Space Text Review | Sui DeFi and Cross-Chain Protocol Interoperability

On December 20, at 5:00 AM (UTC+8), Sui held its final Space of the year, where representatives from Circle, Wormhole, Bluefin, and Mysten Labs joined Sui to delve deep into the interoperability of Sui DeFi with cross-chain protocols. The editor has compiled the text version of the discussion based on the audio for everyone to read and reference.

X Space Audio Recap:

· DeFi Interoperability and Cross-Chain Protocol on Sui

· DeFi Interoperability on Sui

Guest Introductions:

· Jeri Morgan (Host): At Mysten Labs, focusing on DeFi partnerships.

· Bridger: Software Engineer at Mysten Labs, currently leading the Sui Bridge native cross-chain bridge project. Entered the crypto space in 2017, contributing to the development of various protocols.

· Rabeel Jawaid: Founder of Bluefin, a Sui-based spot and perpetual contract DEX. The platform has processed over $400 billion in trading volume this year. In the past two weeks alone, the platform has added approximately $50 million in liquidity.

· Ian J: Currently serving as the CCTP Program Manager at Circle, launched Circle University, and created Circle's crypto knowledge content module. Also has a consulting background in cryptocurrency data infrastructure and market research.

· Isaac: Belonging to the Wormhole Foundation BD team, mainly responsible for product integration and chain expansion. Prior to joining Wormhole, was a member of the Circle BD team and participated in CCTP work.

Space Content Highlights

Q1: Let's start with Circle, Ian, could you briefly introduce USDC and CCTP, and explain how it enhances cross-chain transfers?

Ian: Of course. I'll start with an overview of Circle and then discuss USDC and CCTP. Circle's mission is to enhance global economic prosperity through frictionless value exchange. We are committed to empowering developers to build the future on the blockchain through an open platform, powerful tools, and a supportive community. As many may know, our primary product is USDC, which is a globally leading regulated stablecoin. Currently, our circulating supply is $42 billion, which may actually be slightly higher today. Approximately two months ago, Circle launched native USDC on Sui. An interesting fact is that Sui is the fastest chain to reach $100 million in circulation of native USDC, so kudos to the Sui ecosystem!

I believe CCTP is the connecting tissue in the entire crypto ecosystem, essentially unifying USDC liquidity scattered across different blockchains and ultimately streamlining the user experience. It is actually a permissionless protocol with a "one chain fits all" feature that securely facilitates cross-chain USDC transfers. The term "secure" here refers to the native destruction of USDC on the source chain and the native minting of USDC on the target chain. Next, we can delve into the details of all this.

Q2: You mentioned that CCTP simplifies the user experience while ensuring security. So, how does CCTP address the issue of liquidity fragmentation across multiple chains? What role does it play in today's DeFi?

Ian: I think it's necessary to first discuss how USDC liquidity fragmentation in the ecosystem occurs and then elaborate on how CCTP addresses this issue. Typically, some third-party cross-chain bridges will issue USDC in their unique format and with their own symbols during transfers. If you search for stablecoins on DeFiLlama, you will see many such tokens. These tokens are not directly issued by Circle but are wrapped or bridged versions of USDC. These tokens are not mutually interchangeable, leading to liquidity fragmentation among various pools across different blockchains.

This has not only had a negative impact on User Experience (UX) and Developer Experience (DevX), but also requires end users or developers to explicitly choose a specific bridged version of USDC. Of course, there are some benefits, such as helping emerging blockchains quickly establish liquidity and activity. However, these bridged versions of USDC, whether in terms of liquidity or security, cannot be compared to a dominant form of native USDC in a cross-chain context.

This is where CCTP comes in: it provides developers with a low-level primitive that can be used to expand the use cases of cross-chain DeFi and the crypto capital markets. Developers can embed CCTP into their own applications, wallets, or bridging solutions, allowing users to freely move any form of native USDC across chains. CCTP handles the routing of USDC and is applied to various DeFi scenarios, such as cross-chain transactions, lending, NFT purchases, liquidity pool rebalancing, and more.

Q3: CCTP currently supports 9 chains, providing 72 transfer paths, so as adoption grows, how does CCTP ensure security and scalability?

Ian: This is thanks to the native burn and mint process. For ease of understanding, when a user initiates a transfer through CCTP, the native USDC on the source chain is burned, and then Circle's attestation service observes and confirms this burn event. Based on this attestation, the corresponding native USDC is minted on the target chain.

It is worth noting that CCTP is secured by Circle, meaning no additional trust assumptions are needed. This provides a significant advantage over bridge methods based on "lock and mint" or liquidity pool, or even intent-based bridging. As you mentioned, with Sui's addition, CCTP currently supports 9 blockchains and will continue to expand in 2025.

Q4: Next, please have Isaac explain how Wormhole plays a key role in driving cross-chain interoperability and liquidity, and how Wormhole Connect simplifies the cross-chain experience for developers and end users.

Isaac: On the developer side, we prioritized the Developer Experience (DevX) of Wormhole Connect, ensuring it is very intuitive. Our goal is to make it as simple as possible for developers to access the cross-chain paths provided by Wormhole to expand their user base or acquire new liquidity sources. Setting up Wormhole Connect is extremely simple and can be done with just three lines of code. This has been proven in practice, as on the morning of the launch day, I coordinated with several teams, and they were all able to integrate and go live within minutes.

For users, Wormhole Connect also provides strong value: it allows existing users to seamlessly transfer USDC on Solana to Sui with optimal capital efficiency, while also opening up a whole new potential market. For example, if a Solana power user wants to participate in DeFi on Sui, they can use Wormhole as an entry point to transfer USDC from Solana to Sui in less than a minute and start engaging in yield farming. This way, applications and developers can expand their feature sets, and users can avoid dealing with wrapped assets, liquidity fragmentation, or slippage issues.

Q5: You briefly mentioned how Wormhole integrates USDC on Sui through CCTP. How does this differ from other bridging solutions?

Isaac: Perhaps we can start by discussing Wormhole's past role on Sui. Wormhole has always been Sui's primary bridging solution, where assets transferred from other chains are officially recognized, including Wormhole-wrapped USDC. These Wormhole-wrapped USDC tokens are widely used on Sui, have deep liquidity, and provide a trusted bridging solution for stablecoins.

As Circle, the issuer, begins deploying native USDC on Sui, we are supporting this process to ensure a successful migration to the native asset and help it achieve interoperability with other chains. Our integration is specifically designed to achieve this goal.

In terms of differentiation, Wormhole is the only interoperability protocol with such a comprehensive feature set. We can drive any multi-chain use case to the market, such as cross-chain data querying, general message passing, and more. Additionally, we always prioritize security, which is woven into everything we do. Everything we build is open-source, which is one of the reasons why we have been chosen as the official interoperability partner for institutions like BlackRock, Securitize, and Flow Traders.

Q6: Next, let Bridger introduce the Sui Bridge and give everyone a brief overview of what native bridging is, as well as the progress since its launch.

Bridger: A few months ago, we launched the Sui Bridge. Simply put, native bridging is similar to other bridging solutions, but the key difference is that the nodes actually validating bridging messages are Sui's validation nodes, not a third party. At launch, we initially only supported ETH on Ethereum. So far, we have surpassed a deposit volume of 10,000 ETH, and the total deposit volume on Ethereum is now around 26,000 ETH. From the data, it's evident that the Sui Bridge has shown good activity.

We are working hard to support more tokens (according to the latest official announcement on December 24, the Sui Bridge cross-chain bridge now supports USDT

!), and more new assets will be added soon, so stay tuned. Next year, we will focus on some behind-the-scenes work that will not have a significant impact on the user experience. At the same time, we will also introduce new features, such as supporting more blockchains, and possibly introducing a custom message delivery feature. This way, we can pass custom messages between chains like some other solutions (such as Wormhole).

Q7: How did the collaboration with Wormhole and CCTP improve the user experience of transferring assets to Sui?

Bridger: The collaboration with Wormhole was very pleasant. After CCTP was released, they allowed us to quickly integrate Wormhole Connect into the bridge.sui.io application. So, thanks to Wormhole for their swift support. As a developer, I must say that integrating Wormhole Connect was very simple and efficient.

Q8: What specific challenges does Sui Bridge address? What does this mean for developers?

Bridger: The main challenge addressed by native bridging is dealing with ecosystem fragmentation. One advantage of native bridging is its tight integration with the Sui protocol itself. For developers, when you join the Sui ecosystem, you can easily find all the information you need. If you want to bridge assets from a chain like Ethereum, you can also conveniently find the relevant resources.

Q9: Next, let's have Bluefin's Rabeel share his views as a protocol party on the importance of liquidity efficiency and user-friendly cross-chain solutions. What impact does the improved cross-chain USDC liquidity through CCTP and Sui Bridge have on Bluefin's users?

Rabeel: We are a trading platform, and from an operational standpoint, this means that first, liquidity is no longer as fragmented, while security is higher. I believe both Ian and Isaac have mentioned this. Fast cross-chain transfers allow you to move assets back and forth between Solana and Base in less than a minute. Additionally, users can more easily transfer assets from CEX. Many people still hold assets on centralized platforms and can now transfer back and forth using USDC, making everything much easier.

Previously, people would usually move Sui from Binance to the chain. Now, because you can send USDC from these centralized platforms, there is less slippage when swapping stablecoins. I think this will also unlock more fiat on-ramp options. We ultimately hope to achieve a convenient fiat on-ramp experience similar to Apple Pay. This is undoubtedly a significant step towards that goal.

Finally, this makes the balance between liquidity providers (LP) and users much easier, especially for LPs running CEX-to-DEX or cross-ecosystem DeFi strategies. This is particularly important for institutional LPs running medium- to high-frequency strategies, as it makes operations simpler and clearer.

Q10: In addition to liquidity efficiency and cross-chain solutions, have CCTP and Sui Bridge addressed any other pain points?

Rabeel: I think for a trading platform like us, everything is about liquidity. The lower the barrier to liquidity entry, the higher the capital efficiency, and the better the platform's user experience. Ultimately, the most liquid on-chain platform will attract traffic from mainstream users, and that is our goal. This is undoubtedly a very important step towards that goal.

Q11: So, what unlocking effect do you think this will have on a broader base of traders and DeFi protocols within the Sui ecosystem?

Rabeel: I believe this will significantly lower the barrier for users to enter the Sui ecosystem. So far, with the help of zkLogin, creating wallets and setting up wallet infrastructure has been very simple, but the process of transferring assets has not been as easy and intuitive. And now, this process will become much simpler. This will also unlock more liquidity within the ecosystem, and the interoperability of this liquidity within and across ecosystems will be stronger. This will enable new strategies, such as leveraged yield farming or arbitrage trading. Additionally, through the Sui ecosystem, more competitive pricing can be obtained.

Q12: Why is seamless user onboarding and user experience so crucial in driving the next wave of DeFi adoption?

Ian: The current problem facing DeFi, especially in the past, is that users have been required by protocols to manage multiple wallets. Although Account Abstraction is working to address this issue, users still need to pay Gas fees in the native token on-chain or interact directly with smart contracts. I like to liken this situation to using Dev Tools to operate in TradFi rather than the mainstream user-friendly applications we use in traditional finance today.

I believe this industry needs to evolve gradually from primarily focusing on infrastructure. Although the Flywheel Effect is crucial and indispensable, we need to think more about real-world usability applications on top of DeFi. Examples that come to my mind include AI-driven interfaces, voice-assisted navigation, GameFi, and DeFi.

Ultimately, our goal should be to make the intuitiveness of DeFi similar to mobile banking to onboard mainstream users. We need to push technical complexity to the background and focus on Chain Abstraction. I believe CCTP is a significant leader in this area, connecting different virtual machines and ecosystems such as MoveVM, EVM, Solana's SVM, and Cosmos SDK, integrating them into the backend of the user experience. I think these efforts will drive the next wave of DeFi adoption and attract more non-native crypto users.

Q13: Now with CCTP, Wormhole, and Sui Bridge, we have made it easier for users to enter the Sui ecosystem. However, overall, how do we consider the issue of users entering the cryptocurrency space? Currently, CeFi is still the main gateway. Regarding fiat on-ramp, do you have plans to optimize the process through CCTP or Wormhole?

Isaac: At least from the Wormhole perspective, our current focus is not on fiat on-ramp and off-ramp but on Chain Abstraction. Native cryptocurrency users already understand the core value of DeFi and stablecoins, such as providing financial services to the unbanked, combating inflation, or accessing the lending market opportunity. While the DeFi ecosystem has made significant progress in user experience, there is still much work to be done in the multi-chain operations area.

Currently, more and more key players are beginning to realize the importance of Chain Abstraction. Protocols like Wormhole can handle the heavy lifting of cross-chain operations at the protocol level, and for users, the entire experience should feel like operating on one chain, even abstracting away the concept of a "chain" altogether. I believe this release on Sui is a significant step in this direction.

When we talk about the next wave of DeFi user growth, I believe the concept of chain abstraction needs to be integrated into the entire tech stack — wallets, applications, assets, and every touchpoint in between. This will open the doors to super apps and broader mainstream adoption.

I also want to add a point. This is indeed a challenge because attracting non-crypto-native users is indeed the industry's next focus, but at the same time, we cannot overlook the native users who have fine-grained control needs for on-chain activities. This means we need to address the needs of both user groups simultaneously, which is a challenge. The current focus is still on crypto-native users, but attracting non-native users is undoubtedly key to the next wave of growth, which is also the most challenging part.

Q14: For developers, what do you think are the biggest opportunities that CCTP and Sui Bridge bring to better DeFi products? Can you share some insights?

Rabeel: As I mentioned earlier, cross-chain asset transfers, such as between Solana and Base, or flows with centralized platforms, this convenience will unlock many new opportunities.

Bridger: I want to talk about the significance of CCTP and Sui Bridge at a higher level. By the way, Sui was recently ranked as one of the top ten chains in terms of developer additions in 2024 in Electric Capital's developer report. Sui's technical innovations, such as programmable transaction blocks, can process thousands of transactions in a single execution, rather than sequentially like traditional chains. Considering the native USDC routing achieved through CCTP, this execution model actually brings infinite possibilities, enabling transaction compositions and unlocking more advanced on-chain automation features. For developers, I recommend studying successful Sui protocols like DeepBook, Cetus, Aftermath, and Suilend projects. Deeply understanding their code and operation models will bring a lot of inspiration to everyone.

Q15: Each speaker, in one to two sentences, summarize what excites you most about your project or industry? Or what do you think the audience should learn or explore today?

Isaac: Regarding Wormhole, in line with today's theme, I am most excited about our work on stablecoins, especially enabling them to flow seamlessly across chains. I believe this will bring significant breakthroughs in many ways. So I recommend the audience to closely follow the progress in this area, as we have many new developments coming soon.

Bridger: I am very excited about Native Bridge expanding to support more chains and assets. For Sui, I am especially looking forward to seeing how its low-latency final confirmation time will drive new on-chain interactions, as I believe other chains have never achieved this level of performance. I believe there will be some very interesting innovations emerging next year, which will highlight why Sui is so innovative.

Rabeel: Our goal is to become one of the most liquid platforms on-chain, and everything revolves around liquidity. If Sui's strengths can achieve a breakthrough in liquidity, then we can achieve this goal. Furthermore, the integration of all these cross-chain message passing protocols means that other chains will start relying on Sui's liquidity, which is also very exciting.

Ian: Building on the points made by several others, especially Bridger's, I would like to emphasize the innovation of CCTP v2. This is an upgraded version that we will introduce to Sui and other CCTP-supporting blockchains. Compared to the current version (v1), we will introduce faster transaction confirmation times (even faster than on-chain finalization times) and greater composability of the protocol. On this note, we will release more news in the ecosystem. If you want to learn more, you can visit the official website. I am excited about the future of Sui and CCTP.

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