Article reproduced from: Felix
Author: GCR Research Team
Compiled by: Felix, PANews
Fantom is a major success story in DeFi in 2021, with a peak TVL of $8 billion. However, after the departure of chief developer Andre Cronje and the onset of a bear market, Fantom lost its former glory. Now that Cronje has returned, Fantom is rebranding as 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 path to redemption for Fantom.
What is Sonic
Sonic is not just a new name for Fantom. Sonic Labs CEO Michael Kong states this is a complete reboot. It’s a new chain based on new technology, utilizing a brand new but fully EVM-compatible virtual machine. The team is building a new blockchain from scratch because they couldn't make the changes they wanted to the old blockchain. Kong explains: 'You can’t rebuild an airplane while it’s flying. It’s much easier to build a new plane on the ground and then get it in the air.'
The new chain will process 10,000 transactions per second, with a confirmation time of less than one second. This is much faster than the L2 networks that Sonic wants to compete with. While L2s are becoming increasingly popular, locking up $34 billion, Sonic believes there are fundamental issues with their model. According to Sonic Labs, these networks survive on money earned from sorter fees, which they believe should belong to developers—those who actually build useful applications. They feel that the value created by application developers is not being adequately compensated.
To address this issue, Sonic prioritizes developers. Its core feature is that developers can earn up to 90% of the gas fees generated by their applications. Additionally, Sonic will give developers real control over their applications. They can set their own fee structures and create a smoother payment experience for users. Everything in Sonic is built around this idea: providing developers with the tools and incentives to build better applications. The chain supports languages like Solidity and Vyper, allowing developers to focus on innovation rather than learning new tools.
Sonic is set to launch in December 2024, entering the fast blockchain space alongside Solana, Sui, and Aptos. Although it doesn't have Ethereum's security like L2s do, it offers something unique—the speed of a modern chain using familiar Ethereum tools. This places Sonic in an interesting position: it’s built for developers who need more performance than L2s provide but want to stick with the Ethereum development environment. Currently, only Sei offers this, while Monad is trying to achieve it. Thus, apart from Ethereum L2s, these two chains may be Sonic's main competitors.
How does the technology work?
Sonic Virtual Machine
To eliminate the bottleneck caused by the lack of scalability in EVM, the Sonic Labs team has built their own version of EVM, called the Sonic Virtual Machine. SVM is fully compatible with EVM but improves the way code execution is handled. When someone's code runs, SVM converts it into a more efficient format on the client side. 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 common tools still work, and 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 Graph (DAG) and employs proof of stake. Unlike single chains where blocks must follow one another in order, each validator maintains its own set of local transaction blocks (called DAG). When transactions come in, validators bundle them into 'event blocks' and add them to the DAG.
Before creating a new event block, validators check two things: all transactions in the current block and some transactions they received from other validators. They then share these blocks with other validators through a process that does not require everything to happen strictly in 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 can freely create event blocks that contain transactions and share these blocks asynchronously with other validators on the network, creating a non-linear transaction record. This enhances transaction speed and efficiency.
When validators create event blocks, they propagate them to other validators on the network. Once most validators agree on a block, it becomes what's called a 'root event block.' These root blocks then join the main chain, which serves as the final permanent record of all agreed-upon transactions.
The entire process takes less than a second from start to finish. Transactions go through four steps: first, the user sends a transaction. Then, the validator places it into an event block. Next, this block propagates until most 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 event blocks in the DAG happens in the background.
Each validator retains its own copy of the main chain, which helps them process new blocks faster. This creates a clever balance: the DAG structure allows validators to work independently and quickly, while the main chain ensures that everyone ultimately receives the same final record.
Sonic Tokens
Sonic (S) tokens 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 Fantom's current total supply. About 2.88 billion tokens will be in circulation at launch.
Sonic aims to avoid early inflation of validator rewards. The chain will use the remaining Fantom block rewards instead of minting new coins for four years. When half of the network is staked, these rewards (approximately 70 million per year) will provide validators with a 3.5% return. After these four years, the network will mint new tokens each period to maintain a 3.5% reward rate.
Developer Incentives
Sonic has created several initiatives to attract developers using its tokens. An 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 operate, but it only applies to approved applications. Normal transactions on Sonic will consume 50% of the fees, paying 45% to validators and sending 5% to the ecosystem treasury. Developers can apply to join the fee monetization program. If approved, their applications will receive 90% of the fees they generate, with validators getting 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, rewarding past Fantom users and future Sonic adopters. The team stated that they learned from previous user incentive activities—the focus is not merely on rewarding large amounts of locked funds but on actual usage. This means that applications that naturally do not require large amounts of TVL (such as DEXs, NFTs, games, etc.) can also benefit from the user adoption metrics of this activity, rather than just DeFi applications like lending protocols and AMMs that require significant TVL.
Fantom's historical activity and future participation in Sonic will be rewarded in this airdrop. Significant past activities may include providing liquidity, validating, holding staked tokens (like 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 clear, but based on information shared by the Sonic Labs team, it can be assumed that activities will receive higher rewards than passive liquidity provision.
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 day one, with the remaining 75% as NFT positions. Users can claim the remaining airdrop at any time, but if they redeem early, a portion of the tokens will be burned. The longer these positions go unclaimed, the fewer tokens will be burned upon redemption. Those who want immediate liquidity without burning tokens can sell their NFT positions on the market.
Source: https://docs.soniclabs.com/funding/airdrop
How is the market responding?
Since the launch of Sonic in August 2023, the Fantom token has seen a slight increase. The price rose from $0.41 to $0.71, an increase of 75%, while Bitcoin rose from $64,000 to nearly $100,000, an increase of around 50%. While there’s nothing particularly special about this, it remains a decent performance as Bitcoin outperformed many altcoins during the same period. However, it lags far behind the best-performing tokens like Sui, which rose fivefold at the same time, from $0.7 to $3.6, especially since Fantom's price has lagged behind other altcoins after Bitcoin recently broke its historical high. This suggests that the market seems to be skeptical of Sonic. Currently, the market is not particularly enthusiastic.
The total value locked in the Fantom protocol has also shown no highlights. Despite promises of airdrops, the network's TVL remains stable at around $100 million, far below the peak of $8 billion during the last bull market.
This situation may change when the Sonic mainnet launches, but recent history suggests caution. Other networks (like Scroll) experienced a temporary spike in activity during airdrops, but once the rewards dried up, that funding quickly evaporated. A high initial activity rate or TVL growth at launch may indicate short-term interest rather than lasting adoption.
Future Potential
Sonic is in a crowded track, where block space is richer than ever. While Ethereum L2s might not reach the speed Sonic promises, their speed is sufficient to meet current demand. Thus, most Solidity developers opt to build on these L2s, making it harder for other L1 networks to attract builders and users. Sonic will face the same challenges.
The team emphasizes rewarding developers through gas fee sharing, but this practice also faces its own challenges. History shows that this may not be the compelling feature Sonic hopes to achieve. Major applications like Uniswap, Aave, and Raydium have built successful businesses without gas rebates. NEAR Protocol attempted a similar approach but with little success; what ultimately revived NEAR was not its developer incentives but its focus on AI applications. The anticipated low transaction fees of Sonic complicate this challenge further, as it would reduce the value of gas rebates.
For Sonic to achieve long-term success, it needs to attract applications with its superior speed and scalability. Think of today’s DeFi protocols, perpetual DEXs, DePIN networks, and complex financial applications. The elements to achieve this are already in place—ample development and incentive funds, a well-designed incentive program, and one of DeFi's most inspiring leaders, Andre Cronje. The team seems to understand this, and Andre Cronje is actively seeking collaborations with credit card companies and international banks.
Simply becoming another high-speed blockchain hosting a memecoin casino does not guarantee lasting success. While such activities may provide early momentum, Sonic needs to establish a foothold in a clear niche market where its performance matters most. From the team's carefully designed incentive activities and airdrops to institutional expansion, the team has some hope. However, succeeding in this competitive environment requires more than just good intentions. Sonic's future depends on translating these plans into practice to demonstrate the true value of its high-performance infrastructure.
Related Reading: Fantom Set to Launch New Chain Sonic Will Token Swap + MEME Activate Ecosystem?
