Layer-1 Blockchain Sui Faces Intense Durability Trial Amid Rival Network Maneuvers
The cryptocurrency world was recently shaken by a two-day outage on the Sui network, which abruptly halted user transactions and raised concerns about the chain's stability. This disruption was caused by a conflict between the Address Balances feature and gas billing logic, introduced in version 1.72, and was further complicated by epoch transition issues. Despite a temporary fix being deployed, the problem persisted, leaving validator nodes operational but unable to process transactions. This incident occurred just weeks after Sui experienced an 18% price surge due to institutional staking and a partnership with Paga, adding to the frustration.
In order to regain the trust of builders, validators, and DeFi protocols, the Sui core team must now publish a post-mortem analysis and demonstrate that the chain's upgrade pipeline can handle complexity without causing collateral damage. This is not an isolated incident, as similar outages have occurred on other networks, such as Solana, where a bug introduced in a protocol upgrade led to a patch with a low failure probability that ultimately materialized.
In contrast, Base has made significant progress with its Azul mainnet upgrade, which combines TEE and zero-knowledge proofs to enhance decentralization and reduce withdrawal confirmation times. This upgrade has resulted in a 99% decrease in empty block volume and has successfully handled peak loads of 5,000 transactions per second. With a total value locked of $4.4 billion at the end of May, Base is shifting the focus of the L2 race from cheap fee throughput to verifiable, low-latency infrastructure that can serve as a credible settlement layer for on-chain activity.
The success of Base's Azul upgrade highlights a broader trend in the industry, where L2s are differentiating themselves through protocol-level optimizations rather than relying on fee subsidies. This approach may not be immediately noticeable to users, but it will lead to fewer failed transactions and faster finality, giving Base a competitive edge over alternative L2s and even fast L1s in the battle for DeFi volume and developer mindshare.
In other news, the Arbitrum Foundation has requested $43.5 million in funding for its 2027 operations, which includes 16 million in stablecoins, 1,740 ETH, and 230 million $ARB tokens. This proposal, which accounts for approximately 3.7% of the total supply, has sparked discussions within the DAO about the allocation of funds and the potential impact on the treasury runway. The request comes at a time when the DAO generated $23.49 million in revenue in 2025, and the proposed allocation would nearly double last year's intake.
Meanwhile, Ondo Finance has announced the unexpected passing of its founder, Nathan Allman, and has appointed Ian De Bode as the new CEO. De Bode, who has been with the company for over two years, overseeing strategy and daily operations, is expected to bring stability to the project. However, the transition may pose execution risks, particularly in areas such as partnerships and regulatory goodwill, where the founder's personal relationships played a significant role.
Polymarket has also clarified reports about its KYC requirements, stating that only a new beta product requires identity verification for selected testers, while the existing platform will not impose new rules. This development comes amidst intense regulatory scrutiny, with banks lobbying to rewrite landmark crypto legislation just days before a Senate vote. The clarification suggests that Polymarket is testing identity verification as a feature rather than a forced platform-wide shift, potentially to gauge regulatory comfort without alienating its core user base.
In additional developments, Aave Labs has proposed a standardized technical asset listing framework to unify asset review and monitoring across V3, V4, and Horizon deployments, bringing consistency and transparency to the governance process. Yuga Labs has restructured its ApeCoin organization, cutting coordination costs and transitioning ApeChain's core teams under Yuga Labs. Furthermore, Socket's research team has exposed a supply chain attack called TrapDoor, which targets developers with crypto-stealing payloads disguised as legitimate packages, highlighting a persistent weak point in the developer tooling pipeline.