Is Suterusu (SUTER) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations
Is Suterusu (SUTER) A Good Investment? In-depth Analysis and Near to Longer-Term Expectations

By CryptoBoomer | Investments | 7 Apr 2020


Suterusu is a privacy coin launchpad that is designed to help other blockchains leverage the benefits of zk-SNARK-based privacy, without the hassle of building it into the base layer.  

Herein we analyse Suterusu in terms of several key considerations, including technical advantages and disadvantages, community engagement and interaction, and potential applications to identify whether Suterusu represents an attractive investment option. 

Project Introduction

Suterusu was created by an experienced team comprised of an expert cryptographer and blockchain experts, with experience developing open-source software companies. 

Billed as a “launchpad for privacy preserving interoperable blockchains,” Suterusu is a blockchain platform that allows other projects to launch a private second layer, enabling other platforms to offer confidential transactions, including those associated with smart contracts.

To achieve this, Suterusu implements an updated version of the zk-SNARKs seen in similar projects, including Zcash, JPMorgan’s Quorum protocol and Horizen—this updated protocol is known as zk-ConSNARK and eliminates some of the concerns with previous implementations of zero-knowledge proofs. 

Other implementations of SNARKs require either logarithmic proof sizes, or a process known as a trusted setup, which sees a trusted entity or group generate the original parameters that are used to create the keys for creating and verifying the proofs of later transactions. This system is undesirable, since the security offered by the platform relies on the honest destruction of keys used during the initial setup. 

Suterusu eliminates the need for a trusted setup while keeping proof sizes low, helping to maximize throughput without sacrificing on security or privacy. 

Suterusu provides developers with a custom virtual machine known as the SuterVM, which can be used to deploy privacy-preserving blockchain protocols without expert knowledge on cryptographic principles.

The platform is built around an inclusive governance model that offers voting rights to Suter token holders, and operates on a delegated proof of stake (dPOS) governance model, allowing Suter holders to delegate their tokens to validator nodes to help protect the blockchain. 

As an open source project, anybody project is free to use Suterusu’s solutions.

Tokenomics and Distribution Analysis


351665157-4ac5d8049d3f143ef6b8981d1ca83d3f226d60d4e96b9647f54f6e07172e6b23.png

The circulating supply represents the amount of SUTER that is currently out in free circulation. This can include tokens held by public investors, private investors and team members, but does not include coins that are yet to be emitted.

As it stands, around 9.67% of the total SUTER supply is now in circulation. Compared to other similar projects, Suterusu has a slow rate of emission and can be considered deflationary in nature as the amount of newly emitted SUTER diminishes over time. The projected rate of emission relative to other privacy coins is shown below:

351665157-77d2b65b80207c2597966e2354abdbfac3e0d6c81161034e195fa1c91ac1c360.png


Technical Analysis

Currently, Suterusu operates on the Ethereum blockchain, and the SUTER token uses the ERC20 token standard. The project is scheduled to migrate to its own mainchain, known as suter_chain in the second half of 2020 bringing with it a standardization solution for other blockchains.

Full integration with zk-ConSNARK is currently projected for September 2020, enabling stealth addresses, anonymous payments, private staking and confidential smart contracts, among other use cases.

Suterusu later plans to move to a delegated proof of stake (dPOS) consensus mechanism to achieve blockchain security and transaction finality. This process will be managed by two node types: nominator nodes and validator nodes; in addition to community delegates (SUTER holders). 

Nominator nodes will be community members that are voted in by delegators and share mining rewards based on mining power, they do not directly process transaction data. Validator nodes, on the other hand, will be directly involved in securing the blockchain by validating transactions as part of the block proposal process. 

As it stands, validator nodes will be required to hold more than a fixed minimum of SUTER tokens—the earliest of which must hold at least 1 million tokens (0.01% of the total supply or around 0.1% of the circulating supply). The total number of validator nodes allowed by the network is 100, these will be voted into position by the delegates and must meet specific hardware and performance requirements to avoid being penalized. Validator nodes are kept honest by nominator nodes, which assess the validator node records.

Block rewards will be distributed to validator nodes, who share these with delegates less the delegator commission fee of at least 10% and as much as 20%, providing compensation for their operating costs. 

Until the move is complete, Suterusu will operate on a type of byzantine fault tolerance known as que sera consensus (QSC). This is a type of proof of stake consensus mechanism that provides the basic security of the Suterusu blockchain and uses an innovative algorithm known as TLC (threshold logic clock) to organize the sequence of events processed by Suterusu nodes.

Suterusu will use a decentralized meritocracy system that uses a stake-weighted referendum to apply changes to the protocol. Based on this system, holders with larger stakes have a larger say than those with a smaller stake. When it comes to community governance, SUTER holders will be able to delegate their voting power to an expert they trust, thereby eliminating the issue of limited turnout and the potential centralization problems it could cause.

Overall, since the size of the team allocation sits at 4.8% of the supply, it is highly unlikely that the Suterusu team could subvert the community governance process. The 4.8% allocated to the team and 3.2% allocated to the Suterusu foundation are locked for 3 years. At a combined weight of 8% of the circulating supply, the team and Suterusu foundation represent only a small minority of combined voting power and would represent less than half of the combined voting power if just 9% of circulating SUTER is staked by external SUTER holders.

Technical Innovation 1: zk-ConSNARK

Suterusu introduces a new type of zero knowledge proof known as zk-ConSNARK to guarantee the anonymity of transaction participants. Unlike the zk-SNARKs of competing blockchains, these do not require a trusted setup, and hence remove the need to trust any third-parties. 

These also allow for a uniform proof size, ensuring that transactions are confirmed in a regular timeframe—differing from competing products like Monero and Beam, which have variable proof sizes and verification times. 

As of yet, Suterusu have not provided an estimate for the verification time of zk-ConSNARK proofs, but have described it as “more efficient” than the Monero-like and MimbleWimble-like proofs. Customers using the platform can choose from the UTXO model of Monero or the no address transaction structure of MimbleWimble when developing their anonymous cryptocurrency. 

zk-ConSNARKs enable several possibilities;

  • Other blockchains to benefit from privacy features by using SUTER tokens as an intermediary
  • Trustless privacy
  • Constant size proofs with known verification times
  • Private staking
  • Private smart contracts (see SuterVM)

Technical Innovation 2: SuterVM

The Suterusu Virtual Machine (SuterVM) will be developed on the basis of the zk-ConSNARKs with the goal of providing a private execution environment for smart contracts with SUTER tokens functioning as the gas for these smart contracts. 

This SuterVM will serve as the launchpad for other projects that want to launch a privacy-preserving blockchain layer and will offer private interoperability for blockchains that operate on different consensus mechanisms. This will be combined with an asset management protocol that facilitates cross-chain liquidity between blockchains using the SuterVM solution. 

SuterVM will be provided as individual modules that allow developers to pick and choose their features without needing an in-depth understanding of the underlying cryptography. 

This may be the first blockchain-agnostic private smart contract solution available, since other private smart contract solutions currently being worked on are platform-specific—including IOHK’s proposed Kachina protocol for Cardano and Enigma’s private contracts for Ethereum

SuterVM enables:

  • Private smart contracts
  • Private cross-chain value transfers
  • Simple deployment of a privacy-preserving second layer
  • General purpose layer-2 privacy protocol

Related Reading

Suterusu yellow paper
Suterusu white paper
What are zk-SNARKs?
Delegated Proof of Stake Explained
Suterusu Sidechain yellow paper

Relevant Developer Pages

zk-ConSNARK rust implementation:
https://github.com/suterusu-team/suter_proofs

Suter_chain code
https://github.com/suterusu-team/suter_chain

Suter_chain client
https://github.com/suterusu-team/suter_cli

Suterusu technical documentation
https://github.com/suterusu-team/Suter_yellowpaper

 

Team Analysis

Suterusu is led by an executive team formed by CEO Zhengpeng Hou, CTO Huang Lin and CSO Dazhi Guo

Zhengpeng Hou has a long history working with large technology companies, including those in the blockchain space and specializes in open source software development, whereas Huang Lin is a sophisticated cryptographer with two PhDs in cryptography from prominent universities. The Chief Security Officer Dazhi Guo is a recent PhD graduate in economics and previously worked as a Senior Research Fellow for Huobi Global.

Other core members of the team include Jingjing Zhang, who specializes in algorithm optimization, AI and big data; and Will Wong, a former software engineer for eBay turned blockchain developer for Suterusu.

The team consists of 11 individuals, more than a third of which are blockchain engineers—all holding a degree in computer science from a prestigious US university. The team is advised by renowned cryptographers, including Zhenfu Cao, a professor at Shanghai Jiao Tong University with more than 300 published papers and almost 20 patents. 

Overall, the Suterusu team can be considered particularly strong since the majority of team members have extensive cryptography experience, whereas the overall team has more than 15 years of successful track records in other relevant areas, including finance and open-source software—with experience working with prominent Silicon Valley companies including Uber and eBay. 


Community Engagement and Interest

 

Website:
https://www.suterusu.io/
Alexa rank: 699,941
Registered July 2019

Twitter
https://twitter.com/suterusu_io
10,400+ followers
Joined August 2019

Reddit
https://www.reddit.com/r/Suterusu/
2,300+ members

Telegram
https://t.me/suterusu_en
11,500+ members

YouTube
https://www.youtube.com/channel/UCMUFF_SB8q7GgPgT6BFXgbQ
15 subscribers
Joined February 2020

GitHub
https://github.com/suterusu-team/
0 public members

Medium
https://medium.com/@suterusu
2600+ followers

The Suterusu Medium blog mostly contains generic updates regarding the current state of affairs surrounding the project, including introductory articles, partnership news and biweekly updates discussing its technology and product stack, cooperations, partnerships and recent investments. 

This has the advantage of being primarily factual rather than speculative or overly promotional, but also misses out on the opportunity to attract and convert casual readers and potential investors. This trait also echoes across its other social media platforms, including Twitter and Telegram, which despite having a sizeable audience, miss out on attracting the strong proportion of users and investors that based their decisions on emotional engagement, since posts are primarily related to technical updates and exchange partnership news.  

The Suterusu team appears to do what it can to engage the community where possible, including operating ask me anything (AMA) sessions with the core team and soliciting feedback and suggestions from the community. The team also takes steps to implement constructive feedback where reasonable and incentivizes community participation through its validator node competition and an airdrop through its recent partnership with IOST. 

These efforts to engage the community have yielded positive results for the project, seeing its daily traded volume multiply considerably between January/February 2020 and March 2020. 

Community sentiment regarding the price action of the SUTER token appears to be neutral to positive. Unlike those for other micro-cap or medium-cap cryptocurrencies, the Suterusu community does not appear to be overly fixated on the current value of SUTER on the open market. 

Overall, Suterusu presents strong social media metrics having accumulated an extensive and active Telegram and Twitter community in a short space of time. Taken as a proxy for community interest, this indicates there is high demand for Suterusu’s services, though the team does not capitalize on as many conversion avenues as it probably could. 

Potential Applications

As a privacy coin launchpad, Suterusu allows other blockchain projects to offer an additional privacy layer to their main operations. This enables several interesting applications for the technology;

  1. Anonymous transactions: Since other cryptocurrencies can launch a sidechain on Suterusu, they can also benefit from the privacy enabled by zk-ConSNARK and the SUTER token as a medium of exchange. This could be a potentially pivotal technology for an industry that has seen the usage of transaction mixers and obfuscation tools dramatically increase in recent years. Through Suterusu’s solution, the transacted amount, recipient and sender are hidden thanks to its zero-knowledge proofs.

  2. Private smart contracts: As it stands, most interactions with smart contracts are trackable on public block explorers, allowing practically anybody to identify who interacted with the contract and when. However, with Suterusu’s SuterVM, projects will be able to launch their own private smart contracts with simple modules based on its zk-ConSNARK implementation. As previously mentioned, projects can choose either account-based or UTXO-based anonymity, while developers will be able to choose from several preset rules for contracts, including those for different regulatory provisions in different countries. 

  3. Private identity verification: zk-ConSNARKs can also be used to prove the identity of a person or organization without revealing any sensitive information. This could provide a new, privacy-preserving way to log in to websites and applications, allowing for anonymous voting, donations, auctions, discussions and more.

  4. Improved smart contract scalability: The Suterusu team argues that zk-ConSNARK can be used to improve the scalability of smart contract platforms, similar to the zk-rollup technology which could see Ethereum throughput increase to ~500 transactions per second (tps), up from around 15-20 as of March 2020. Suterusu’s zk-ConSNARK could bring similar scaling improvements to any other smart-contract capable blockchain as a second layer.

  5. Data protection and monetization: zk-ConSNARKs could be used for zero knowledge data tests, allowing anybody to prove ownership of data without revealing anything about its content. This makes content monetization a safer task, while also enabling unique data sharing models. 

Suterusu clearly tackles some of the most pressing challenges in the industry, ranging from transactional privacy and blockchain scaling, to verifiably fair decentralized voting and data monetization. As such, widespread implementation of zk-ConSNARKs and the SuterVM could represent a paradigm shift in the blockchain space. 

Summary

Overall, Suterusu represents a promising platform and standalone project that is well-positioned for growth in the near to medium term. Ranging from its limited downside potential to impressive accolades in such a short period of time, Suterusu looks rock solid as an early investment perspective. 

Long term perspective:

Despite launching in the second half of 2019, Suterusu has already gone on to establish several strong partnerships—the majority of which came in the first quarter of 2020. To date, Suterusu has established partnerships with IOST, STPT, NEO, Theta, SWFT and PROCHAIN, all of which plan to use Suterusu’s privacy features to enhance their own use cases.

Several prominent investment groups have already joined Suterusu, including CGS Dubai and BTX Capital, who have purchased a combined 430 million SUTER on the secondary markets and are now operating a validator node. Such a large investment in an early stage project is a good indicator of overall interest in Suterusu and is often a good proxy for long-term potential. 

As of its latest bi-weekly update, Suterusu had a total of 23 validator node candidates—an addition of five nodes in two weeks. At this rate, Suterusu should reach the maximum quorum of 100 validator nodes by October 2020. 

As the gas token for the SuterVM, there will be a balance between those holding SUTER for gas purposes, those holding SUTER for staking rewards and those looking to trade SUTER on a regular basis. Thanks to its low emission and inflation rate, growth in the circulating supply should create very limited, if any downward pressure on the SUTER price action.  

With a huge range of prospective customers, including the likes of Ethereum Classic, NEM, Wasabi Wallet, Bitpie, Cobo, KAVA, and compatibility with practically any layer 1 blockchain, Suterusu has significant upside potential, but limited downside potential—owed to its currently small market capitalization of just $7.3 million.  

Short term perspective

While the rest of the cryptocurrency market was seriously adversely affected by the recent coronavirus pandemic, SUTER remained strong during this time and is one of the few cryptocurrencies to actually gain value since the World Health Organization declared coronavirus a pandemic on March 7, 2020. 

The cryptocurrency has ranged between $0.0046 and $0.01 for more than 75% of its existence, and does not appear to exhibit the volatility seen by most other privacy coins—despite its daily trading volume multiplying by a factor of four since the start of 2020. 

This appears to be the result of the limited number of large equity investors, which as of yet, have not dumped large batches of SUTER on the secondary markets. This, despite there being no apparent time-locks in place for private investor tokens, whereas the team and Suterusu foundation have their tokens locked for a minimum of three years. 

There are also incentives to hold SUTER tokens, including the ongoing Lockup and Cashback Program, currently being operated by KuCoin. As part of the program, SUTER holders lockup their tokens and receive a yearly APR of 60%. By the time this ends, the Suterusu dPOS governance system should be live, enabling further profitable opportunities for SUTER holders. 

With the launch of its test net in April 2020, Suterusu should experience a significant uptick in both developer interest and partnerships—events which could drive up demand for SUTER tokens in the near future. 

Bottom line: Suterusu looks promising from both a fundamental and technical standpoint. What remains unclear is whether the team is able to continue its momentum and make Suterusu appeal to a mass audience. If it can, then the project’s fundamentals should see it rise to prominence in the coming years. 


CryptoBoomer
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