Firm Belief After a Security Crisis: Why SUI Still Has Long-term Rise Potential?

1. A chain reaction triggered by an attack

On May 22, 2025, the leading AMM protocol Cetus deployed on the SUI network suffered a hacker attack. The attackers exploited a logical vulnerability related to the "integer overflow issue" to conduct precise manipulation, resulting in a loss of over $200 million in assets. This incident is not only one of the largest security incidents in the DeFi space so far this year but also the most destructive hacker attack since the launch of the SUI mainnet.

According to DefiLlama data, the total value locked (TVL) in the SUI chain plummeted by over $330 million on the day of the attack, with the amount locked in the Cetus protocol evaporating by 84% in an instant, dropping to $38 million. As a result, several popular tokens on SUI experienced a drop of 76% to 97% within just one hour, raising widespread concerns in the market about the security and ecological stability of SUI.

However, after this shockwave, the SUI ecosystem has demonstrated strong resilience and recovery capabilities. Although the Cetus incident caused fluctuations in confidence in the short term, on-chain funds and user activity did not experience a sustained decline; instead, it significantly heightened the entire ecosystem's focus on security, infrastructure development, and project quality.

2. Analysis of the Causes of the Cetus Incident Attack

2.1 Attack Implementation Process

According to the technical analysis of the Cetus attack incident by the Slow Fog team, the hacker successfully exploited a critical arithmetic overflow vulnerability in the protocol, using flash loans, precise price manipulation, and contract flaws to steal over $200 million in digital assets within a short period. The attack path can be roughly divided into the following three stages:

①Initiate flash loans to manipulate prices

The hacker first utilized a maximum slippage to flash swap 10 billion haSUI through a flash loan, borrowing a large amount of funds to manipulate the price.

Flash loans allow users to borrow and repay funds within the same transaction, requiring only a fee, characterized by high leverage, low risk, and low cost. Hackers exploited this mechanism to drive down market prices in a short period and precisely control them within a very narrow range.

The attacker then prepared to create an extremely narrow liquidity position, precisely setting the price range between the lowest quote of 300,000 and the highest price of 300,200, with a price width of only 1.00496621%.

By the above method, hackers successfully manipulated the haSUI price using a sufficiently large number of tokens and huge liquidity. Subsequently, they also targeted several tokens with no actual value for manipulation.

② Add liquidity

The attacker creates a narrow liquidity position, claims to add liquidity, but due to a vulnerability in the checked_shlw function, ultimately only receives 1 token.

It is essentially due to two reasons:

1. Mask setting is too wide: equivalent to a very large liquidity addition limit, resulting in the contract's validation of user input being effectively meaningless. Hackers bypassed overflow detection by setting abnormal parameters, constructing inputs that are always less than this limit.

2. Data overflow was truncated: When performing the shift operation n << 64 on the numeric value n, data truncation occurred because the shift exceeded the effective bit width of the uint256 data type (256 bits). The high-order overflow part was automatically discarded, resulting in a calculation far below expectations, causing the system to underestimate the amount of haSUI required for the exchange. The final calculation result was approximately less than 1, but since it was rounded up, it ended up being equal to 1, meaning the hacker only needed to add 1 token to exchange for a huge amount of liquidity.

③Withdraw liquidity

Repay flash loans while retaining huge profits. Ultimately withdraw token assets worth hundreds of millions of dollars from multiple liquidity pools.

The situation of fund loss is serious, the attack resulted in the theft of the following assets:

• 12.9 million SUI (approximately 54 million USD)

• 60 million USDC

• 4.9 million USD Haedal Staked SUI

• 19.5 million USD TOILET

• Other tokens such as HIPPO and LOFI fell by 75-80%, liquidity dried up.

2.2 The causes and characteristics of this vulnerability

The vulnerabilities of Cetus have three characteristics:

1. The cost of fixing is extremely low: on one hand, the fundamental cause of the Cetus incident is a flaw in the Cetus mathematical library, not an error in the protocol's pricing mechanism or underlying architecture. On the other hand, the vulnerability is limited to Cetus itself and is unrelated to the SUI code. The root of the flaw lies in a boundary condition check, and only two lines of code need to be modified to completely eliminate the risk; once the fix is completed, it can be immediately deployed to the mainnet to ensure that subsequent contract logic is complete and to eliminate this vulnerability.

2. High Concealment: The contract has been running smoothly for two years with zero faults. The Cetus Protocol has undergone multiple audits, but no vulnerabilities were found, mainly because the Integer_Mate library used for mathematical calculations was not included in the audit scope.

Hackers exploit extreme values to precisely construct trading intervals, creating exceptionally rare scenarios with extremely high liquidity that trigger abnormal logic, indicating that such issues are difficult to detect through ordinary testing. These types of problems often exist in blind spots within people's vision, which is why they remain hidden for a long time before being discovered.

3. Not just a problem of Move:

Move excels in resource safety and type checking compared to various smart contract languages, and it has built-in native detection for integer overflow issues in common scenarios. This overflow occurred because, when adding liquidity, an incorrect value was used for the upper limit check when calculating the required amount of tokens, and bitwise operations were used in place of conventional multiplication. If conventional addition, subtraction, multiplication, and division were used in Move, overflow situations would be automatically checked, preventing this kind of high-bit truncation issue.

Similar vulnerabilities have also appeared in other languages (such as Solidity and Rust), and they can be more easily exploited due to the lack of integer overflow protection; before the updates to the Solidity version, the overflow checks were very weak. Historically, there have been addition overflow, subtraction overflow, multiplication overflow, etc., and the direct cause is always that the operation results exceed the range. For example, the vulnerabilities in the BEC and SMT smart contracts of the Solidity language bypassed the detection statements in the contracts through carefully constructed parameters to achieve excessive transfers and carry out attacks.

3. The consensus mechanism of SUI

3.1 Introduction to SUI Consensus Mechanism

Overview:

SUI adopts a Delegated Proof of Stake framework (DeleGated Proof of Stake, abbreviated as DPoS)). Although the DPoS mechanism can improve transaction throughput, it cannot provide the same level of decentralization as PoW (Proof of Work). Therefore, SUI has a relatively low degree of decentralization, with a higher governance threshold, making it difficult for ordinary users to directly influence network governance.

• Average number of validators: 106

• Average Epoch Cycle: 24 hours

Mechanism process:

• Equity Delegation: Ordinary users do not need to run nodes themselves; they can participate in network security assurance and reward distribution by staking SUI and delegating it to candidate validators. This mechanism lowers the participation threshold for ordinary users, allowing them to engage in network consensus by "employing" trusted validators. This is also a significant advantage of DPoS over traditional PoS.

• Representative round block: A small number of selected validators produce blocks in a fixed or random order, which improves confirmation speed and increases TPS.

• Dynamic Election: After each voting period, a dynamic rotation is conducted based on voting weight to re-elect the Validator set, ensuring node vitality, interest consistency, and decentralization.

Advantages of DPoS:

• High Efficiency: Due to the controllable number of block producing nodes, the network can complete confirmations in milliseconds, meeting high TPS requirements.

• Low cost: Fewer nodes participate in the consensus, significantly reducing the network bandwidth and computing resources required for information synchronization and signature aggregation. As a result, hardware and operational costs decrease, the demand for computing power decreases, and costs are lower. Ultimately achieving lower user transaction fees.

• High security: The staking and delegation mechanisms synchronize the costs and risks of attacks; combined with the on-chain confiscation mechanism, it effectively suppresses malicious behavior.

At the same time, in the consensus mechanism of SUI, an algorithm based on BFT (Byzantine Fault Tolerance) is used, requiring more than two-thirds of the votes from validators to reach consensus in order to confirm transactions. This mechanism ensures that even if a minority of nodes act maliciously, the network can remain secure and operate efficiently. Any upgrades or major decisions also require more than two-thirds of the votes to be implemented.

Essentially, DPoS is a compromise solution to the "impossible triangle," balancing decentralization and efficiency. In the security-decentralization-scalability "impossible triangle," DPoS chooses to reduce the number of active block producers in exchange for higher performance, sacrificing a certain degree of complete decentralization compared to pure PoS or PoW, but significantly improving network throughput and transaction speed.

3.2 The performance of SUI in this attack

3.2.1 Operation of the Freezing Mechanism

In this incident, SUI quickly froze the addresses related to the attacker.

From a code perspective, it prevents transfer transactions from being packaged on-chain. Validator nodes are the core components of the SUI blockchain, responsible for validating transactions and executing protocol rules. By collectively ignoring transactions related to the attacker, these validators effectively implement a mechanism similar to the 'account freeze' in traditional finance at the consensus level.

SUI itself has a built-in deny list mechanism, which is a blacklist function that can block any transactions involving listed addresses. Since this feature exists in the client, when an attack occurs,

SUI can immediately freeze the hacker's address. Without this feature, even with only 113 validators, it would be difficult for Cetus to coordinate all validators to respond one by one in a short time.

3.2.2 Who has the authority to change the blacklist?

TransactionDenyConfig is a YAML/TOML configuration file loaded locally by each validator. Anyone running a node can edit this file, hot reload, or restart the node and update the list. On the surface, each validator seems to freely express their own values.

In fact, for the consistency and effectiveness of security policies, updates to this critical configuration are usually coordinated. Since this is an "urgent update pushed by the SUI team", it is essentially the SUI Foundation (or its authorized developers) that sets and updates this denial list.

SUI has released a blacklist, and theoretically, validators can choose whether to adopt it -- but in practice, most people will automatically adopt it by default. Therefore, while this feature protects user funds, it does indeed have a certain degree of centralization.

3.2.3 The essence of the blacklist function

The blacklist feature is not actually a logic at the protocol layer; it is more like an additional layer of security to respond to emergencies and ensure the safety of users' funds.

It is essentially a security assurance mechanism. Similar to a "security chain" tied to a door, it is activated only for those who wish to intrude, that is, for those who act maliciously against the protocol. For users:

• For large holders, the main providers of liquidity, protocols prioritize ensuring the safety of funds, because in reality, the on-chain data TVL is all contributed by major large holders. To achieve long-term development of the protocol, ensuring safety will undoubtedly be the top priority.

• For retail investors, contributors to ecosystem activity, and strong supporters of technology and community co-construction. The project team also hopes to attract retail investors to co-build, so as to gradually improve the ecosystem and enhance retention rates. In the DeFi space, the top priority is still the security of funds.

The key to determining "whether it is decentralized" should be whether users have control over their assets. In this regard, SUI embodies this through the Move programming language.