXXS), with a management fee of 1.89%, providing derivatives exposure for investors with higher risk tolerance. Within a single quarter, SUI’s product lineup in the U.S. ETF market has now covered investors across diverse risk profiles and return expectations—from leveraged to spot to staking.

The differentiated strategies of the three products are clear: Grayscale and Canary Capital have opted for staking ETFs, passing on on-chain yields to traditional financial investors, while 21Shares has chosen a pure spot approach, providing institutions that prefer simple exposure and lower fees with an entry point.

The significance of a staking ETF extends far beyond a simple capital channel. In traditional ETF structures, investors gain price exposure, while the underlying assets remain dormant. The staking SUI ETF transforms this logic: institutional capital entering through the ETF is used to stake SUI on the network to participate in validation and enhance security, with staking rewards distributed back to holders. This creates a two-way flow of value between traditional capital and on-chain economics. This structural innovation—previously unachieved by BTC and ETH ETFs—makes the SUI ETF among the first products to embed on-chain economic incentives directly into a traditional fund structure.

Previously, institutional investors needed to access SUI through OTC desks or by managing their own private keys, resulting in high barriers and operational complexity. ETFs simplify this process into a routine stock trade.

For the Sui ecosystem, opening institutional access channels expands the user base and capital pool from on-chain native users to the traditional financial system. When a fund manager with a traditional brokerage account can buy SUI exposure as easily as buying SPY, this public chain’s potential capital pool grows from billions of dollars in crypto-native assets to the trillions of dollars in traditional asset management.

Stablecoin infrastructure, powering DeFi with a settlement engine

ETF solves the problem of who can enter, while stablecoins address what to use for trading once inside. Without mature stablecoin infrastructure, on-chain DeFi is like a system with pipes installed but no water flowing—capital cannot circulate efficiently, and transactions lack stable units of account and settlement tools.

In the first quarter of 2026, two stablecoin products with distinctly different approaches were launched on Sui, driving the on-chain stablecoin market capitalization to steadily rise from approximately $485 million at the end of 2025.

On February 11, Ethena’s synthetic dollar, suiUSDe, launched on the Sui mainnet. suiUSDe is the native version of Ethena Labs’ synthetic stablecoin on Sui, maintaining its peg to the U.S. dollar through a delta-neutral strategy. Unlike traditional fiat-collateralized stablecoins, Ethena’s model generates yield through long-short hedging of crypto assets, making suiUSDe naturally suited for leveraged trading and yield strategies in DeFi.

The launch of suiUSDe was synchronized with its integration into DeepBook Margin, making it the first synthetic USD to be directly usable for margin trading, lending, and leverage operations from day one, without requiring individual protocols to be integrated one by one. This infrastructure-ready, product-ready efficiency is a key advantage of composability.

SUI Group Holdings (Nasdaq: SUIG) has injected $10 million into the suiUSDe yield vault on Ember Protocol, with an initial capacity of $25 million. SUIG is a Nasdaq-listed digital asset platform holding approximately 102 million SUI tokens, focused on driving institutional-grade applications within the Sui ecosystem. The direct participation of a Nasdaq-listed company in deploying an on-chain yield vault underscores the shift in capital types attracted to Sui—from retail to institutional. Projects within the ecosystem such as Aftermath, AlphaLend, Bluefin, Navi, Scallop, and Suilend have announced support for suiUSDe, covering key use cases including lending, trading, and yield aggregation.

USDsui, launched on March 4, took a completely different path. While suiUSDe serves on-chain native DeFi users, USDsui targets the broader compliant payments and institutional settlement market. USDsui is issued by Bridge, a stablecoin infrastructure company acquired by Stripe in 2025, which enables businesses and networks to rapidly deploy customized stablecoin products through its Open Issuance platform.

The reserves for USDsui are managed by institutional partners such as BlackRock, Fidelity Investments, and Superstate, built in compliance with the GENIUS Act. A key feature of USDsui is interoperability. Through Bridge’s Open Issuance ecosystem, USDsui can be instantly exchanged on a 1:1 basis with other stablecoins issued by Bridge, enabling low-friction cross-chain transfers. For global payments and DeFi applications, this means having a compliant, scalable, USD-pegged asset on the Sui blockchain.

The strategic intent behind both pathways is clear: suiUSDe serves as the underlying asset for yield generation and leveraged trading, targeting native DeFi users, while USDsui provides a stable dollar backed by institutional-grade reserves, designed for payments and compliance scenarios. This dual-track architecture enables Sui to attract both DeFi capital and traditional institutional funds simultaneously.

Viewed within the broader market context, the global stablecoin market cap reached a historic high of $316.4 billion in Q1 2026, with monthly trading volume exceeding $10 trillion. Even amid an overall contraction in DeFi TVL, stablecoins remain the fastest-growing category of crypto assets. The maturity of a blockchain’s stablecoin infrastructure directly determines how much of this structural growth it can capture. By launching stablecoins along two distinct pathways during this critical window, Sui has made a strategic, calculated move to secure its position.

DeepBook Margin: A Composable Layer for DeFi Infrastructure

ETFs bring capital in, stablecoins provide a unit of account, but for capital to flow efficiently on-chain, a unified trading infrastructure for order matching, lending, and settlement is needed. The launch of DeepBook Margin fills the most critical missing link, enabling capital on the Sui chain to advance from merely entering and having a tool to achieving efficient trading.

DeepBook is Sui’s core liquidity layer—a fully on-chain central limit order book (CLOB). As of April 15, DeepBook has processed a total trading volume of $18.8 billion, served over 31.4 million users, generated approximately $10.5 million in 24-hour trading volume, and permanently burned 26.5 million DEEP tokens from trading fees.

Built on this verified matching infrastructure, DeepBook Margin adds modules for margin trading, a liquidation engine, and interest rate calculations, supporting leverage options from 1x to 16x. Trades automatically complete the full process of borrowing, swapping, collateralizing, and repaying via flash loans. Interest rates are dynamically calculated based on pool utilization using a piecewise linear model: rates rise gradually at low utilization levels and increase sharply once utilization exceeds a threshold (e.g., 80%), automatically balancing supply and demand through market mechanisms. The liquidation mechanism is fully executed on-chain; when a margin account’s risk ratio falls below the liquidation threshold, anyone can initiate liquidation. Liquidators receive the collateral and a reward, safeguarding lenders’ funds.

DeepBook has been upgraded from a matching engine to a full-stack DeFi infrastructure platform. For developers, building products such as leveraged trading, lending, and market making no longer requires building margin management and liquidation logic from scratch.

DeepBook Margin provides a set of shared, embeddable financial primitives that development teams can directly invoke, allowing them to focus on product-level innovation and differentiation. Adeniyi Abiodun, Co-Founder and Chief Product Officer at Mysten Labs, said that DeepBook Margin represents a new model for on-chain financial infrastructure, and its integration with suiUSDe positions it as the defining solution in this category.

Multiple ecosystem projects have announced integration with DeepBook Margin’s deep integration, including leveraged and derivatives trading, liquidity infrastructure, and lending markets. Abyss, Cetus, and Deeptrade will be the first to integrate margin trading functionality, while other projects can leverage shared infrastructure to offer users a broader range of trading options.

The value of this composability lies in economies of scale: as more protocols share the same margin and clearing infrastructure, liquidity is no longer siloed within individual protocols but flows freely across the entire DeepBook network. For users, this means better price discovery and lower slippage; for developers, it means lower barriers to entry and faster product iteration.

In Ethereum’s DeFi ecosystem, each protocol builds its own margin system, leading to highly fragmented liquidity, with user funds locked in separate protocols and unable to interoperate. Sui has adopted a different architectural approach by moving margining and liquidation down to the infrastructure layer, allowing application layers to focus solely on product innovation and fundamentally preventing liquidity fragmentation.

This also explains why suiUSDe was able to integrate directly with margin trading on its first day of launch, as the stablecoin and trading infrastructure share the same composable foundation.

Bear market empowers builders

With the recent deployment of ETFs, stablecoins, and DeepBook Margin, Sui completed a major four-layer financial infrastructure upgrade within a single quarter. However, the value of infrastructure depends on the applications built atop it. To bridge this gap, the Sui Foundation launched DeFi Moonshots—an elite incentive program designed to accelerate the “infrastructure flywheel.” Unlike traditional broad-based grants, Moonshots focuses on a select few industry-leading pioneers, offering up to $500,000 in growth incentives and direct technical collaboration to ensure this newly established foundation translates into tangible ecosystem outcomes.

This aggressive expansion strategy exemplifies textbook counter-cyclical investing, accelerating growth amid overall market contraction and pressure. By prioritizing the construction of a comprehensive financial system—from institutional settlement to permissionless innovation—Sui is positioning itself to reap substantial returns when the cycle turns. Whether or not the market immediately rewards the token price, Q1’s performance demonstrates that Sui’s competitive advantage now hinges on the completeness of its infrastructure, effectively betting that the first chain to build a robust foundation will lead the eventual recovery.