Feature Highlight: Partial SUI Unstaking
To understand why this matters, it is helpful to understand how Sui operates.
Sui is a high performance blockchain that achieves high throughput by using an object-centric architecture. Objects are data structures that contain a unique identifier and some data. As an example for those familiar with Bitcoin, a balance object looks a lot like a UTXO; it contains information about the tokens stored therein and who is authorized to spend them. When balances are transferred, part or all of the object the balance was previously in is “moved” (this mental model is where inspiration for the move programming language’s namesake comes from) into another object. To further the UTXO analogy, when a balance transfers, an entirely new object is created.
When a SUI holder delegates their stakes to a validator, these amounts are also represented as objects, this time containing information about the validator the stake is delegated to, when it was activated, and more. Upon delegation, tokens move from the holder’s address to a new staking object, giving the object a principal balance.
To “unstake,” the owner initiates a transaction that converts an object of type “StakedSui” into a standard “Sui” object. Because an object cannot have two types, an object can only be completely unstaked. Most wallets stop here, only allowing an object to be completely unstaked.
As Anchorage Digital implemented support for Sui staking, however, we made the conscious decision to enable partial unstaking because we understood the importance of flexibility for our clients.
We accomplish this by creating a transaction that splits the stake object into two parts. First, the portion that is withdrawn, and second, the portion that remains staked. Our integration even calculates how much principal to unstake to receive a desired amount of SUI after gaining a proportional amount of rewards.
Why might an institution unstake a portion of its balance?
There are many reasons why an institution may need to unstake portions of its balance. These include claiming rewards, changing validators, and withdrawing some SUI to spend or trade.
Perhaps the most common reason clients will need to partially unstake is to receive staking rewards. Unlike other protocols, Sui rewards aren’t given until a principal amount is unstaked. Though this doesn’t negatively affect reward compounding, it does mean that unstaking must occur to receive any staking rewards. Stakers that wish to see any rewards without having to exit completely will have to unstake a portion of their balance.
Alternatives to partial unstaking SUI
Without the ability to partially unstake, a SUI holder may need to break up their stake into many smaller stakes in order to unstake portions without unstaking the entirety of their balance and this setup can be costly in both time and additional gas fees. It also requires stakers to decide how they plan to exit their stake before they’ve even created it. But the alternative is worse, especially if they ultimately want the majority of their position re-staked.
Sui operates in 24-hour periods called "epochs". So while unstaking is instantaneous, rewards do not accrue during that epoch. Re-staked balances do not start receiving rewards again until the beginning of the epoch after they were staked. The end result is a minimum of 24 hours of downtime where the tokens are not receiving rewards. For reference, this would cause a 50 million SUI position receiving the current network average of 5.25% APY to miss more than 7,000 SUI in rewards per missed day during the restake.
Maximum flexibility with Anchorage Digital
With all this in mind, we developed our Sui offering to give maximum flexibility and efficiency to our clients in addition to our baseline staking assurances that all operations take place out of secure custody. Lastly, clients may stake to Anchorage Digital validators or the another validator of their choice.
About Anchorage Digital
Anchorage Digital is a regulated crypto platform that provides institutions with integrated financial services and infrastructure solutions. With the only federally chartered crypto bank in the US, as well as Anchorage Digital Singapore, which offers equivalent security and service standards, Anchorage Digital delivers an unparalleled combination of secure custody, regulatory compliance, and platform capabilities. The company is funded by leading institutions including Andreessen Horowitz, GIC—Singapore’s sovereign wealth fund, Goldman Sachs, KKR, and Visa, with its most recent Series D valuation over $3 billion. Founded in 2017, Anchorage Digital is headquartered in San Francisco, California with offices in New York, New York; Porto, Portugal; Singapore; and Sioux Falls, South Dakota. Learn more at anchorage.com, on X @Anchorage, and on LinkedIn.
This post is intended for informational purposes only. It is not to be construed as and does not constitute an offer to sell or a solicitation of an offer to purchase any securities in Anchor Labs, Inc., or any of its subsidiaries, and should not be relied upon to make any investment decisions. Furthermore, nothing within this announcement is intended to provide tax, legal, or investment advice and its contents should not be construed as a recommendation to buy, sell, or hold any security or digital asset or to engage in any transaction therein.