DeepBook - Sui Liquidity Layer: What You Need to Know
Sui-native CLOB, $DEEP token, & More
Sui has been one of the key narratives recently, especially the $SUI token, and its price. $SUI has pulled away as the market’s favorite when it comes to the Move tokens that are liquid and live to trade. While both $APT and $SUI have similar marketcaps, ~$5.2B to ~$6B, respectively, $SUI’s FDV is almost double that of Aptos. This also puts the chain’s fully diluted valuation at ¼ of Solana’s, as some have noted.
Beyond price though, Sui’s offerings are a little less apparent. But the chain doesn’t yet have the same kind of robust ecosystem spanning multiple sectors (e.g. DeFi, DePIN, NFTs, Memecoins, etc.) that Solana does. Today we’ll discuss a recently launched Sui project, DeepBook. We’ll discuss its project offerings as well as the $DEEP token, which might garner some interest as there just aren’t that many Sui ecosystem tokens that exist at this point right now.
Background on DeepBook
DeepBook aims to be a supporting layer for DeFi liquidity natively deployed on Sui. The protocol is an onchain Central Limit Order Book (CLOB), serving as an infrastructure layer for other Sui teams to build on top of. There is no official frontend, rather, users access DeepBook’s liquidity by trading on the various Sui DEXs that have integrated the protocol’s offerings. This includes protocols like Cetus (primary Sui DEX), Aftermath Finance (Sui DeFi Hub), and more, with some additional integrations to come.
Sui DEXs can leverage DeepBook’s liquidity to be more competitive with DEXs on other chains, as well as even CEXs. This can help to bridge the performance gap between what is available on Sui vs what CEXs can offer. Right now this might not mean much, as the Sui ecosystem itself is still nascent, but being a young chain, Mysten Labs has an opportunity to build out functionalities that we have seen prove useful before, rather than after adoption comes.
The whole goal of DeepBook, as a CLOB, is to offer low-latency trading on top of Sui’s high-throughput capabilities. Like other CLOBs, the protocol is developed with high-frequency trading in mind, looking to handle large trading volumes with minimal slippage. DeepBook maintains a very close relationship with the Sui team (Mysten Labs) and the Sui Foundation, receiving a lot of support, which will likely result in various ecosystem integrations.
Today, DeepBook announced its V3 launch. V3 aims to reduce gas fees, add additional customization of trading fee parameters, implement flash loans for smoother borrowing and access to more arbitrage opportunities, and more.
The protocol’s V3 launch has also coincided with the launch of the $DEEP token. This is actually a significant point, as there simply aren’t that many tokens live on Sui for those looking to chase beta. This includes tokens of top protocols, as well as memecoins. So, building up a strong ecosystem of Sui-native projects can help to create a more complete onchain environment, taking advantage of $SUI’s high valuation. So far, the market is valuing $DEEP at a $30M marketcap, with a $122M FDV.
As far as utility, $DEEP is used to pay trading fees on the DeepBook platform as well as pool creation fees. It’s also used as a sort of incentivization mechanism, rewarding market markers and takers with rebates and discounts. And of course, the token is also used for governance.
The $DEEP token has launched today, with its genesis seeing 25% of the total 10 billion token supply circulated. This initial 25% of supply released consists of a 10% airdrop allocation, 14% allocated to the ecosystem reserve, and 1% allocated to investors. The remaining portion of the investor lockup has a 1-year cliff before distribution begins and early employees also begin to receive distributions following the 1-year mark. Emissions follow a seven-year curve, as seen below:
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