Author: Frank, PANews
From the once-star public chain Fantom to the current Sonic Labs, 2024 can be described as a year of major changes on this Layer1 chain: the foundation was renamed, the mainnet was upgraded, and the token was exchanged. Fantom is trying to complete a "second startup" with a series of actions. However, from the decline of TVL to less than $100 million, the continuous controversy over issuance, and the lingering shadow of cross-chain security, Sonic still faces many doubts and challenges. Can the high performance of the new chain be realized? Can the token exchange and airdrop save the ecosystem?
Telling the story of performance, borrowing the sub-second public chain to return to the market
On December 18, 2024, the Fantom Foundation was officially renamed Sonic Labs and announced the launch of the Sonic mainnet. As a new public chain known for its sub-second transaction speed, performance naturally becomes the most important technical narrative for Fantom. On December 21, just three days after the launch, official data showed that the Sonic chain had already produced 1 million blocks.
What is the secret of the "speed"? According to the official introduction, Sonic has made in-depth optimizations to the consensus layer and the storage layer, introducing technologies such as live-pruning, node synchronization acceleration, and database weight loss, so that nodes can confirm and record transactions with a lighter burden. The official said that compared to the old Opera chain, the node synchronization speed has increased by 10 times, and the cost of large-scale RPC nodes can be reduced by 96%, laying the foundation for a truly high-performance network.
It is worth noting that "high TPS" is no longer a novelty in the public chain competition, but it is still one of the core indicators that attract users and project parties. A fast and smooth interactive experience can often lower the threshold for users to access the blockchain, and also provide possibilities for complex contracts, high-frequency transactions, metaverse games and other application scenarios.
In addition to "high performance", Sonic claims to fully support EVM and be compatible with mainstream smart contract languages such as Solidity and Vyper. On the surface, "self-developed virtual machine vs. EVM compatibility" was once a watershed for new public chains, but Sonic chose the latter, the benefit of which is that the migration threshold for developers is low. As long as the smart contracts originally written on Ethereum or other EVM chains, they can be directly deployed to Sonic without major changes, saving a lot of adaptation costs.
Facing the fiercely competitive public chain market, giving up EVM often means having to re-cultivate developers and users. Obviously, Sonic hopes to "conveniently" inherit the Ethereum ecosystem on the basis of strong performance, so that projects can be deployed as quickly as possible. From the official Q&A, the Sonic team has also considered other routes, but based on their judgment of the industry's inertia, EVM is still the choice with the greatest "common denominator" meaning, which is helpful for quickly accumulating the number of applications and user base in the early stage.
In addition, Fantom once stumbled in the Multichain incident, so Sonic's cross-chain strategy is also closely watched. The technical documentation of the official website lists the Sonic Gateway as a key technology, and also introduces the security mechanism in detail. Sonic Gateway adopts the method of validators running client nodes on both Sonic and Ethereum, with decentralized and tamper-proof "Fail-Safe" protection. The "Fail-Safe" mechanism is designed in a special way: if the bridge does not report "heartbeat" for 14 days, the original assets can be automatically unlocked on the Ethereum side to protect user funds; by default, cross-chain is packaged every 10 minutes (ETH→Sonic) and 1 hour (Sonic→ETH), and can also be triggered immediately by paying a fee; Sonic's own validator network operates the gateway by running client nodes on both Sonic and Ethereum. This ensures that the Sonic Gateway is as decentralized as the Sonic chain itself, eliminating the risk of centralized manipulation.
From the design point of view, Sonic's main updates still hope to attract a new round of developers and capital with "hardware configurations" such as million-level TPS, sub-second settlement, and EVM compatibility, so that this old public chain can return to the market's vision with a new image and performance.
Token Economics: Issuing with the Left Hand, Burning with the Right Hand
In fact, the topic that the community is currently discussing the most is the new token economics of Sonic. On the one hand, the 1:1 exchange model with FTM seems to be a simple transfer. On the other hand, the airdrop plan 6 months later, which is equivalent to an additional 6% (about 190 million) token issuance, is also considered by the community as a move to dilute the token value.
When Sonic was just launched, it set the same initial supply of 3.175 billion as FTM, ensuring that old token holders can obtain S at a 1:1 ratio. But a closer look will reveal that the issuance may only be a part of Sonic, and there are also many approaches to balancing the total supply in the token economics.
The official document shows that starting from six months after the mainnet launch, 1.5% (about 47.625 million S) will be issued annually for network operations, marketing, DeFi promotion, etc., and this will continue for six years. However, if this part of the token is not used up in a certain year, it will be 100% burned, ensuring that the increased part is actually invested in construction, rather than being hoarded by the foundation.
In the first four years, the 3.5% annual validator rewards of the Sonic mainnet will mainly come from the unused "block reward share" of the Opera FTM, so as to avoid massive minting of new S at the start-up stage, causing malicious inflation. After four years, the issuance of new tokens will be restored at a rate of 1.75% to pay for block rewards.
To offset the inflationary pressure brought by this part of the issuance, Sonic has designed three burning mechanisms:
Fee Monetization Burn: If a DApp does not participate in FeeM, 50% of the Gas fees generated by users on that application will be directly burned; this is equivalent to levying a higher "deflationary tax" on applications that do not join the revenue sharing, encouraging DApps to actively participate in FeeM.
Airdrop Burn: 75% of the airdrop shares require a 270-day vesting period to be fully obtained; if users choose to unlock early, they will lose a portion of the airdrop shares, and these "deducted" shares will be directly burned, reducing the circulation of S in the market.
Ongoing Funding Burn: The 1.5% annual issuance for network development, if not used up in the year, will also be 100% burned; this can prevent the foundation from hoarding tokens and also limit the long-term occupation of tokens by certain members.
Overall, Sonic is trying to use one hand of "controllable issuance" to ensure the development funds of the ecosystem, and the other hand of multiple "burning" to suppress inflation. The most noteworthy is the "burning" under the FeeM mechanism, because it is directly linked to the participation degree and transaction volume of DApps. This means that the more applications do not participate in FeeM, the greater the deflationary force on the chain; on the contrary, the more FeeM applications, the less the "deflationary tax", but the developer's revenue sharing will increase, forming a dynamic balance between profit sharing and deflation.
TVL is only 1% of its peak, can the refund + airdrop regain the DeFi momentum?
The Fantom team once shone brightly in the 2021-2022 bull market, but Fantom's on-chain performance has not been ideal in the past year. Fantom's current TVL is only around $90 million, ranking 49th among DeFi public chains, while Fantom's TVL once reached around $7 billion at its peak. The current data is only about 1% of the peak period.
Perhaps to revive the DeFi ecosystem, Sonic has specially launched the Fee Monetization (FeeM) mechanism, claiming that it can return up to 90% of the network's Gas fees to project parties, so that they can obtain continuous revenue based on actual on-chain usage without relying too much on external financing. This model borrows the "revenue sharing based on traffic" approach of Web2 platforms, hoping to encourage more DeFi, NFT, GameFi and other developers to come to Sonic and stay.
In addition, the official has set up a 200 million S token airdrop pool and launched two gameplay: Sonic Points, which encourages ordinary users to actively interact, hold or accumulate certain historical activities on Sonic or Opera; Sonic Gems, which is aimed at developers' incentives, encouraging them to launch attractive DApps with real usage on the Sonic chain. The S tokens used for this airdrop are also integrated with mechanisms such as "linear vesting + NFT locking + early unlocking and burning" in an attempt to find a balance between airdrop and medium-to-long-term stickiness.
Mainnet launch, 1 million block milestone, cross-chain Bridge preview. These news have indeed boosted Sonic's exposure in the short term. But the current reality is far from the prosperous and peak era. Currently, the full competition of Layer2, Solana, Aptos, Sui and other public chains has already ushered in the era of multi-chain blossoming. High TPS is no longer the only selling point. If Sonic cannot unleash one or two "flagship projects" in the ecosystem, it may be difficult to compete with other popular chains.
However, Sonic's launch has received the support of some industry-leading projects. In December, the AAVE community proposed to deploy Aave v3 on Sonic, and Uniswap also announced that it has completed deployment on Sonic. In addition, Sonic can directly inherit 333 staking protocols on Fantom as the ecological foundation. These are advantages over a pure new public chain.
Relying on performance and high incentives to bring back capital and developers? The answer may depend on whether Sonic can deliver convincing results in terms of specific application landing, governance transparency and cross-chain security in 2025. If everything goes well, Sonic may have the chance to recreate the glory of Fantom. If it is just a concept hype, and unable to solve internal contradictions and security concerns, this "second entrepreneurship" may also become mundane in the multi-chain battle.
