Sui on-chain fund freezing incident triggers decentralization controversy

Recently, a hacking incident occurred on the Sui blockchain, sparking widespread discussions in the industry about the level of Decentralization of blockchain. It is reported that after a certain protocol was hacked, the validators of the Sui network took coordinated action to "freeze" the addresses controlled by the hacker, successfully recovering approximately $160 million in funds. Although this action prevented greater losses in the short term, it also raised questions about the level of Decentralization of Sui.

From a technical perspective, this "freeze" operation mainly targets the stolen funds that still remain on the Sui chain. Some assets that have already been transferred to other public chains through cross-chain bridges cannot be recovered, because once they leave the Sui ecosystem, the validators are powerless.

The specific method for the Sui validator network to achieve "freezing" is to directly ignore transactions initiated by hacker addresses during the transaction pool stage. These transactions are technically completely valid, but validators choose not to package them on-chain, thus achieving the effect of "soft custody" of hacker funds. This practice is largely made possible by the object model characteristics of the Move language. In the Sui network, to transfer assets such as USDC and SUI, a transaction must be initiated and confirmed by the validators. When validators refuse to process transactions from certain addresses, the assets in those addresses effectively become non-circulating.

This approach has triggered a series of discussions about the nature of Decentralization. On one hand, intervention in emergency situations can protect user interests to some extent; on the other hand, this practice also exposes the centralization tendency of the Sui validator network, where a few nodes can control critical decisions across the entire network. This not only challenges the idea of on-chain Decentralization but also raises concerns about the potential abuse of this power in the future.

It is worth noting that the issue of validator centralization is not unique to Sui; many public chains that use the Proof of Stake (PoS) consensus mechanism face similar challenges. However, Sui's actions this time have made the issue particularly apparent.

What is more concerning is that the Sui officials stated that they plan to return the frozen funds to the affected users. This statement has further raised doubts: if it is indeed just the validators refusing to process the transactions, theoretically these funds should be immovable. Does Sui have special permissions at the system level that allow them to directly modify asset ownership? These questions urgently require a more detailed explanation from the officials.

For users, although no one wants their funds to fall into the hands of hackers, the standards and boundaries of the "freezing" operation are equally concerning. Under what circumstances will a fund transfer be defined as "stolen"? Who has the authority to make such a judgment? Once this precedent is set, it could undermine the core anti-censorship characteristics of public chains, thereby affecting the trust base of users.

Decentralization is not a black-and-white concept. Sui's recent approach reflects its attempt to seek a balance between user protection and decentralization. However, the lack of transparent governance mechanisms and clear standards is a major issue currently faced. At this stage of development in the blockchain industry, many projects are making similar trade-offs. It is important for users to understand the true operational mechanisms of these projects, and they should not be misled by the label of "fully decentralized."