Sui Network’s ability to handle high transaction volumes while maintaining low fees has attracted developers and users alike, and it is now home to one of the fastest-growing DeFi apps.
Scallop, a DeFi lending protocol built on Sui, is leveraging the network’s strengths to offer a user-friendly platform for borrowing and lending digital assets.
As blockchain networks grow in popularity and usage, they face increased demands for transaction throughput and efficient resource allocation. Current blockchains often struggle to handle the growing volume of transactions without compromising performance, leading to higher transaction fees, slower transaction speeds, and potential scalability bottlenecks.
Addressing scalability issues is crucial for blockchain to fulfill its potential as a mainstream technology. Scalable blockchains can support a wider range of applications, attract more users, and drive broader adoption across various sectors. One of them is layer-1 blockchain Sui Network, which aims to simplify Web3 onboarding and address the scalability limitations.
Sui expands DeFi presence
Launched in May 2023, Sui implements a unique architecture to achieve high scalability, using horizontal scaling to keep transaction fees low even during high demand. The network is capable of processing multiple transactions in parallel, achieving instant finality and security.
One of the fastest-growing DeFi apps that reflect Sui’s efficiency is Scallop, a lending protocol that has become the leading money market for the Sui ecosystem.
The protocol offers a comprehensive suite of institutional-grade features, including tools for building Sui Programmable Transaction Blocks (PTxs), Scallop SDK for interacting with Scallop, Sui Kit for interacting with Sui using the TypeScript SDK, and sCoins (Scallop Market Coins) for zero-cost flash loans.
Scallop is the first DeFi project to be awarded by the Sui Foundation through a grant. It has also obtained various awards from Sui Builder House hackathons. The protocol also secured funds from major institutions and venture capital (VC) firms, including Comma 3 Ventures and OtterSec.
Users can transfer digital assets to the Sui network using Scallop’s bridging solution, which includes Wormhole Connect, Portal Bridge and Celer Bridge. Moreover, Scallop offers low transaction fees, making it an attractive option for users who want to save money on their DeFi transactions.
In 2022, the team behind Scallop embarked on a quest to find the ideal blockchain foundation for their lending protocol. Their search led them to the Sui blockchain, which they recognized for its exceptional security and composability. Unlike other blockchains, Sui’s architecture enables seamless integration of Scallop into existing DeFi applications, empowering developers to create innovative and interconnected DeFi experiences. Sui’s Move smart contract development language, built upon the robust Rust programming language, further solidified its appeal, addressing critical security concerns inherent in DeFi smart contracts.
Scallop enables users to borrow and lend major stablecoins, such as USDC and USDT, as well as SUI and CETUS, the native token of Cetus, a Sui-based decentralized exchange (DEX). Through its temporary incentive program funded by Mysten Labs, Sui Foundation, and Openblock Labs, Scallop rewards both lenders and borrowers who receive SUI tokens for participating in its ecosystem.
Scallop values its users and intends to recognize early supporters and users of Scallop with the Scallop token, SCA, which will launch in Q1 2024.
Growing adoption
Scallop has experienced significant growth in the final quarter of 2023. As of Dec. 6, its total value locked (TVL) reached over $40 million, making it the second-largest DeFi app on the SUI chain after Cetus. This growth marks a substantial increase from September when Scallop’s TVL was less than $4 million.
This upward trend reflects the growing adoption of Scallop’s lending pools, which offer users the opportunity to earn interest on their crypto holdings or borrow assets for various purposes. The protocol’s focus on accessibility, security and user-friendly interfaces is likely contributing to its appeal among SUI users.
Scallop plans to set the standards for all lending DeFi platforms on all chains by focusing on user experience and security. The team — comprised of cybersecurity, fintech, DeFi, and quantitative trading experts — aimed to build a comprehensive monetary market leveraging Sui’s composability and security, implementing risk management and offering ongoing user support.
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