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 Layer 1 chain: name change of the foundation, mainnet upgrade, token swap. Fantom attempts to complete a 'second entrepreneurship' with a series of actions. However, with TVL dropping to less than $100 million, ongoing disputes over issuance, and lingering shadows of cross-chain security, Sonic still faces many doubts and challenges. Can the new chain's high performance deliver? Can the token swap and airdrop save the ecosystem?
Tell the performance story, leveraging sub-second public chains to return to the market
On December 18, 2024, the Fantom Foundation officially changed its name to Sonic Labs and announced the launch of the Sonic mainnet. As a new public chain known for sub-second transaction speeds, performance naturally becomes Fantom's most important technical narrative. On 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 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 compared to the old Opera chain, node synchronization speed has increased by 10 times, and costs for 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 novelty in public chain competition, it remains one of the core metrics that attract users and project parties. A fast and smooth interactive experience typically lowers the barrier for users to engage with blockchain, also enabling complex contracts, high-frequency trading, and applications in the metaverse gaming space.
Beyond 'high performance', Sonic claims to fully support EVM and is compatible 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, but Sonic chose the latter. The benefit of this approach is that the threshold for developers to migrate is low; as long as the smart contracts were originally written on Ethereum or other EVM chains, they can be deployed on Sonic directly without major modifications, saving a lot of adaptation costs.
In the face of the 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 based on strong performance, allowing projects to land as quickly as possible. From the official Q&A, it seems that the Sonic team also considered other routes, but based on their judgment of industry inertia, EVM remains the most meaningful choice with the “greatest common divisor,” helping to quickly accumulate the number of applications and user base in the initial stages.
Moreover, Fantom once suffered setbacks in the Multichain incident due to cross-chain issues, 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 running clients on both Sonic and Ethereum ends, featuring decentralized and tamper-proof 'Fail-Safe' protection. The 'Fail-Safe' mechanism is particularly designed: if the bridge reports no 'heartbeat' for 14 days, the original assets can automatically be unlocked on the Ethereum end, ensuring user funds; by default, cross-chain packaging occurs every 10 minutes (ETH→Sonic) and every hour (Sonic→ETH), or can 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 decentralized like the Sonic chain itself, eliminating the risk of centralized manipulation.
From a design perspective, Sonic's main updates aim to attract a new round of developers and funding through high TPS, sub-second settlement, and EVM compatibility, allowing this old public chain to return to market visibility with a new image and performance.
Token Economics: Left hand issuance, right hand burning
In fact, the most discussed topic in the community right now is Sonic's new token economics. On one hand, the 1:1 exchange model with FTM seems like a straightforward shift. On the other hand, the airdrop plan six months later, which is equivalent to an additional issuance of 6% of tokens (about 190 million), is also seen by the community as a method that dilutes token value.
When Sonic first launched, it set an initial supply (total volume) of 3.175 billion tokens, the same as FTM, ensuring old holders could receive S at a 1:1 ratio. However, a closer examination reveals that issuance may only be part of Sonic, as the token economics also contains many practices regarding total balance.
According to official documents, starting six months after the mainnet launch, an annual increase of 1.5% (about 47.625 million S) will be issued for network operations, marketing, DeFi promotion, and other uses, for six years. However, if the tokens are not fully utilized in a given year, they will be 100% destroyed, ensuring that only the issued portion is actually invested in development, rather than hoarded by the foundation.
In the first four years, 3.5% annualized validator rewards for the Sonic mainnet mainly come from the unused FTM 'block reward share' from Opera, thus avoiding the large-scale minting of new S at the launch stage, which could cause severe inflation. Four years later, the issuance of new tokens will resume at a pace of 1.75%, used for paying block rewards.
To hedge against the inflationary pressure brought by this issuance, Sonic has designed three burning mechanisms:
Fee Monetization Burn: If DApps do not participate in FeeM, 50% of the gas fees generated from transactions in that application will be directly burned; this is equivalent to imposing a higher 'deflation tax' on applications that do not join the profit-sharing, 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, thereby reducing S's circulation in the market.
Ongoing Funding Burn: 1.5% annual increase for network development; if not fully used in that year, the remaining tokens will also be 100% burned; this prevents the foundation from hoarding tokens and limits certain members' long-term occupation of tokens.
Overall, Sonic attempts to ensure ecological development funding through 'controllable issuance' in one hand, while employing multiple 'burning' strategies to curb inflation. The most noteworthy is the 'burning' under the FeeM mechanism, as it is directly linked to the level of participation in DApps and transaction volume, meaning that the more applications that do not participate in FeeM, the greater the on-chain deflationary pressure; conversely, with more FeeM applications, the 'deflation tax' decreases, but developers' share increases, forming a dynamic balance between profit sharing and deflation.
TVL is only 1% of its peak; can cashback + airdrop reclaim DeFi momentum?
The Fantom team once enjoyed a glorious period during the bull market of 2021-2022, but over the past year, Fantom's on-chain performance has not been ideal. Fantom's current TVL is only about $90 million, ranking 49th among DeFi public chains. At its peak, Fantom's TVL reached around $7 billion. The current data is only about 1% of its peak.
Perhaps to revitalize the DeFi ecosystem, Sonic has specifically launched the Fee Monetization (FeeM) mechanism, claiming it can return up to 90% of network gas fees to project parties, allowing them to obtain continuous revenue based on actual on-chain usage without overly relying on external financing. This model draws from the Web2 platform's 'traffic-based revenue sharing' practice, hoping to encourage more DeFi, NFT, GameFi, and other developers to come to Sonic and stay.
Additionally, the official has set up airdrop pools of 200 million S tokens, introducing two gameplay options: Sonic Points, which encourage ordinary users to actively interact, hold, or accumulate a certain historical activity on Sonic; and Sonic Gems, aimed at incentivizing developers to launch attractive and genuinely used DApps on the Sonic chain. The S used for the airdrop also incorporates mechanisms like 'linear vesting + NFT locking + early unlocking and burning', attempting to find a balance between airdrops and medium- to long-term retention.
The mainnet launch, the 1 million block milestone, and the cross-chain bridge announcement 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. The full competition among Layer2, Solana, Aptos, Sui, and other public chains has already led the market into an era of multi-chain bloom. High TPS is no longer the only selling point. If Sonic cannot create one or two 'flagship projects' in the ecosystem, it may struggle to compete with other popular chains.
However, Sonic's launch has received support from some industry star projects. In December, the AAVE community proposed to deploy the Aave v3 proposal on Sonic, and Uniswap also announced it had completed its deployment on Sonic. Furthermore, Sonic can directly inherit 333 staking protocols from Fantom as its ecological foundation. These are advantages compared to a completely new public chain.
And can relying on performance and high rewards bring back funds and developers? The answer may depend on whether Sonic can deliver a convincing performance in 2025 regarding the specific application deployment, governance transparency, and cross-chain security. If all goes well, Sonic may hope to recreate the glory of Fantom back in the day. However, if it only stops at conceptual hype, it may fail to resolve internal contradictions and security concerns, and this 'second entrepreneurship' might fade into mediocrity amidst the multi-chain melee.
