Sonic is a newly launched (December 2024) next-generation Layer-1 (L1) blockchain platform designed to transform the developer incentive model and redefine blockchain usability. Through its Fee Monetization program, Sonic allows developers to earn up to 90% of the fees generated by their applications while also enjoying EVM compatibility and ~10,000 TPS. As legacy L1 blockchains face the critical challenge of evolution or obsolescence, Sonic positions itself as a leader in scalability, decentralization, and performance. By blending the strengths of L1 and L2 architectures, Sonic delivers a network capable of achieving next-level scalability with sub-second finality. Its native decentralized bridge to Ethereum and other ecosystems ensures seamless liquidity and heightened security, addressing key infrastructure demands in the blockchain space. With a focus on cutting-edge technology and a developer-first approach, Sonic reinvigorates the blockchain landscape by enabling the creation of productive, consumer-facing applications.
Sonic Chain
Launched in 2019 as the Fantom Opera network, the platform quickly became a prominent smart contract solution but required major upgrades to keep pace with blockchain advancements. Addressing the challenges of enhancing a live network, the team introduced Sonic in March 2024, a high-performance blockchain focused on scalability and efficiency. By August, the platform was rebranded as Sonic Labs, emphasizing its commitment to innovation. It launched the Sonic testnet in September, showcasing advanced features. FTM token holders can exchange their tokens 1:1 for Sonic's native S tokens, with 190.5 million S tokens allocated via airdrops to developers, early adopters, and loyal users, featuring a vesting schedule and burn mechanism to encourage long-term use.
Key Technical Features of Sonic
At its core, Sonic delivers exceptional network performance, achieving up to 10,000 ERC-20 transactions per second with sub-second finality, ensuring fast and reliable processing and rivaling leading chains like Solana, Aptos, and Sui. Central to its architecture is Sonic’s Virtual Machine, an optimized virtual machine that enhances smart contract execution by reducing gas costs and boosting overall efficiency. Complementing this is Sonic’s database storage, a pioneering database solution featuring live pruning, which minimizes validator storage requirements and promotes sustainable network growth. Additionally, the Sonic Gateway enables secure cross-chain asset transfers between Ethereum and Sonic, enhancing interoperability.
Sonic Labs has partnered with key industry players such as Chainlink, Pyth, Dune, Alchemy, and Safe, offering robust tools and infrastructure to empower developers. With the successful rollout of its testnet and a focus on scalability, flexibility, and performance, Sonic positions itself as a leader in blockchain innovation. Through its technical advancements and comprehensive support for builders, Sonic Labs sets a new benchmark for what blockchain infrastructure can achieve, creating fertile ground for the next wave of decentralized applications.
Sonic Chain: Under the Hood
To address the limitations inherited from the EVM, Sonic Labs introduces a dual framework: the Sonic Virtual Machine and a Directed Acyclic Graph (DAG)-based consensus mechanism. Together, these innovations aim to enhance transaction efficiency while preserving developer familiarity.
Sonic Virtual Machine: Optimizing EVM Compatibility
The Sonic Virtual Machine represents a strategic redesign of the EVM architecture, enhancing computational efficiency while retaining developer usability. While the EVM's fundamental structure supports wide adoption, its lack of scalability hinders performance as transaction volumes increase. To address this, Sonic Labs built the Sonic Virtual Machine, which fully supports EVM compatibility while introducing several optimizations.
The Sonic Virtual Machine translates smart contract code into a more efficient format during execution. This transformation identifies recurring code patterns and substitutes them with optimized "super-instructions," effectively streamlining the computational process. Notably, this refinement does not alter the tools or workflows developers rely on. Coders can continue using established programming languages such as Solidity and Vyper while the network remains compatible with Geth 1.4, ensuring seamless integration.
This architectural upgrade allows the Sonic Virtual Machine to eliminate inefficiencies without demanding additional effort from developers. The process leverages native optimizations to enhance execution speeds without compromising the underlying functionality or ecosystem compatibility.
DAG-Based Consensus Mechanism: Rethinking Blockchain Ordering
Sonic’s DAG-based consensus mechanism, combined with proof-of-stake (PoS), shifts from traditional blockchain architectures that mandate linear block production. By using DAGs, validators maintain their own asynchronous collection of transaction blocks, enabling greater efficiency and throughput.
Validators bundle incoming transactions into "event blocks," which they integrate into their local DAG. These event blocks include both newly processed transactions and those received from other validators. Unlike conventional blockchain systems where validators must operate on the current block sequentially, Sonic’s approach allows validators to process and share event blocks asynchronously independently. This significantly reduces restrictions on transaction speed and finality.
The consensus process ensures that validators achieve agreement on a subset of these event blocks, which then form “root event blocks.” These root blocks subsequently integrate into the system’s main chain, representing the final, immutable ledger of transactions. Validators achieve consensus dynamically, enabling high throughput while maintaining network-wide consistency.
Process Flow: From Transaction to Finality
The lifecycle of a transaction on Sonic highlights the interplay between the DAG structure and the main chain. It proceeds through four distinct stages:
- Transaction Submission: A user sends a transaction to the network.
- Event Block Creation: A validator incorporates the transaction into an event block within their local DAG.
- Event Block Dissemination: The event block propagates across validators, who verify and accept its contents.
- Main Chain Integration: Once most validators agree, the event block becomes a root event block, joining the main chain.
This process, spanning less than a second, ensures rapid transaction confirmation. Importantly, the main chain’s linear structure abstracts the complexity of DAG-based event blocks, presenting users with a simplified view while preserving the advantages of non-linear processing.
The DAG-based approach allows validators to operate independently, fostering high transaction speeds. Simultaneously, the consolidation of root event blocks into the main chain ensures the network maintains a single source of truth, preventing discrepancies in the ledger. This balance between decentralization and finality highlights Sonic’s ability to address scalability concerns without sacrificing the core tenets of blockchain technology. Validators retain autonomy in processing transactions, while users experience seamless, near-instant finality.
Why Not Build an Ethereum Rollup?
Sonic’s decision to establish itself as a standalone Layer 1 (L1) blockchain rather than an Ethereum rollup stems from addressing the inherent limitations of rollup-based architectures. While rollups provide valuable scaling solutions within the Ethereum ecosystem, they introduce centralization risks, scalability bottlenecks, and interoperability constraints that conflict with Sonic's vision of a high-performance, decentralized network.
- Avoiding Centralization Risks: A critical flaw in rollup architecture lies in its reliance on centralized sequencers to process transactions. These sequencers represent single points of failure, vulnerable to censorship and manipulation, particularly through malicious MEV (Maximal Extractable Value) extraction. Although decentralizing sequencers remains an ongoing effort, the lack of a robust solution compromises the core principles of trustlessness and decentralization. Sonic’s native architecture avoids such vulnerabilities, ensuring that no central authority governs transaction ordering or execution.
- Surpassing Scalability Constraints: Ethereum rollups inherit limitations from Ethereum’s base layer, including its restricted block size and associated throughput ceilings. Even with compression techniques, rollups are unable to surpass Ethereum’s TPS cap effectively, with practical limits well below 5,000 TPS. In contrast, Sonic achieves a superior 10,000 TPS through its DAG-based consensus mechanism and optimized infrastructure, delivering unparalleled scalability and sub-second finality without being constrained by Ethereum’s block capacity.
- Eliminating Interoperability Bottlenecks: The fragmented nature of rollups creates significant interoperability challenges, as each rollup operates like an isolated chain with limited cross-rollup communication. This fragmentation hinders seamless liquidity movement and increases reliance on external bridges, which often come with additional security and trust trade-offs. Sonic sidesteps these constraints by building a unified ecosystem with native interoperability features, such as the Sonic Gateway, which facilitates secure, efficient cross-chain transactions without external dependencies.
- Streamlining Economic Viability: Rollups incur substantial operational costs by settling transactions on Ethereum’s L1, often paid in ETH. These expenses not only strain developers but also undermine the economic scalability of applications. Sonic’s self-contained L1 ecosystem eliminates the dependency on Ethereum, enabling cost-efficient operations while offering developers the flexibility to maximize revenue through its Fee Monetization program.
- Future-Proofing Innovation: Finally, rollups face scalability limits tied to Ethereum’s underlying architecture, including the EVM’s inefficiencies. Sonic’s advanced architecture, including the Sonic Virtual Machine, enhances scalability while retaining compatibility with existing developer tools, ensuring long-term flexibility for innovation.
By choosing to be a Layer 1 blockchain, Sonic avoids the trade-offs inherent to rollups, offering a platform that delivers unmatched scalability, decentralization, and developer empowerment. This strategic decision positions Sonic as a trailblazer in the next generation of blockchain infrastructure.
Incentive Programs for All
Fee Monetization (FeeM)
Previously known as Gas Monetization, Sonic's Fee Monetization program is a game-changer for developers. It tackles a critical challenge in the blockchain space: the lack of stable revenue streams. Traditionally, developers have relied on temporary grants or token sales, often stalling innovation and pushing talent toward more reliable industries.
With FeeM, developers can earn up to 90% of the fees their apps generate. This model transforms app creation into a sustainable venture, attracting top talent and fostering long-term growth. However, app participation requires approval to ensure quality contributions to the network.
Innovator Fund
Early adopters benefit from the S Airdrop campaign, which stimulates initial economic activity while fostering engagement. Sonic further supports ecosystem growth with a 200 million S token Innovator Fund aimed at fostering infrastructure development and strategic partnerships. Global developer networking events, branded as "Sonic and Sodas," provide platforms for collaboration and knowledge exchange. Sonic Chain incentivizes participation through these initiatives and paves the way for a more vibrant, developer-friendly blockchain future.
Partnerships
In H2 2024, Sonic significantly expanded its ecosystem by announcing multiple strategic partnerships and integrations aimed at enhancing both user and developer experiences. Eight prominent user applications, including Shadow Exchange, Curve, Kyber, OpenOcean, SuperSonic, ODOS, Gelato, and Silo Finance, committed to launching on Sonic, bringing diverse use cases such as decentralized exchanges, automated liquidity management, and advanced trading tools to the platform. Additionally, Sonic secured collaborations with seven leading infrastructure providers—Tenderly, Chainlink, Alchemy, Safe, Sentio, Snapshot Labs, and Dune—to deliver comprehensive developer support with solutions ranging from debugging tools and secure wallet infrastructure to decentralized oracles and blockchain analytics. A standout partnership with Rabby Wallet introduced gas-free trading, sponsoring up to 10 decentralized exchange transactions per user on Opera for 90 days starting July 22, 2024, reducing barriers for new users and encouraging platform adoption.
One partnership, in particular, looks to help bring the Sonic and Bitcoin ecosystem closer together than ever before. In Q4 2024, Sonic announced a strategic partnership with Solv Protocol, an innovative on-chain Bitcoin Reserve platform. This collaboration introduces the ability to mint SolvBTC and SolvBTC.BBN directly on Sonic, offering seamless access to these Bitcoin-based assets for DeFi applications.
Solv Protocol serves as an on-chain Bitcoin Reserve, addressing the untapped potential of Bitcoin’s ~$2 trillion market value. By introducing a Staking Abstraction Layer (SAL), the protocol simplifies the staking process for Bitcoin holders, enabling them to convert their Bitcoin into SolvBTC — a 1:1 wrapped Bitcoin token. This token operates seamlessly across multiple blockchains, opening doors to a variety of DeFi opportunities. Additionally, LSTs such as SolvBTC.BBN allows users to unlock liquidity, earn staking rewards, and support proof-of-stake (PoS) blockchain networks through innovative mechanisms.
Through SolvBTC, users gain access to yield farming, liquidity provision, and advanced trading strategies while maintaining asset liquidity. The platform’s tiered reserve system minimizes risks associated with wrapped Bitcoin assets, ensuring secure operations.
The integrity and safety of Solv Protocol are reinforced through comprehensive audits by leading security firms, including Quantstamp, Certik, and SlowMist. By integrating with DeFi platforms, Solv Protocol transforms Bitcoin into a productive, versatile asset, expanding its use cases beyond traditional store-of-value functionality.
Sonic Gateway
The Sonic Gateway redefines blockchain interoperability by addressing critical challenges in security and speed that have plagued traditional cross-chain solutions. Existing Layer-1 and Layer-2 bridges often rely on centralized systems, exposing users to significant risks, as evidenced by over $2.5 billion in losses from bridge hacks. Sonic Labs has developed the Gateway to combat these vulnerabilities with a trustless architecture that prioritizes user security and control. Built on Sonic's validator network, which operates nodes on both Ethereum and Sonic, the Gateway establishes a secure channel for ERC-20 token transfers while still allowing users to maintain complete control over their assets.
A fail-safe mechanism is integrated to safeguard assets; in the rare event of a 14-day operational failure, users can retrieve their bridged funds from the originating chain. This immutable feature ensures that user custody of assets remains protected.
The Sonic Gateway also excels in efficiency, offering predictable and timely asset transfers. Transactions from Ethereum to Sonic are completed within 10 minutes, while transfers back to Ethereum take up to 1 hour, measured in "heartbeat" intervals. For those requiring instant access, the Gateway introduces Fast-Lane Transactions, allowing users to expedite transfers for a fee. These transactions immediately update the state of the target chain, benefiting all users awaiting the next scheduled heartbeat without disrupting the regular intervals. This innovative feature enhances flexibility while maintaining the system's overall predictability, offering a seamless user experience for participants in the Sonic ecosystem.
While Sonic is not a Layer-2 solution, it actively engages with the Ethereum ecosystem by using ETH for on-chain operations. This deep integration ensures robust liquidity and interoperability, cementing Sonic’s position as a bridge between ecosystems. The Gateway’s ability to combine security, rapid processing, and user-centric features marks a significant advancement in cross-chain interoperability.
By integrating this L2 bridge to Ethereum, Sonic provides direct access to native ETH and other assets on Ethereum without the need for costly and time-consuming third-party intermediaries. This connection empowers Sonic to tap into Ethereum’s industry-leading DeFi liquidity (~$65 billion in TVL), DeFi protocols, and user base while maintaining the low fees and high throughput characteristic of Layer 1 platforms.
S Token
The S token, Sonic’s native asset, is central to the network’s functionality and governance. Designed to foster scalability and sustainability, the S token offers various utilities while incorporating mechanisms to combat inflation and drive ecosystem growth.
The S token serves multiple purposes within the Sonic ecosystem:
- Transaction Fees: Used to pay for transactions on the network.
- Validator Operations: Essential for running validators and maintaining network security.
- Staking: Users can stake S tokens, with a 14-day withdrawal period, to support network operations and earn rewards.
- Governance: Provides holders with voting rights to shape the network’s future.
Initial Supply and Distribution
At launch, Sonic will introduce 3.175 billion S tokens, matching the total supply of Fantom (FTM). Circulating supply will mirror FTM's current levels, with S tokens initially available on Sonic's decentralized exchanges. Post-launch, availability will expand to leading centralized exchanges.
Six months after launch, Sonic will begin linear token minting to support:
- Scaling operations
- Marketing efforts
- Partnerships
- Growth programs
- Initiatives like Sonic University
Community consensus limits annual inflation to 1.5% (47.625 million tokens) for six years. Any unused minted tokens will be burned, ensuring that all new supply directly contributes to the network’s growth.
To mitigate inflationary risks, Sonic incorporates several burning mechanisms:
- Unused Minted Tokens: Burned at the end of each year.
- Non-FeeM Transactions: If an app is not approved for Fee Monetization, 50% of its transaction fees are burned.
- Airdrop Burns: Additional mechanisms reduce excess supply.
These deflationary strategies ensure a balanced supply-demand dynamic, preserving the token’s value.
Sonic is also facilitating the migration of block rewards from Fantom Opera to Sonic. Opera’s rewards will gradually reduce to zero, reallocating funds to incentivize Sonic validators and stakers. This transition aims to strengthen Sonic’s infrastructure and reward active network participants.
Sonic Points
Sonic Points reward users based on their interactions, loyalty, and engagement with the network. These points are divided into two categories:
- Passive Liquidity Points: Earned by bridging primary assets onto the Sonic mainnet.
- Activity Points: These offer a multiplier on passive points, incentivizing users to actively deploy and utilize their assets within the ecosystem.
Points are distributed in multiple seasons, with the first ending in mid-2025. Users can earn multipliers based on the type of assets they bridge:
- 3x Multiplier: S tokens and S Liquid Staking Tokens (LSTs)
- 2x Multiplier: scUSD, scETH, ONE
- 1x Multiplier: Stablecoins like USDC, USDT, and tokens like SolvBTC and SolvBTC.BBN
Sonic Gems
Sonic Gems rewards developers for app innovation and user engagement. These off-chain points are redeemable for liquid S tokens and are distributed across multiple seasons.
- PvP System: A competitive setup ensures that an app’s gem balance is dynamic, influenced by its performance relative to others.
- Generosity Incentive: Apps that share their S token rewards with users gain higher scores and additional benefits.
Gems are weighted by app exclusivity to Sonic, the category, and other factors found here.
Season 1 will distribute 1.68 million Gems to participating apps, encouraging developers to build and thrive within Sonic's ecosystem.
Airdrop Strategy
Sonic’s airdrop strategy applies game theory to reward early adopters while balancing long-term value:
- Initial Access: Users can claim 25% of their allocation immediately upon airdrop release.
- Locked Tokens: The remaining tokens are locked for 270 days as NFT positions.
- Early claims come with a penalty, requiring users to burn a portion of their allocation.
- For example, after 90 days, claiming early means receiving one-third of the locked tokens while burning two-thirds. Impatience has its price.
For those unwilling to wait, a secondary NFT marketplace allows airdrop positions to be traded.
Conclusion
Sonic emerges as a transformative force in the blockchain landscape, redefining scalability, decentralization, and developer incentives through cutting-edge technology and strategic innovation. With its unique blend of advanced features—such as its virtual machine, DAG-based consensus, and the Sonic Gateway—Sonic addresses the critical pain points of existing blockchain networks, delivering unparalleled transaction speeds, security, and interoperability.
The Fee Monetization program and Innovator Fund exemplify Sonic’s commitment to empowering developers by creating sustainable revenue streams and fostering a vibrant ecosystem. Strategic partnerships with leading industry players and the introduction of versatile airdrop/points mechanisms like Sonic Points and Sonic Gems further cement Sonic's position as a developer-first platform.
By seamlessly integrating EVM compatibility with next-generation advancements, Sonic not only ensures developers' accessibility but also positions itself as a bridge between traditional and modern blockchain paradigms. Its robust tokenomics and deflationary strategies provide a solid foundation for long-term network sustainability and user engagement.
As Sonic gains momentum with its ambitious vision and powerful ecosystem, it sets a new benchmark for Layer-1 blockchain platforms. Sonic’s forward-thinking approach and unwavering focus on innovation make it a catalyst for the next wave of decentralized applications, paving the way for a more scalable, efficient, and inclusive blockchain future.
Disclaimer: This report was commissioned by Sonic Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Sonic is a newly launched (December 2024) next-generation Layer-1 (L1) blockchain platform designed to transform the developer incentive model and redefine blockchain usability. Through its Fee Monetization program, Sonic allows developers to earn up to 90% of the fees generated by their applications while also enjoying EVM compatibility and ~10,000 TPS. As legacy L1 blockchains face the critical challenge of evolution or obsolescence, Sonic positions itself as a leader in scalability, decentralization, and performance. By blending the strengths of L1 and L2 architectures, Sonic delivers a network capable of achieving next-level scalability with sub-second finality. Its native decentralized bridge to Ethereum and other ecosystems ensures seamless liquidity and heightened security, addressing key infrastructure demands in the blockchain space. With a focus on cutting-edge technology and a developer-first approach, Sonic reinvigorates the blockchain landscape by enabling the creation of productive, consumer-facing applications.
Sonic Chain
Launched in 2019 as the Fantom Opera network, the platform quickly became a prominent smart contract solution but required major upgrades to keep pace with blockchain advancements. Addressing the challenges of enhancing a live network, the team introduced Sonic in March 2024, a high-performance blockchain focused on scalability and efficiency. By August, the platform was rebranded as Sonic Labs, emphasizing its commitment to innovation. It launched the Sonic testnet in September, showcasing advanced features. FTM token holders can exchange their tokens 1:1 for Sonic's native S tokens, with 190.5 million S tokens allocated via airdrops to developers, early adopters, and loyal users, featuring a vesting schedule and burn mechanism to encourage long-term use.
Key Technical Features of Sonic
At its core, Sonic delivers exceptional network performance, achieving up to 10,000 ERC-20 transactions per second with sub-second finality, ensuring fast and reliable processing and rivaling leading chains like Solana, Aptos, and Sui. Central to its architecture is Sonic’s Virtual Machine, an optimized virtual machine that enhances smart contract execution by reducing gas costs and boosting overall efficiency. Complementing this is Sonic’s database storage, a pioneering database solution featuring live pruning, which minimizes validator storage requirements and promotes sustainable network growth. Additionally, the Sonic Gateway enables secure cross-chain asset transfers between Ethereum and Sonic, enhancing interoperability.
Sonic Labs has partnered with key industry players such as Chainlink, Pyth, Dune, Alchemy, and Safe, offering robust tools and infrastructure to empower developers. With the successful rollout of its testnet and a focus on scalability, flexibility, and performance, Sonic positions itself as a leader in blockchain innovation. Through its technical advancements and comprehensive support for builders, Sonic Labs sets a new benchmark for what blockchain infrastructure can achieve, creating fertile ground for the next wave of decentralized applications.
Sonic Chain: Under the Hood
To address the limitations inherited from the EVM, Sonic Labs introduces a dual framework: the Sonic Virtual Machine and a Directed Acyclic Graph (DAG)-based consensus mechanism. Together, these innovations aim to enhance transaction efficiency while preserving developer familiarity.
Sonic Virtual Machine: Optimizing EVM Compatibility
The Sonic Virtual Machine represents a strategic redesign of the EVM architecture, enhancing computational efficiency while retaining developer usability. While the EVM's fundamental structure supports wide adoption, its lack of scalability hinders performance as transaction volumes increase. To address this, Sonic Labs built the Sonic Virtual Machine, which fully supports EVM compatibility while introducing several optimizations.
The Sonic Virtual Machine translates smart contract code into a more efficient format during execution. This transformation identifies recurring code patterns and substitutes them with optimized "super-instructions," effectively streamlining the computational process. Notably, this refinement does not alter the tools or workflows developers rely on. Coders can continue using established programming languages such as Solidity and Vyper while the network remains compatible with Geth 1.4, ensuring seamless integration.
This architectural upgrade allows the Sonic Virtual Machine to eliminate inefficiencies without demanding additional effort from developers. The process leverages native optimizations to enhance execution speeds without compromising the underlying functionality or ecosystem compatibility.
DAG-Based Consensus Mechanism: Rethinking Blockchain Ordering
Sonic’s DAG-based consensus mechanism, combined with proof-of-stake (PoS), shifts from traditional blockchain architectures that mandate linear block production. By using DAGs, validators maintain their own asynchronous collection of transaction blocks, enabling greater efficiency and throughput.
Validators bundle incoming transactions into "event blocks," which they integrate into their local DAG. These event blocks include both newly processed transactions and those received from other validators. Unlike conventional blockchain systems where validators must operate on the current block sequentially, Sonic’s approach allows validators to process and share event blocks asynchronously independently. This significantly reduces restrictions on transaction speed and finality.
The consensus process ensures that validators achieve agreement on a subset of these event blocks, which then form “root event blocks.” These root blocks subsequently integrate into the system’s main chain, representing the final, immutable ledger of transactions. Validators achieve consensus dynamically, enabling high throughput while maintaining network-wide consistency.
Process Flow: From Transaction to Finality
The lifecycle of a transaction on Sonic highlights the interplay between the DAG structure and the main chain. It proceeds through four distinct stages:
- Transaction Submission: A user sends a transaction to the network.
- Event Block Creation: A validator incorporates the transaction into an event block within their local DAG.
- Event Block Dissemination: The event block propagates across validators, who verify and accept its contents.
- Main Chain Integration: Once most validators agree, the event block becomes a root event block, joining the main chain.
This process, spanning less than a second, ensures rapid transaction confirmation. Importantly, the main chain’s linear structure abstracts the complexity of DAG-based event blocks, presenting users with a simplified view while preserving the advantages of non-linear processing.
The DAG-based approach allows validators to operate independently, fostering high transaction speeds. Simultaneously, the consolidation of root event blocks into the main chain ensures the network maintains a single source of truth, preventing discrepancies in the ledger. This balance between decentralization and finality highlights Sonic’s ability to address scalability concerns without sacrificing the core tenets of blockchain technology. Validators retain autonomy in processing transactions, while users experience seamless, near-instant finality.
Why Not Build an Ethereum Rollup?
Sonic’s decision to establish itself as a standalone Layer 1 (L1) blockchain rather than an Ethereum rollup stems from addressing the inherent limitations of rollup-based architectures. While rollups provide valuable scaling solutions within the Ethereum ecosystem, they introduce centralization risks, scalability bottlenecks, and interoperability constraints that conflict with Sonic's vision of a high-performance, decentralized network.
- Avoiding Centralization Risks: A critical flaw in rollup architecture lies in its reliance on centralized sequencers to process transactions. These sequencers represent single points of failure, vulnerable to censorship and manipulation, particularly through malicious MEV (Maximal Extractable Value) extraction. Although decentralizing sequencers remains an ongoing effort, the lack of a robust solution compromises the core principles of trustlessness and decentralization. Sonic’s native architecture avoids such vulnerabilities, ensuring that no central authority governs transaction ordering or execution.
- Surpassing Scalability Constraints: Ethereum rollups inherit limitations from Ethereum’s base layer, including its restricted block size and associated throughput ceilings. Even with compression techniques, rollups are unable to surpass Ethereum’s TPS cap effectively, with practical limits well below 5,000 TPS. In contrast, Sonic achieves a superior 10,000 TPS through its DAG-based consensus mechanism and optimized infrastructure, delivering unparalleled scalability and sub-second finality without being constrained by Ethereum’s block capacity.
- Eliminating Interoperability Bottlenecks: The fragmented nature of rollups creates significant interoperability challenges, as each rollup operates like an isolated chain with limited cross-rollup communication. This fragmentation hinders seamless liquidity movement and increases reliance on external bridges, which often come with additional security and trust trade-offs. Sonic sidesteps these constraints by building a unified ecosystem with native interoperability features, such as the Sonic Gateway, which facilitates secure, efficient cross-chain transactions without external dependencies.
- Streamlining Economic Viability: Rollups incur substantial operational costs by settling transactions on Ethereum’s L1, often paid in ETH. These expenses not only strain developers but also undermine the economic scalability of applications. Sonic’s self-contained L1 ecosystem eliminates the dependency on Ethereum, enabling cost-efficient operations while offering developers the flexibility to maximize revenue through its Fee Monetization program.
- Future-Proofing Innovation: Finally, rollups face scalability limits tied to Ethereum’s underlying architecture, including the EVM’s inefficiencies. Sonic’s advanced architecture, including the Sonic Virtual Machine, enhances scalability while retaining compatibility with existing developer tools, ensuring long-term flexibility for innovation.
By choosing to be a Layer 1 blockchain, Sonic avoids the trade-offs inherent to rollups, offering a platform that delivers unmatched scalability, decentralization, and developer empowerment. This strategic decision positions Sonic as a trailblazer in the next generation of blockchain infrastructure.
Incentive Programs for All
Fee Monetization (FeeM)
Previously known as Gas Monetization, Sonic's Fee Monetization program is a game-changer for developers. It tackles a critical challenge in the blockchain space: the lack of stable revenue streams. Traditionally, developers have relied on temporary grants or token sales, often stalling innovation and pushing talent toward more reliable industries.
With FeeM, developers can earn up to 90% of the fees their apps generate. This model transforms app creation into a sustainable venture, attracting top talent and fostering long-term growth. However, app participation requires approval to ensure quality contributions to the network.
Innovator Fund
Early adopters benefit from the S Airdrop campaign, which stimulates initial economic activity while fostering engagement. Sonic further supports ecosystem growth with a 200 million S token Innovator Fund aimed at fostering infrastructure development and strategic partnerships. Global developer networking events, branded as "Sonic and Sodas," provide platforms for collaboration and knowledge exchange. Sonic Chain incentivizes participation through these initiatives and paves the way for a more vibrant, developer-friendly blockchain future.
Partnerships
In H2 2024, Sonic significantly expanded its ecosystem by announcing multiple strategic partnerships and integrations aimed at enhancing both user and developer experiences. Eight prominent user applications, including Shadow Exchange, Curve, Kyber, OpenOcean, SuperSonic, ODOS, Gelato, and Silo Finance, committed to launching on Sonic, bringing diverse use cases such as decentralized exchanges, automated liquidity management, and advanced trading tools to the platform. Additionally, Sonic secured collaborations with seven leading infrastructure providers—Tenderly, Chainlink, Alchemy, Safe, Sentio, Snapshot Labs, and Dune—to deliver comprehensive developer support with solutions ranging from debugging tools and secure wallet infrastructure to decentralized oracles and blockchain analytics. A standout partnership with Rabby Wallet introduced gas-free trading, sponsoring up to 10 decentralized exchange transactions per user on Opera for 90 days starting July 22, 2024, reducing barriers for new users and encouraging platform adoption.
One partnership, in particular, looks to help bring the Sonic and Bitcoin ecosystem closer together than ever before. In Q4 2024, Sonic announced a strategic partnership with Solv Protocol, an innovative on-chain Bitcoin Reserve platform. This collaboration introduces the ability to mint SolvBTC and SolvBTC.BBN directly on Sonic, offering seamless access to these Bitcoin-based assets for DeFi applications.
Solv Protocol serves as an on-chain Bitcoin Reserve, addressing the untapped potential of Bitcoin’s ~$2 trillion market value. By introducing a Staking Abstraction Layer (SAL), the protocol simplifies the staking process for Bitcoin holders, enabling them to convert their Bitcoin into SolvBTC — a 1:1 wrapped Bitcoin token. This token operates seamlessly across multiple blockchains, opening doors to a variety of DeFi opportunities. Additionally, LSTs such as SolvBTC.BBN allows users to unlock liquidity, earn staking rewards, and support proof-of-stake (PoS) blockchain networks through innovative mechanisms.
Through SolvBTC, users gain access to yield farming, liquidity provision, and advanced trading strategies while maintaining asset liquidity. The platform’s tiered reserve system minimizes risks associated with wrapped Bitcoin assets, ensuring secure operations.
The integrity and safety of Solv Protocol are reinforced through comprehensive audits by leading security firms, including Quantstamp, Certik, and SlowMist. By integrating with DeFi platforms, Solv Protocol transforms Bitcoin into a productive, versatile asset, expanding its use cases beyond traditional store-of-value functionality.
Sonic Gateway
The Sonic Gateway redefines blockchain interoperability by addressing critical challenges in security and speed that have plagued traditional cross-chain solutions. Existing Layer-1 and Layer-2 bridges often rely on centralized systems, exposing users to significant risks, as evidenced by over $2.5 billion in losses from bridge hacks. Sonic Labs has developed the Gateway to combat these vulnerabilities with a trustless architecture that prioritizes user security and control. Built on Sonic's validator network, which operates nodes on both Ethereum and Sonic, the Gateway establishes a secure channel for ERC-20 token transfers while still allowing users to maintain complete control over their assets.
A fail-safe mechanism is integrated to safeguard assets; in the rare event of a 14-day operational failure, users can retrieve their bridged funds from the originating chain. This immutable feature ensures that user custody of assets remains protected.
The Sonic Gateway also excels in efficiency, offering predictable and timely asset transfers. Transactions from Ethereum to Sonic are completed within 10 minutes, while transfers back to Ethereum take up to 1 hour, measured in "heartbeat" intervals. For those requiring instant access, the Gateway introduces Fast-Lane Transactions, allowing users to expedite transfers for a fee. These transactions immediately update the state of the target chain, benefiting all users awaiting the next scheduled heartbeat without disrupting the regular intervals. This innovative feature enhances flexibility while maintaining the system's overall predictability, offering a seamless user experience for participants in the Sonic ecosystem.
While Sonic is not a Layer-2 solution, it actively engages with the Ethereum ecosystem by using ETH for on-chain operations. This deep integration ensures robust liquidity and interoperability, cementing Sonic’s position as a bridge between ecosystems. The Gateway’s ability to combine security, rapid processing, and user-centric features marks a significant advancement in cross-chain interoperability.
By integrating this L2 bridge to Ethereum, Sonic provides direct access to native ETH and other assets on Ethereum without the need for costly and time-consuming third-party intermediaries. This connection empowers Sonic to tap into Ethereum’s industry-leading DeFi liquidity (~$65 billion in TVL), DeFi protocols, and user base while maintaining the low fees and high throughput characteristic of Layer 1 platforms.
S Token
The S token, Sonic’s native asset, is central to the network’s functionality and governance. Designed to foster scalability and sustainability, the S token offers various utilities while incorporating mechanisms to combat inflation and drive ecosystem growth.
The S token serves multiple purposes within the Sonic ecosystem:
- Transaction Fees: Used to pay for transactions on the network.
- Validator Operations: Essential for running validators and maintaining network security.
- Staking: Users can stake S tokens, with a 14-day withdrawal period, to support network operations and earn rewards.
- Governance: Provides holders with voting rights to shape the network’s future.
Initial Supply and Distribution
At launch, Sonic will introduce 3.175 billion S tokens, matching the total supply of Fantom (FTM). Circulating supply will mirror FTM's current levels, with S tokens initially available on Sonic's decentralized exchanges. Post-launch, availability will expand to leading centralized exchanges.
Six months after launch, Sonic will begin linear token minting to support:
- Scaling operations
- Marketing efforts
- Partnerships
- Growth programs
- Initiatives like Sonic University
Community consensus limits annual inflation to 1.5% (47.625 million tokens) for six years. Any unused minted tokens will be burned, ensuring that all new supply directly contributes to the network’s growth.
To mitigate inflationary risks, Sonic incorporates several burning mechanisms:
- Unused Minted Tokens: Burned at the end of each year.
- Non-FeeM Transactions: If an app is not approved for Fee Monetization, 50% of its transaction fees are burned.
- Airdrop Burns: Additional mechanisms reduce excess supply.
These deflationary strategies ensure a balanced supply-demand dynamic, preserving the token’s value.
Sonic is also facilitating the migration of block rewards from Fantom Opera to Sonic. Opera’s rewards will gradually reduce to zero, reallocating funds to incentivize Sonic validators and stakers. This transition aims to strengthen Sonic’s infrastructure and reward active network participants.
Sonic Points
Sonic Points reward users based on their interactions, loyalty, and engagement with the network. These points are divided into two categories:
- Passive Liquidity Points: Earned by bridging primary assets onto the Sonic mainnet.
- Activity Points: These offer a multiplier on passive points, incentivizing users to actively deploy and utilize their assets within the ecosystem.
Points are distributed in multiple seasons, with the first ending in mid-2025. Users can earn multipliers based on the type of assets they bridge:
- 3x Multiplier: S tokens and S Liquid Staking Tokens (LSTs)
- 2x Multiplier: scUSD, scETH, ONE
- 1x Multiplier: Stablecoins like USDC, USDT, and tokens like SolvBTC and SolvBTC.BBN
Sonic Gems
Sonic Gems rewards developers for app innovation and user engagement. These off-chain points are redeemable for liquid S tokens and are distributed across multiple seasons.
- PvP System: A competitive setup ensures that an app’s gem balance is dynamic, influenced by its performance relative to others.
- Generosity Incentive: Apps that share their S token rewards with users gain higher scores and additional benefits.
Gems are weighted by app exclusivity to Sonic, the category, and other factors found here.
Season 1 will distribute 1.68 million Gems to participating apps, encouraging developers to build and thrive within Sonic's ecosystem.
Airdrop Strategy
Sonic’s airdrop strategy applies game theory to reward early adopters while balancing long-term value:
- Initial Access: Users can claim 25% of their allocation immediately upon airdrop release.
- Locked Tokens: The remaining tokens are locked for 270 days as NFT positions.
- Early claims come with a penalty, requiring users to burn a portion of their allocation.
- For example, after 90 days, claiming early means receiving one-third of the locked tokens while burning two-thirds. Impatience has its price.
For those unwilling to wait, a secondary NFT marketplace allows airdrop positions to be traded.
Conclusion
Sonic emerges as a transformative force in the blockchain landscape, redefining scalability, decentralization, and developer incentives through cutting-edge technology and strategic innovation. With its unique blend of advanced features—such as its virtual machine, DAG-based consensus, and the Sonic Gateway—Sonic addresses the critical pain points of existing blockchain networks, delivering unparalleled transaction speeds, security, and interoperability.
The Fee Monetization program and Innovator Fund exemplify Sonic’s commitment to empowering developers by creating sustainable revenue streams and fostering a vibrant ecosystem. Strategic partnerships with leading industry players and the introduction of versatile airdrop/points mechanisms like Sonic Points and Sonic Gems further cement Sonic's position as a developer-first platform.
By seamlessly integrating EVM compatibility with next-generation advancements, Sonic not only ensures developers' accessibility but also positions itself as a bridge between traditional and modern blockchain paradigms. Its robust tokenomics and deflationary strategies provide a solid foundation for long-term network sustainability and user engagement.
As Sonic gains momentum with its ambitious vision and powerful ecosystem, it sets a new benchmark for Layer-1 blockchain platforms. Sonic’s forward-thinking approach and unwavering focus on innovation make it a catalyst for the next wave of decentralized applications, paving the way for a more scalable, efficient, and inclusive blockchain future.
Disclaimer: This report was commissioned by Sonic Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
Sonic is a newly launched (December 2024) next-generation Layer-1 (L1) blockchain platform designed to transform the developer incentive model and redefine blockchain usability. Through its Fee Monetization program, Sonic allows developers to earn up to 90% of the fees generated by their applications while also enjoying EVM compatibility and ~10,000 TPS. As legacy L1 blockchains face the critical challenge of evolution or obsolescence, Sonic positions itself as a leader in scalability, decentralization, and performance. By blending the strengths of L1 and L2 architectures, Sonic delivers a network capable of achieving next-level scalability with sub-second finality. Its native decentralized bridge to Ethereum and other ecosystems ensures seamless liquidity and heightened security, addressing key infrastructure demands in the blockchain space. With a focus on cutting-edge technology and a developer-first approach, Sonic reinvigorates the blockchain landscape by enabling the creation of productive, consumer-facing applications.
Sonic Chain
Launched in 2019 as the Fantom Opera network, the platform quickly became a prominent smart contract solution but required major upgrades to keep pace with blockchain advancements. Addressing the challenges of enhancing a live network, the team introduced Sonic in March 2024, a high-performance blockchain focused on scalability and efficiency. By August, the platform was rebranded as Sonic Labs, emphasizing its commitment to innovation. It launched the Sonic testnet in September, showcasing advanced features. FTM token holders can exchange their tokens 1:1 for Sonic's native S tokens, with 190.5 million S tokens allocated via airdrops to developers, early adopters, and loyal users, featuring a vesting schedule and burn mechanism to encourage long-term use.
Key Technical Features of Sonic
At its core, Sonic delivers exceptional network performance, achieving up to 10,000 ERC-20 transactions per second with sub-second finality, ensuring fast and reliable processing and rivaling leading chains like Solana, Aptos, and Sui. Central to its architecture is Sonic’s Virtual Machine, an optimized virtual machine that enhances smart contract execution by reducing gas costs and boosting overall efficiency. Complementing this is Sonic’s database storage, a pioneering database solution featuring live pruning, which minimizes validator storage requirements and promotes sustainable network growth. Additionally, the Sonic Gateway enables secure cross-chain asset transfers between Ethereum and Sonic, enhancing interoperability.
Sonic Labs has partnered with key industry players such as Chainlink, Pyth, Dune, Alchemy, and Safe, offering robust tools and infrastructure to empower developers. With the successful rollout of its testnet and a focus on scalability, flexibility, and performance, Sonic positions itself as a leader in blockchain innovation. Through its technical advancements and comprehensive support for builders, Sonic Labs sets a new benchmark for what blockchain infrastructure can achieve, creating fertile ground for the next wave of decentralized applications.
Sonic Chain: Under the Hood
To address the limitations inherited from the EVM, Sonic Labs introduces a dual framework: the Sonic Virtual Machine and a Directed Acyclic Graph (DAG)-based consensus mechanism. Together, these innovations aim to enhance transaction efficiency while preserving developer familiarity.
Sonic Virtual Machine: Optimizing EVM Compatibility
The Sonic Virtual Machine represents a strategic redesign of the EVM architecture, enhancing computational efficiency while retaining developer usability. While the EVM's fundamental structure supports wide adoption, its lack of scalability hinders performance as transaction volumes increase. To address this, Sonic Labs built the Sonic Virtual Machine, which fully supports EVM compatibility while introducing several optimizations.
The Sonic Virtual Machine translates smart contract code into a more efficient format during execution. This transformation identifies recurring code patterns and substitutes them with optimized "super-instructions," effectively streamlining the computational process. Notably, this refinement does not alter the tools or workflows developers rely on. Coders can continue using established programming languages such as Solidity and Vyper while the network remains compatible with Geth 1.4, ensuring seamless integration.
This architectural upgrade allows the Sonic Virtual Machine to eliminate inefficiencies without demanding additional effort from developers. The process leverages native optimizations to enhance execution speeds without compromising the underlying functionality or ecosystem compatibility.
DAG-Based Consensus Mechanism: Rethinking Blockchain Ordering
Sonic’s DAG-based consensus mechanism, combined with proof-of-stake (PoS), shifts from traditional blockchain architectures that mandate linear block production. By using DAGs, validators maintain their own asynchronous collection of transaction blocks, enabling greater efficiency and throughput.
Validators bundle incoming transactions into "event blocks," which they integrate into their local DAG. These event blocks include both newly processed transactions and those received from other validators. Unlike conventional blockchain systems where validators must operate on the current block sequentially, Sonic’s approach allows validators to process and share event blocks asynchronously independently. This significantly reduces restrictions on transaction speed and finality.
The consensus process ensures that validators achieve agreement on a subset of these event blocks, which then form “root event blocks.” These root blocks subsequently integrate into the system’s main chain, representing the final, immutable ledger of transactions. Validators achieve consensus dynamically, enabling high throughput while maintaining network-wide consistency.
Process Flow: From Transaction to Finality
The lifecycle of a transaction on Sonic highlights the interplay between the DAG structure and the main chain. It proceeds through four distinct stages:
- Transaction Submission: A user sends a transaction to the network.
- Event Block Creation: A validator incorporates the transaction into an event block within their local DAG.
- Event Block Dissemination: The event block propagates across validators, who verify and accept its contents.
- Main Chain Integration: Once most validators agree, the event block becomes a root event block, joining the main chain.
This process, spanning less than a second, ensures rapid transaction confirmation. Importantly, the main chain’s linear structure abstracts the complexity of DAG-based event blocks, presenting users with a simplified view while preserving the advantages of non-linear processing.
The DAG-based approach allows validators to operate independently, fostering high transaction speeds. Simultaneously, the consolidation of root event blocks into the main chain ensures the network maintains a single source of truth, preventing discrepancies in the ledger. This balance between decentralization and finality highlights Sonic’s ability to address scalability concerns without sacrificing the core tenets of blockchain technology. Validators retain autonomy in processing transactions, while users experience seamless, near-instant finality.
Why Not Build an Ethereum Rollup?
Sonic’s decision to establish itself as a standalone Layer 1 (L1) blockchain rather than an Ethereum rollup stems from addressing the inherent limitations of rollup-based architectures. While rollups provide valuable scaling solutions within the Ethereum ecosystem, they introduce centralization risks, scalability bottlenecks, and interoperability constraints that conflict with Sonic's vision of a high-performance, decentralized network.
- Avoiding Centralization Risks: A critical flaw in rollup architecture lies in its reliance on centralized sequencers to process transactions. These sequencers represent single points of failure, vulnerable to censorship and manipulation, particularly through malicious MEV (Maximal Extractable Value) extraction. Although decentralizing sequencers remains an ongoing effort, the lack of a robust solution compromises the core principles of trustlessness and decentralization. Sonic’s native architecture avoids such vulnerabilities, ensuring that no central authority governs transaction ordering or execution.
- Surpassing Scalability Constraints: Ethereum rollups inherit limitations from Ethereum’s base layer, including its restricted block size and associated throughput ceilings. Even with compression techniques, rollups are unable to surpass Ethereum’s TPS cap effectively, with practical limits well below 5,000 TPS. In contrast, Sonic achieves a superior 10,000 TPS through its DAG-based consensus mechanism and optimized infrastructure, delivering unparalleled scalability and sub-second finality without being constrained by Ethereum’s block capacity.
- Eliminating Interoperability Bottlenecks: The fragmented nature of rollups creates significant interoperability challenges, as each rollup operates like an isolated chain with limited cross-rollup communication. This fragmentation hinders seamless liquidity movement and increases reliance on external bridges, which often come with additional security and trust trade-offs. Sonic sidesteps these constraints by building a unified ecosystem with native interoperability features, such as the Sonic Gateway, which facilitates secure, efficient cross-chain transactions without external dependencies.
- Streamlining Economic Viability: Rollups incur substantial operational costs by settling transactions on Ethereum’s L1, often paid in ETH. These expenses not only strain developers but also undermine the economic scalability of applications. Sonic’s self-contained L1 ecosystem eliminates the dependency on Ethereum, enabling cost-efficient operations while offering developers the flexibility to maximize revenue through its Fee Monetization program.
- Future-Proofing Innovation: Finally, rollups face scalability limits tied to Ethereum’s underlying architecture, including the EVM’s inefficiencies. Sonic’s advanced architecture, including the Sonic Virtual Machine, enhances scalability while retaining compatibility with existing developer tools, ensuring long-term flexibility for innovation.
By choosing to be a Layer 1 blockchain, Sonic avoids the trade-offs inherent to rollups, offering a platform that delivers unmatched scalability, decentralization, and developer empowerment. This strategic decision positions Sonic as a trailblazer in the next generation of blockchain infrastructure.
Incentive Programs for All
Fee Monetization (FeeM)
Previously known as Gas Monetization, Sonic's Fee Monetization program is a game-changer for developers. It tackles a critical challenge in the blockchain space: the lack of stable revenue streams. Traditionally, developers have relied on temporary grants or token sales, often stalling innovation and pushing talent toward more reliable industries.
With FeeM, developers can earn up to 90% of the fees their apps generate. This model transforms app creation into a sustainable venture, attracting top talent and fostering long-term growth. However, app participation requires approval to ensure quality contributions to the network.
Innovator Fund
Early adopters benefit from the S Airdrop campaign, which stimulates initial economic activity while fostering engagement. Sonic further supports ecosystem growth with a 200 million S token Innovator Fund aimed at fostering infrastructure development and strategic partnerships. Global developer networking events, branded as "Sonic and Sodas," provide platforms for collaboration and knowledge exchange. Sonic Chain incentivizes participation through these initiatives and paves the way for a more vibrant, developer-friendly blockchain future.
Partnerships
In H2 2024, Sonic significantly expanded its ecosystem by announcing multiple strategic partnerships and integrations aimed at enhancing both user and developer experiences. Eight prominent user applications, including Shadow Exchange, Curve, Kyber, OpenOcean, SuperSonic, ODOS, Gelato, and Silo Finance, committed to launching on Sonic, bringing diverse use cases such as decentralized exchanges, automated liquidity management, and advanced trading tools to the platform. Additionally, Sonic secured collaborations with seven leading infrastructure providers—Tenderly, Chainlink, Alchemy, Safe, Sentio, Snapshot Labs, and Dune—to deliver comprehensive developer support with solutions ranging from debugging tools and secure wallet infrastructure to decentralized oracles and blockchain analytics. A standout partnership with Rabby Wallet introduced gas-free trading, sponsoring up to 10 decentralized exchange transactions per user on Opera for 90 days starting July 22, 2024, reducing barriers for new users and encouraging platform adoption.
One partnership, in particular, looks to help bring the Sonic and Bitcoin ecosystem closer together than ever before. In Q4 2024, Sonic announced a strategic partnership with Solv Protocol, an innovative on-chain Bitcoin Reserve platform. This collaboration introduces the ability to mint SolvBTC and SolvBTC.BBN directly on Sonic, offering seamless access to these Bitcoin-based assets for DeFi applications.
Solv Protocol serves as an on-chain Bitcoin Reserve, addressing the untapped potential of Bitcoin’s ~$2 trillion market value. By introducing a Staking Abstraction Layer (SAL), the protocol simplifies the staking process for Bitcoin holders, enabling them to convert their Bitcoin into SolvBTC — a 1:1 wrapped Bitcoin token. This token operates seamlessly across multiple blockchains, opening doors to a variety of DeFi opportunities. Additionally, LSTs such as SolvBTC.BBN allows users to unlock liquidity, earn staking rewards, and support proof-of-stake (PoS) blockchain networks through innovative mechanisms.
Through SolvBTC, users gain access to yield farming, liquidity provision, and advanced trading strategies while maintaining asset liquidity. The platform’s tiered reserve system minimizes risks associated with wrapped Bitcoin assets, ensuring secure operations.
The integrity and safety of Solv Protocol are reinforced through comprehensive audits by leading security firms, including Quantstamp, Certik, and SlowMist. By integrating with DeFi platforms, Solv Protocol transforms Bitcoin into a productive, versatile asset, expanding its use cases beyond traditional store-of-value functionality.
Sonic Gateway
The Sonic Gateway redefines blockchain interoperability by addressing critical challenges in security and speed that have plagued traditional cross-chain solutions. Existing Layer-1 and Layer-2 bridges often rely on centralized systems, exposing users to significant risks, as evidenced by over $2.5 billion in losses from bridge hacks. Sonic Labs has developed the Gateway to combat these vulnerabilities with a trustless architecture that prioritizes user security and control. Built on Sonic's validator network, which operates nodes on both Ethereum and Sonic, the Gateway establishes a secure channel for ERC-20 token transfers while still allowing users to maintain complete control over their assets.
A fail-safe mechanism is integrated to safeguard assets; in the rare event of a 14-day operational failure, users can retrieve their bridged funds from the originating chain. This immutable feature ensures that user custody of assets remains protected.
The Sonic Gateway also excels in efficiency, offering predictable and timely asset transfers. Transactions from Ethereum to Sonic are completed within 10 minutes, while transfers back to Ethereum take up to 1 hour, measured in "heartbeat" intervals. For those requiring instant access, the Gateway introduces Fast-Lane Transactions, allowing users to expedite transfers for a fee. These transactions immediately update the state of the target chain, benefiting all users awaiting the next scheduled heartbeat without disrupting the regular intervals. This innovative feature enhances flexibility while maintaining the system's overall predictability, offering a seamless user experience for participants in the Sonic ecosystem.
While Sonic is not a Layer-2 solution, it actively engages with the Ethereum ecosystem by using ETH for on-chain operations. This deep integration ensures robust liquidity and interoperability, cementing Sonic’s position as a bridge between ecosystems. The Gateway’s ability to combine security, rapid processing, and user-centric features marks a significant advancement in cross-chain interoperability.
By integrating this L2 bridge to Ethereum, Sonic provides direct access to native ETH and other assets on Ethereum without the need for costly and time-consuming third-party intermediaries. This connection empowers Sonic to tap into Ethereum’s industry-leading DeFi liquidity (~$65 billion in TVL), DeFi protocols, and user base while maintaining the low fees and high throughput characteristic of Layer 1 platforms.
S Token
The S token, Sonic’s native asset, is central to the network’s functionality and governance. Designed to foster scalability and sustainability, the S token offers various utilities while incorporating mechanisms to combat inflation and drive ecosystem growth.
The S token serves multiple purposes within the Sonic ecosystem:
- Transaction Fees: Used to pay for transactions on the network.
- Validator Operations: Essential for running validators and maintaining network security.
- Staking: Users can stake S tokens, with a 14-day withdrawal period, to support network operations and earn rewards.
- Governance: Provides holders with voting rights to shape the network’s future.
Initial Supply and Distribution
At launch, Sonic will introduce 3.175 billion S tokens, matching the total supply of Fantom (FTM). Circulating supply will mirror FTM's current levels, with S tokens initially available on Sonic's decentralized exchanges. Post-launch, availability will expand to leading centralized exchanges.
Six months after launch, Sonic will begin linear token minting to support:
- Scaling operations
- Marketing efforts
- Partnerships
- Growth programs
- Initiatives like Sonic University
Community consensus limits annual inflation to 1.5% (47.625 million tokens) for six years. Any unused minted tokens will be burned, ensuring that all new supply directly contributes to the network’s growth.
To mitigate inflationary risks, Sonic incorporates several burning mechanisms:
- Unused Minted Tokens: Burned at the end of each year.
- Non-FeeM Transactions: If an app is not approved for Fee Monetization, 50% of its transaction fees are burned.
- Airdrop Burns: Additional mechanisms reduce excess supply.
These deflationary strategies ensure a balanced supply-demand dynamic, preserving the token’s value.
Sonic is also facilitating the migration of block rewards from Fantom Opera to Sonic. Opera’s rewards will gradually reduce to zero, reallocating funds to incentivize Sonic validators and stakers. This transition aims to strengthen Sonic’s infrastructure and reward active network participants.
Sonic Points
Sonic Points reward users based on their interactions, loyalty, and engagement with the network. These points are divided into two categories:
- Passive Liquidity Points: Earned by bridging primary assets onto the Sonic mainnet.
- Activity Points: These offer a multiplier on passive points, incentivizing users to actively deploy and utilize their assets within the ecosystem.
Points are distributed in multiple seasons, with the first ending in mid-2025. Users can earn multipliers based on the type of assets they bridge:
- 3x Multiplier: S tokens and S Liquid Staking Tokens (LSTs)
- 2x Multiplier: scUSD, scETH, ONE
- 1x Multiplier: Stablecoins like USDC, USDT, and tokens like SolvBTC and SolvBTC.BBN
Sonic Gems
Sonic Gems rewards developers for app innovation and user engagement. These off-chain points are redeemable for liquid S tokens and are distributed across multiple seasons.
- PvP System: A competitive setup ensures that an app’s gem balance is dynamic, influenced by its performance relative to others.
- Generosity Incentive: Apps that share their S token rewards with users gain higher scores and additional benefits.
Gems are weighted by app exclusivity to Sonic, the category, and other factors found here.
Season 1 will distribute 1.68 million Gems to participating apps, encouraging developers to build and thrive within Sonic's ecosystem.
Airdrop Strategy
Sonic’s airdrop strategy applies game theory to reward early adopters while balancing long-term value:
- Initial Access: Users can claim 25% of their allocation immediately upon airdrop release.
- Locked Tokens: The remaining tokens are locked for 270 days as NFT positions.
- Early claims come with a penalty, requiring users to burn a portion of their allocation.
- For example, after 90 days, claiming early means receiving one-third of the locked tokens while burning two-thirds. Impatience has its price.
For those unwilling to wait, a secondary NFT marketplace allows airdrop positions to be traded.
Conclusion
Sonic emerges as a transformative force in the blockchain landscape, redefining scalability, decentralization, and developer incentives through cutting-edge technology and strategic innovation. With its unique blend of advanced features—such as its virtual machine, DAG-based consensus, and the Sonic Gateway—Sonic addresses the critical pain points of existing blockchain networks, delivering unparalleled transaction speeds, security, and interoperability.
The Fee Monetization program and Innovator Fund exemplify Sonic’s commitment to empowering developers by creating sustainable revenue streams and fostering a vibrant ecosystem. Strategic partnerships with leading industry players and the introduction of versatile airdrop/points mechanisms like Sonic Points and Sonic Gems further cement Sonic's position as a developer-first platform.
By seamlessly integrating EVM compatibility with next-generation advancements, Sonic not only ensures developers' accessibility but also positions itself as a bridge between traditional and modern blockchain paradigms. Its robust tokenomics and deflationary strategies provide a solid foundation for long-term network sustainability and user engagement.
As Sonic gains momentum with its ambitious vision and powerful ecosystem, it sets a new benchmark for Layer-1 blockchain platforms. Sonic’s forward-thinking approach and unwavering focus on innovation make it a catalyst for the next wave of decentralized applications, paving the way for a more scalable, efficient, and inclusive blockchain future.
Disclaimer: This report was commissioned by Sonic Labs. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.
