Crypto Market Rebounds, Sui Token Thrives on Liquid Staking Momentum

 

Crypto Market Rebounds, Sui Token Thrives on Liquid Staking Momentum
Sui, the token associated with Sui Network, experienced significant gains on Tuesday as the broader cryptocurrency market sought to bounce back from its recent downturn. The market was rattled last week when the United States Securities and Exchange Commission (SEC) took decisive action against two of the largest exchanges globally, Binance and Coinbase, affecting tokens classified as securities by the Commission.

Sui (SUI) spearheaded today's surge with a notable increase of 7.9%. This upward momentum was attributed to a fresh proposal aimed at improving tokenomics and a short squeeze of long orders in the futures market.

Developed by former members of Facebook's blockchain team (now Meta), Sui is a layer-1 blockchain that utilizes SUI as its native token for gas payments and validation within the network. While the majority of tokens experienced declines over the past week, several digital assets managed to record modest gains ranging from one to five percent since Monday.

On June 10, Sui core contributors introduced a Sui Improvement Proposal (SIP) that, if approved, would enable liquid staking for SUI tokens. Liquid staking involves locking tokens in a proof-of-stake (PoS) blockchain to earn rewards as validators while maintaining the token's liquidity through a liquid representation of the staked amount.



Presently, SUI validators earn an annual reward of 5.43% in SUI for securing the network. Liquid staking would empower investors to earn these rewards while actively engaging in token trading. The anticipated annual yields are expected to incentivize more users to stake their tokens.

Another factor contributing to the surge in SUI's price is a short squeeze in the futures market. Data from Coinglass indicates a significant drop in the funding rate for SUI perpetual contracts on June 11, suggesting that traders initiated aggressive short positions.

The funding rate represents periodic payments exchanged between long and short traders in a perpetual contract market, influenced by the market's demand for these contracts. If demand for long positions increases, the funding rate rises for traders holding buy positions.

In the case of SUI, most traders took short positions and speculated on a price decline. This presented an opportunity for more sophisticated traders to drive the price upward, triggering stop losses among the majority.

Coinglass data reveals that approximately $2.5 million worth of SUI long orders were liquidated in the last two days as the funding rate for the contract approached neutral values.


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Disclaimer:
This information is for educational purposes only and does not constitute investment advice. No person should rely on it to make any investment. Investing carries risks, including the loss of capital. All opinions expressed are subject to change without notice. Past performance is not indicative of future results. Always seek the advice of a licensed investment professional before making any investment.