Author: Frank, PANews
From the once-star public chain Fantom to today's Sonic Labs, the year 2024 can be described as a year of bold changes on this Layer 1 chain: foundation renaming, mainnet upgrades, token swaps. Fantom attempts to complete a 'second startup' with a series of actions. However, with TVL dropping to less than $100 million, ongoing controversies over token issuance, and the lingering shadow of cross-chain security, Sonic still faces many doubts and challenges. Can the new chain's high performance deliver? Will the token swap and airdrop save the ecosystem?
Telling the performance story, leveraging sub-second public chains to re-enter the market.
On December 18, 2024, the Fantom Foundation officially renamed itself to Sonic Labs and announced the launch of the Sonic mainnet. As a new public chain known for sub-second transaction speeds, performance has naturally become the most important technical narrative for Fantom. By December 21, just three days after launch, official data showed that the Sonic chain had already produced 1 million blocks.
So what is the secret to being 'fast'? According to official information, Sonic has deeply optimized both the consensus layer and storage layer, introducing techniques such as live pruning, node synchronization acceleration, and database slimming, enabling nodes to confirm and record transactions with a lighter burden. The official claims a tenfold increase in node synchronization speed compared to the old Opera chain, with the cost of large-scale RPC nodes 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 public chain competition, yet it remains one of the core indicators that attract users and project parties. A fast and smooth interactive experience usually lowers the barrier for users to blockchain technology and provides possibilities for complex contracts, high-frequency trading, and metaverse games.
Beyond 'high performance', Sonic indicates full support for EVM and compatibility with mainstream smart contract languages like Solidity and Vyper. On the surface, 'self-developed virtual machine vs. EVM compatibility' was once a dividing line for new public chains. However, Sonic chose the latter, which benefits developers by lowering the migration threshold; any smart contracts originally written for Ethereum or other EVM chains can be directly deployed to Sonic without major modifications, saving a lot of adaptation costs.
In the face of fierce competition in the public chain market, abandoning EVM often means needing to re-cultivate developers and users. Clearly, Sonic hopes to 'smoothly' inherit the Ethereum ecosystem based on strong performance, allowing projects to land as quickly as possible. From the official Q&A, it can be seen that the Sonic team also considered other routes, but based on judgment of industry inertia, EVM remains the most meaningful 'greatest common divisor' choice, helping to rapidly accumulate application numbers and a user base in the early stages.
Moreover, Fantom had previously stumbled in the Multichain incident, so Sonic's cross-chain strategy is also highly anticipated. The official technical documentation lists the cross-chain Sonic Gateway as a key technology and specifically introduces its security mechanisms. The Sonic Gateway uses validators to run clients on both Sonic and Ethereum, providing decentralized and tamper-proof 'Fail-Safe' protection. The design of the 'Fail-Safe' mechanism is particularly special: if the bridge does not report a 'heartbeat' for 14 days, it can automatically unlock the original assets on the Ethereum side to protect user funds; cross-chain packaging occurs by default every 10 minutes (ETH→Sonic) and every hour (Sonic→ETH), and can also be triggered instantly for a fee; Sonic's own validator network operates the gateway by running clients 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 a design perspective, Sonic's main updates still hope to attract a new wave of developers and funds through hardware configurations such as tens of thousands of TPS, sub-second finality, and EVM compatibility, allowing this old public chain to return to market visibility with a new image and performance.
Token Economics: Issuance in the left hand, destruction in the right hand.
In fact, the most discussed topic in the community is Sonic's new token economics. On one hand, the 1:1 exchange model for FTM seems to be equivalent to a simple migration. On the other hand, the airdrop plan after six months amounts to an additional issuance of 6% tokens (approximately 19 million) which the community considers to dilute the value of the tokens.
At the time of its launch, Sonic set an initial supply (total) of 3.175 billion coins, the same as FTM, ensuring that existing holders can obtain S at a 1:1 ratio. However, a closer study reveals that the increase in issuance may only be part of Sonic, as there are many practices concerning total supply balance embedded in the token economics.
According to official documentation, starting six months after the mainnet launch, 1.5% will be issued annually for network operations, marketing, DeFi promotion, etc. (approximately 47.625 million S) for six years. However, if this part of the tokens is not fully utilized in any given year, they will be 100% destroyed, ensuring that only the issued portion is actually invested in construction, rather than hoarded by the foundation.
In the first four years, the 3.5% annual validator reward of the Sonic mainnet mainly comes from the unused FTM 'block reward share' from Opera, thus avoiding a large amount of new S being minted at the startup phase, which could lead to severe inflation. Four years later, a new token issuance will resume at a pace of 1.75% for paying block rewards.
To hedge against the inflationary pressure brought by this part of the issuance, Sonic has designed three destruction mechanisms:
Fee Monetization Burn: If a DApp does not participate in FeeM, 50% of the Gas fees generated in transactions within that application will be directly destroyed; this amounts to imposing a higher 'deflation tax' on applications that do not join the profit-sharing cooperation, encouraging DApps to actively participate in FeeM.
Airdrop Burn: 75% of the airdrop share requires a 270-day vesting period to be fully obtained; if a user chooses to unlock early, they will lose a portion of the airdrop share, and these withheld shares will be directly destroyed, thus reducing the circulation of S in the market.
Ongoing Funding Burn: 1.5% annual issuance for network development, and if this portion is not fully utilized in a given year, the remaining tokens will also be 100% burned; this avoids the foundation hoarding tokens and restricts certain members from long-term occupying the tokens.
Overall, Sonic attempts to ensure ecological development funds through controlled issuance in one hand and multiple points of destruction to curb inflation in the other. The most noteworthy is the 'burning' under the FeeM mechanism, as it is directly linked to the level of participation of DApps and transaction volume, which means that the more applications that do not participate in FeeM, the greater the deflationary pressure on-chain; conversely, as more FeeM applications are added, the 'deflation tax' decreases, but the developer share increases, forming a dynamic balance between profit sharing and deflation.
TVL is only 1% of its peak; can cashback + airdrop regain DeFi momentum?
The Fantom team once shone during the 2021-2022 bull market, but over the past year, Fantom's on-chain performance has not been ideal, with the current TVL of Fantom remaining around $90 million, ranking 49th among DeFi public chains, whereas its TVL at peak was as high as $7 billion. The current data is only about 1% of the peak.
Perhaps to revive the DeFi ecosystem, Sonic has specifically launched the Fee Monetization (FeeM) mechanism, claiming to return up to 90% of the network Gas fees to project parties, allowing them to obtain sustained revenue based on actual on-chain usage without relying excessively on external financing. This model draws on the Web2 platform's 'traffic sharing' approach and aims 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 methods: Sonic Points, encouraging ordinary users to actively interact, hold, or accumulate a certain historical activity on Sonic; Sonic Gems, aimed at developers' incentives, encouraging them to launch attractive and genuinely used DApps on the Sonic chain. The S used for the airdrop also incorporates mechanisms such as 'linear vesting + NFT locking + early unlock and destruction', attempting to find a balance between airdrops and medium to long-term stickiness.
Mainnet launch, 1 million block milestone, cross-chain Bridge preview. These news have indeed increased Sonic's exposure in the short term. However, the current reality is that the prosperity of the ecosystem is far from its peak era. The full competition of Layer2, Solana, Aptos, Sui, and other public chains has already ushered the market into an era of a hundred flowers blooming across multiple chains. High TPS is no longer the only selling point. If Sonic cannot explode with one or two 'flagship projects' within the ecosystem, it may struggle to compete with other popular chains.
However, Sonic's launch has still received support from some industry star projects. In December, the AAVE community proposed to deploy Aave v3 on Sonic, and Uniswap also announced that it has completed deployment on Sonic. Additionally, Sonic can directly inherit 333 staking protocols established on Fantom as an ecological foundation. These are advantages compared to a completely new public chain.
Can performance and high incentives bring back funds and developers? The answer may depend on whether Sonic can deliver a convincing response in terms of specific application deployment, governance transparency, and cross-chain security by 2025. If everything goes smoothly, Sonic may hope to recapture the glory of Fantom's past. However, if it remains merely a concept hype without addressing internal conflicts and security concerns, this 'second startup' could fade into obscurity amidst the multi-chain chaos.
