Article sourced from: Frank
Author: Frank, PANews
From the once star public chain Fantom to the current Sonic Labs, 2024 is set to be a transformative year for this Layer1 chain: the foundation's renaming, mainnet upgrades, and token swaps. Fantom is attempting to complete a 'second startup' through a series of actions. However, with TVL plummeting to less than $100 million, ongoing controversies over token issuance, and the lingering shadows 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, returning to the market with sub-second public chains
On December 18, 2024, the Fantom Foundation officially renamed itself as Sonic Labs and announced the launch of the Sonic mainnet. As a new public chain known for its sub-second transaction speed, performance has naturally become Fantom's most important technical narrative. By December 21, just three days after launch, the official data showed that the Sonic chain had already produced 1 million blocks.
So what is the secret to being 'fast'? According to official sources, Sonic has made deep optimizations to both the consensus layer and the storage layer, introducing technologies such as live-pruning, node synchronization acceleration, and database slimming, allowing nodes to confirm and record transactions with a lighter load. The official claims that node synchronization speed is improved by 10 times compared to the old Opera chain, and the cost of large-scale RPC nodes can be reduced by 96%, laying the foundation for a truly high-performance network.
It is worth noting that while 'high TPS' is no longer a new concept in public chain competition, it remains one of the core metrics for attracting users and project parties. Fast and smooth interactive experiences can usually lower the barriers for users to blockchain, providing possibilities for complex contracts, high-frequency trading, and metaverse gaming applications.
Besides 'high performance', Sonic claims to fully support EVM and is compatible with mainstream smart contract languages such as Solidity and Vyper. On the surface, 'self-developed virtual machine vs. EVM compatibility' once served as a dividing line for new public chains, but Sonic chose the latter. The benefit of this approach is that developers face a low barrier for migration; smart contracts originally written on Ethereum or other EVM chains can be deployed directly on Sonic without major modifications, saving a significant amount of adaptation costs.
Faced with a fiercely competitive public chain market, abandoning EVM often means having to re-cultivate developers and users. Clearly, Sonic hopes to 'smoothly' inherit the Ethereum ecosystem on the basis of strong performance, allowing projects to land as quickly as possible. From official Q&A, the Sonic team also considered other routes, but based on their judgment of industry inertia, EVM remains the most meaningful choice to accumulate application numbers and user bases rapidly in the early stages.
Additionally, Fantom had previously stumbled in the Multichain incident, so Sonic's cross-chain strategy is also highly anticipated. The official technical documentation highlights the 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 immutable 'Fail-Safe' protection. The design of the 'Fail-Safe' mechanism is particularly special: if the bridge does not report a 'heartbeat' for 14 days, the original assets can be automatically unlocked on the Ethereum side, ensuring user funds; by default, cross-chain packing occurs every 10 minutes (ETH→Sonic) and every hour (Sonic→ETH), and can also be triggered immediately 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 update hopes to attract a new wave of developers and funding through its tens of thousands of TPS, sub-second settlement, and EVM compatibility, allowing this veteran public chain to re-enter the market 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 right now is Sonic's new tokenomics. On one hand, the 1:1 exchange model for FTM seems like a simple transition. On the other hand, the airdrop plan six months later, which amounts to an additional issuance of 6% of the tokens (about 190 million), is also seen by the community as a way to dilute token value.
When Sonic first launched, it set the same initial supply (total amount) of 3.175 billion tokens as FTM, ensuring that old holders could receive S on a 1:1 basis. However, upon closer examination, it may be found that issuance is only part of Sonic, and the tokenomics also contain many practices regarding total volume balance.
According to official documents, starting six months after the mainnet launch, 1.5% (approximately 47.625 million S tokens) will be issued annually for network operations, marketing, DeFi promotion, and other purposes for six years. However, if this portion of tokens is not fully utilized in a given year, it will be 100% burned, ensuring that only the issued portion is actually invested in development rather than hoarded by the foundation.
In the first four years, the 3.5% annual validator rewards of the Sonic mainnet mainly come from the unused FTM 'block reward share' of Opera, thus avoiding large-scale minting of new S tokens at the startup phase, which could lead to severe inflation. After four years, the issuance of new tokens will be restored at a rate of 1.75% for block rewards.
To hedge against the inflationary pressure brought by this issuance, Sonic has designed three burning mechanisms:
Fee Monetization Burn: If a DApp does not participate in FeeM, 50% of the Gas fees generated by user transactions in that application will be directly burned; this is equivalent to imposing a higher 'deflation tax' on applications that do not join the revenue-sharing collaboration, 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 users choose to unlock early, they will lose a portion of the airdrop share, and these 'withheld' shares will be directly burned, thus reducing the circulation of S in the market.
Ongoing Funding Burn: The 1.5% annual issuance for network development will also be 100% burned if not fully utilized that year; this can prevent the foundation from hoarding tokens and limit long-term occupation of tokens by certain members.
Overall, Sonic attempts to ensure ecological development funding through 'controllable issuance' in one hand, and multiple 'burning' strategies to suppress inflation in the other. Among the most noteworthy is the 'burning' under the FeeM mechanism, as it is directly linked to the participation level of DApps and transaction volumes, meaning that the more applications that do not participate in FeeM, the greater the deflationary force on-chain; conversely, as more FeeM applications emerge, the 'deflation tax' decreases, but developer revenue sharing increases, creating a dynamic balance between profit sharing and deflation.
TVL is only 1% of its peak. Can cashback + airdrop regain the momentum of DeFi?
The Fantom team once basked in the limelight during the bull market of 2021-2022, but over the past year, Fantom's on-chain performance has not been ideal. Currently, Fantom's TVL is only around $90 million, ranking 49th among DeFi public chains, whereas at its peak, Fantom's TVL was as high as $7 billion. The current data is only about 1% of the peak.
Perhaps to revitalize the DeFi ecosystem, Sonic has introduced the Fee Monetization (FeeM) mechanism, claiming it can return up to 90% of network Gas fees to project parties, allowing them to gain sustainable revenue based on actual on-chain usage without excessive reliance on external funding. This model draws on the Web2 platform's 'traffic-sharing' approach, hoping to encourage more DeFi, NFT, and GameFi developers to come to Sonic and stay.
Moreover, the official has set up an airdrop pool of 200 million S tokens and launched two gameplay options: Sonic Points, which encourages ordinary users to actively interact on Sonic, hold, or accumulate certain historical activities on Opera; and Sonic Gems, aimed at developers, encouraging them to launch attractive and genuinely usable DApps on the Sonic chain. The portion of S used for the airdrop also incorporates mechanisms like 'linear vesting + NFT locking + early unlock burning', attempting to find a balance between the airdrop and mid-to-long-term stickiness.
Mainnet launch, 1 million block milestone, cross-chain bridge announcement. These news updates have indeed increased Sonic's visibility in the short term. However, the current reality is that the prosperity of the ecosystem is far from its peak era. Currently, the full competition among public chains like Layer2, Solana, Aptos, and Sui has already entered an era of multi-chain diversity. High TPS is no longer the only selling point. If Sonic cannot produce one or two 'flagship projects' within its ecosystem, it may struggle to compete with other popular chains.
However, Sonic's launch 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 had completed its deployment on Sonic. Additionally, Sonic can directly inherit 333 staking protocols from Fantom as its ecological foundation. These are advantages compared to a purely new public chain.
Can performance and high incentives bring back funding and developers? The answer may depend on whether Sonic can deliver a convincing performance in terms of specific application landings, governance transparency, and cross-chain security by 2025. If all goes well, Sonic may be able to recreate the glory of Fantom in its heyday. If it remains merely a concept hype, it may not resolve internal contradictions and security concerns, and this 'second startup' could fade in the multi-chain battlefield.
