Decentralization is not black and white; Sui has chosen a specific balance point between user protection and decentralization.
Written by: Haotian
Many people wonder how Sui officials claimed that after @CetusProtocol was hacked, the validator network coordinated to 'freeze' the hacker's address, recovering $160 million. How did they do it? Is decentralization a 'lie'? Below, let's try to analyze it from a technical perspective:
Part of the cross-chain bridge transfer: after the hacker successfully attacked, they immediately transferred part of the assets like USDC to Ethereum and other chains via a cross-chain bridge. This part of the funds is unrecoverable, as once it leaves the Sui ecosystem, the validators are powerless.
Remaining on the Sui chain: a considerable amount of the stolen funds is still stored in addresses controlled by the hacker. This part of the funds became the target for 'freezing.'
According to the official announcement, 'a large number of validators identified the addresses of the stolen funds and are ignoring transactions on these addresses.'
—How exactly was this achieved?
1. Transaction filtering at the validator level—simply put, the validators collectively 'pretend to be blind':

Validators directly ignore the transactions of hacker addresses during the transaction pool (mempool) stage;
These transactions are technically completely valid, but they simply won’t be packaged onto the chain;
Thus, the hacker's funds are 'soft frozen' in the address;

2. Key mechanism of the Move object model—the object model of Move language makes this 'freezing' feasible:

Transfers must be on-chain: although the hacker controls a large amount of assets in the Sui address, to transfer these USDC, SUI, and other objects, a transaction must be initiated and packaged by validators for confirmation;
Validators hold absolute power: if validators refuse to package, the objects cannot be moved forever;
As a result: the hacker nominally 'owns' these assets, but in reality, they have no way to access them.

It's like having a bank card, but all ATMs refuse to serve you. The money is in the card, but you cannot withdraw it. With continuous monitoring and intervention from SUI validating nodes (ATMs), tokens like SUI in the hacker's address cannot circulate, and these stolen funds are now like they have been 'destroyed', objectively achieving a 'deflationary' effect?
Of course, aside from temporary coordination among validators, Sui may have preset a deny list function at the system level. If so, the process might be: relevant authorities (like Sui Foundation or through governance) add the hacker's address to the system deny_list, and validators execute based on this system rule, refusing to process transactions from blacklisted addresses.
Whether it is temporary coordination or execution according to system rules, it requires most validators to act in unison. Clearly, the power distribution within Sui's validator network is still too centralized, allowing a few nodes to control key decisions for the entire network.
The problem of validator centralization in Sui is not an isolated case among PoS chains—most PoS networks, from Ethereum to BSC, face similar risks of validator concentration, but Sui has made this issue particularly obvious.
How can a network that claims to be decentralized have such a strong centralization 'freezing' capability?
What's more concerning is that Sui's officials stated they would return frozen funds to the pool, but if validators really 'refuse to package transactions,' these funds should theoretically remain frozen forever. How does Sui manage to return them? This further challenges the decentralization characteristics of the Sui chain!
Could it be that, apart from a few concentrated validators refusing transactions, the officials even have system-level super permissions to directly modify asset ownership? (Sui needs to provide further details on the 'freezing')
Before specific details are disclosed, it is necessary to discuss the trade-offs regarding decentralization:
Is it necessarily a bad thing to sacrifice a little decentralization for emergency response intervention? If there is a hacker attack, is it what users want for the entire chain to do nothing?
What I want to say is that everyone naturally does not want their money to fall into the hands of hackers, but this move raises market concerns that the freezing criteria are completely 'subjective': what counts as 'stolen funds'? Who defines it? Where are the boundaries? Today it's freezing hackers, who will be frozen tomorrow? Once this precedent is set, the core anti-censorship value of public chains will be completely undermined, inevitably damaging user trust.
Decentralization is not black and white; Sui has chosen a specific balance point between user protection and decentralization. The key issue lies in the lack of a transparent governance mechanism and clear boundary standards.
Most blockchain projects are making such trade-offs at this stage, but users have the right to know the truth rather than being misled by the label of 'complete decentralization.'

#ETF #USDC