Author: GCR Research Team
Compiled by: Felix, PANews
Fantom was a big success story for DeFi in 2021, with a TVL of up to $8 billion. But when lead developer Andre Cronje left and the bear market hit, Fantom lost its former glory. Now Cronje is back, and Fantom has been rebranded to Sonic. This is not just a name change, but a new beginning.
This article will explore Sonic’s core innovations, market response, and whether it will open the road to redemption for Fantom.
What is Sonic
Sonic is more than just a new name for Fantom. Michael Kong, CEO of Sonic Labs, said it’s a complete reboot. It’s a new chain based on new technology, using a brand new but fully EVM-compatible virtual machine. The team is building a new blockchain from scratch because they can’t make the changes they want to the old one. “You can’t rebuild a flying airplane,” Kong explained. “It’s much easier to build a new airplane on the ground and then take it into the air.”
The new chain will process 10,000 transactions per second, with confirmation times of less than a second. This is much faster than the L2 networks that Sonic wants to compete with. While L2 is growing in popularity, with $34 billion locked up, Sonic believes there is a fundamental problem with their model. According to Sonic Labs, these networks live off the money earned from sorter fees, which, in their opinion, should go to developers - the people who actually build useful applications. In their view, the value created by application developers is not being compensated.
To solve this problem, Sonic puts developers first. Its core feature is the ability for developers to earn up to 90% of the gas fees generated by their applications. In addition to this, Sonic will give developers real control over their applications. They can set their own fee structure and create a smoother payment experience for users. Everything in Sonic is built around this idea: to provide developers with tools and incentives to build better applications. The chain allows developers to focus on innovation instead of learning new tools by supporting languages such as Solidity and Vyper.
Sonic will launch in December 2024, joining a field of fast blockchains such as Solana, Sui, and Aptos. While it does not have the security of Ethereum like L2, it offers something unique - the speed of a modern chain using Ethereum's familiar tools. This puts Sonic in an interesting position: it is built for developers who need more performance than L2s can provide, but want to stick to the Ethereum development environment. Currently only Sei offers this, while Monad attempts to achieve this. Therefore, in addition to Ethereum L2s, these two chains may be Sonic's main competitors.
How does the technology work?
Sonic Virtual Machine
To remove the bottlenecks caused by the EVM's lack of scalability, the Sonic Labs team built their own version of the EVM, called the Sonic Virtual Machine. The SVM is fully compatible with the EVM, but has improvements to how code execution is handled. When someone's code is running, the SVM converts it to a more efficient format in the client. It looks for common patterns in the code and replaces them with optimized "super instructions." This makes everything run faster without changing the way developers work. All the usual tools still work, developers can continue to write in Solidity and Vyper, and the chain still supports Geth 1.4.
Sonic consensus mechanism
Sonic uses a consensus mechanism based on directed acyclic graphs (DAGs) and adopts proof of stake. Unlike a single chain where blocks must follow each other in sequence, each validator maintains its own local collection of transaction blocks (called a DAG). When transactions come in, the validator bundles them into "event blocks" and adds them to the DAG.
Before creating a new event block, validators check two things: all the transactions in the current block, and some of the transactions they received from other validators. They then share these blocks with other validators through a process that does not require everything to happen in strict order.
Source: https://docs.soniclabs.com/technology/consensus
Unlike blockchain, this DAG-based approach does not force validators to process the current block being generated, which limits transaction speed and finality. Validators are free to create event blocks containing transactions and share these blocks with other validators on the network in an asynchronous manner, creating a non-linear transaction record. This improves transaction speed and efficiency.
When a validator creates an event block, it is propagated to other validators on the network. Once a majority of validators agree on a block, it becomes what is known as a "root event block." These root blocks are then added to the main chain, which is the final permanent record of all transactions that everyone agrees on.
The whole process takes less than a second from start to finish. Transactions go through four steps: First, the user sends the transaction. Then, the validator puts it in the event block. Next, this block propagates until the majority of validators accept it. Finally, it becomes part of the main chain. When you view Sonic through a block explorer, you only see this final main chain. All the complex work of the event block in the DAG happens in the background.
Each validator keeps its own copy of the main chain, which helps them process new blocks faster. This creates a clever balance: the DAG structure lets validators work independently and quickly, while the main chain ensures that everyone ends up with the same final record.
Sonic Token
The Sonic (S) token will be a traditional L1 token - used to pay gas fees, participate in governance, and secure the network through staking. When Sonic launches, Fantom (FTM) can be converted to Sonic (S) at a one-to-one ratio. The total supply will start at 3.175 billion Scoins, matching the current total supply of Fantom. About 2.88 billion of these tokens will be in circulation at launch.
Sonic wants to avoid early inflation of validator rewards. The chain will use the remaining Fantom block rewards instead of minting new coins for a period of four years. When half of the network is staked, these rewards (about 70 million per year) will provide a 3.5% return to validators. After these four years, the network will mint new tokens every period to maintain a 3.5% reward rate.
Developer Incentives
Sonic has created several programs to attract developers using its tokens. The Innovation Fund has allocated 200 million S tokens to help new projects based on Sonic. These tokens will be awarded as grants to developers who create innovative applications.
The Fee Monetization Program changes how transaction fees work, but only for approved applications. A normal transaction on Sonic consumes 50% of fees, pays 45% to validators, and sends 5% to the ecosystem vault. Developers can apply to join the Fee Monetization Program. If approved, their application will receive 90% of the fees it generates, and the validator will receive the remaining 10%. This structure allows successful applications to earn sustainable income while supporting network security.
airdrop
Sonic plans to distribute 190.5 million tokens through airdrops to reward past Fantom users and future Sonic adopters. The team said they learned from the mistakes of previous user incentive campaigns - the focus is not on simply rewarding a large amount of locked funds, but on actual usage. This means that applications that do not naturally require a large amount of TVL (such as DEX, NFT, games, etc.) can also benefit from the user adoption metrics of this event, not just DeFi applications like lending protocols and AMMs that require a large amount of TVL.
Fantom's historical activities and future participation in Sonic will be rewarded in this airdrop. Past significant activities may include providing liquidity, validation, holding staked tokens (such as sFTMx), and using NFTs. Future eligibility criteria may include providing liquidity on Sonic staking, deploying contracts, participating in community activities, and using bridges. The exact criteria are not yet known, but based on the information shared by the Sonic Labs team, it can be assumed that activities will receive higher rewards than passively providing liquidity.
Additionally, the “Sonic Boom” program allows 30 projects to win additional airdrop allocations to distribute to their users.
Finally, this airdrop includes a novel claiming mechanism with a 270-day vesting period. The system releases 25% of the tokens on the first day, leaving the remaining 75% as NFT positions. Users can claim the remaining airdrops at any point in time, but if they redeem early, some of the tokens will be destroyed. The longer these positions remain unclaimed, the fewer tokens will be destroyed when they are redeemed. Those who want immediate liquidity without burning their tokens can sell their NFT positions on the market.
Source: https://docs.soniclabs.com/funding/airdrop
How has the market reacted ?
Fantom’s token has been rising slightly since Sonic was released in August 2023. The price has risen from $0.41 to $0.71, a 75% increase, while Bitcoin has risen from $64,000 to nearly $100,000, a rise of about 50%. While nothing special, it is still a good performance as Bitcoin has outperformed many altcoins in the same period. However, it lags far behind the best performing tokens such as Sui, whose price has risen 5x in the same period, from $0.7 to $3.6, and Fantom’s price has lagged behind other altcoins, especially after Bitcoin recently broke through its all-time high. This shows that the market seems to be skeptical about Sonic. The market is not enthusiastic at the moment.
The total value locked in the Fantom protocol is also lackluster. Despite the promised airdrop, the network’s TVL remains stable at around $100 million, well below its peak of $8 billion during the last bull run.
This may change when the Sonic mainnet launches, but recent history suggests caution is needed. Other networks, such as Scroll, have seen temporary spikes in activity during airdrops, but those funds have quickly evaporated once the rewards have dried up. High initial activity or TVL growth at launch may indicate short-term interest rather than lasting adoption.
Future potential
Sonic is in a crowded race, where block space is more plentiful than ever before. While Ethereum L2s may not reach the speeds promised by Sonic, they are fast enough for current needs. As a result, most Solidity developers choose to build on these L2s, while other L1 networks have difficulty attracting builders and users. Sonic will face the same challenge.
The team emphasizes rewarding developers through gas fee sharing, but this approach faces its own obstacles. History suggests that this may not be the compelling feature Sonic hopes to achieve. Major applications such as Uniswap, Aave, and Raydium have built successful businesses without gas rebates. NEAR Protocol tried a similar approach with little success, and it was ultimately not its developer incentives that brought NEAR back to life, but its focus on AI applications. This challenge is compounded by Sonic’s expected low transaction fees, which will reduce the value of gas rebates.
For Sonic to succeed in the long term, it needs to attract applications with its superior speed and scalability. Think of today’s DeFi protocols, perpetual DEX, DePIN network, and complex financial applications. The elements to achieve this goal are already in place - a large amount of development and incentive funds, a well-designed incentive plan, and one of DeFi’s most inspiring leaders, Andre Cronje. The team seems to understand this, and Andre Cronje is actively seeking cooperation with credit card companies and international banks.
Simply becoming another high-speed blockchain hosting a Memecoin casino will not ensure lasting success. While such events may provide early momentum, Sonic needs to establish itself in a well-defined niche where its performance is what matters most. From the team’s carefully crafted incentive campaigns and airdrops to institutional outreach, the team has some promise. But it will take more than good intentions to succeed in this competitive environment. Sonic’s future depends on translating these plans into practice to demonstrate the true value of its high-performance infrastructure.
Related reading: Fantom is about to launch a new chain Sonic. Can coin swap + MEME activate the ecosystem?
