Fantom was a big DeFi success story in 2021, reaching $8 billion in locked value at its peak. But when the inspirational lead developer Andre Cronje left, and the bear market hit, Fantom lost its shine. Now Cronje is back, and Fantom is becoming Sonic. This isn't just a name change - it's a fresh start. In this article, we'll look at what's new about Sonic, how the market has reacted so far, and whether Sonic will kick off the big Fantom redemption arc.
What is Sonic
Sonic isn't just Fantom with a new name. It's a complete restart, says Sonic Labs CEO Michael Kong. It is a new chain, built on new technology with a 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 one. "You can't rebuild an airplane mid flight in the air. It's much easier to build a new plane on the ground and then bring it up into the air," Kong explains.
The new chain will process 10,000 transactions per second with sub second confirmation times. That's much faster than Layer-2 networks Sonic wants to compete with. While Layer-2s have grown popular, with $34 billion locked in them, Sonic sees a fundamental problem with their model. According to Sonic Labs, these networks feast on money they make from sequencer fees, which in their opinion should go to developers - the people actually building useful applications. In their opinion, app developers are undercompensated for the value they create.
To resolve this issue, Sonic puts developers first. Its core feature is the ability for developers to earn up to 90% of the gas fees their apps generate. On top of that, Sonic will also offer developers real control over their applications. They can set their own fee structures and create smoother payment experiences for users. Everything in Sonic is built around this idea: give developers the tools and incentives to build better apps. The chain keeps things familiar by supporting languages like Solidity and Vyper, so developers can focus on innovation rather than learning new tools.
Sonic will launch in December 2024, joining a crowded field of fast blockchains like Solana, Sui, and Aptos. While it won't have Ethereum's security like Layer-2s do, it offers something unique - the speed of modern chains with the familiar tools of Ethereum. This puts Sonic in an interesting spot: it's built for developers who need more performance than Layer-2s can provide, but want to stick with the Ethereum development environment. This is something at this point only Sei offers and Monad tries to achieve. Therefore in addition to Ethereum L2s, these two chains will likely be Sonic’s main competitors.
How does the tech work?
Sonic Virtual Machine
To eliminate the bottleneck stemming from the EVMs fundamental lack of scalability, the Sonic Labs team built their own version of the EVM called the Sonic Virtual Machine. The SVM is fully EVM compatible but improvemes how it handles code execution. When someone's code runs, the SVM translates it into a more efficient format within the client. It looks for common patterns in the code and replaces them with optimized "super-instructions." This makes everything run faster without changing how developers work. All the usual tools still work - developers can keep writing in Solidity and Vyper, and the chain still supports Geth 1.4.
Sonic Consensus Mechanism
Sonic uses Directed acyclic graphs (DAG) based consensus mechanism with proof-of-stake. Instead of having one chain where blocks must follow each other in order, each validator maintains their own local collection of transaction blocks, called a DAG. When transactions come in, validators bundle them into "event blocks" and add them to their DAG.
Before creating a new event block, validators check two things: all transactions in their current block, and some transactions they've received from other validators. They then share these blocks with other validators through a process that doesn't require everything to happen in strict order.
Source: https://docs.soniclabs.com/technology/consensus
Unlike blockchains, this DAG-based approach does not force validators to work on the current block that is being produced, which places restrictions on transaction speed and finality. Validators are free to create their own event blocks that contain transactions and share these with other validators on the network asynchronously, creating a non-linear record of transactions. This increases transaction speed and efficiency.
When a validator creates an event block, it spreads across the network to other validators. 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 is the final, permanent record of all transactions that everyone agrees on.
The whole process takes less than a second from start to finish. A transaction goes through four steps: First, a user sends it. Then, a validator puts it in an event block. Next, this block spreads until most validators accept it. Finally, it becomes part of the main chain. When you look at Sonic through a block explorer, you only see this final main chain. All the complex work with event blocks in the DAG happens behind the scenes.
Every validator keeps their own copy of this main chain, which helps them process new blocks more quickly. This creates a clever balance - the DAG structure lets validators work independently and quickly, while the main chain ensures everyone ends up with the same final record.
Sonic Coin
The Sonic (S) coin will be a traditional Layer-1 coin - 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 rate. The total supply will start at 3.175 billion S coins, matching Fantom's current total supply. About 2.88 billion of these will be in circulation at launch.
Sonic wants to avoid early inflation for validator rewards. Instead of minting new coins, the chain will use leftover Fantom block rewards for the first four years. These rewards, about 70 million coins annually, will provide validators with a 3.5% return when half the network is staked. After these four years, the network will mint new coins each epoch to maintain the same 3.5% reward rate.
Developer Incentives
Sonic has created several programs to leverage its coin to attract developers. The Innovator Fund sets aside 200 million S coins to help new projects build on Sonic. These coins will be awarded as grants to developers creating innovative applications.
The Fee Monetization program changes how transaction fees work, but only for approved applications. Normal transactions on Sonic burn 50% of fees, give 45% to validators, and send 5% to the ecosystem vault. Developers can apply to join the Fee Monetization program. If accepted, their applications receive 90% of the fees they generate, with validators getting the remaining 10%. This structure lets successful applications earn sustainable revenue while still supporting network security.
The Airdrop
Sonic plans to distribute 190.5 million coins through an airdrop that rewards both past Fantom users and future Sonic adopters. The team says that they have learned from past mistakes of its previous user incentives campaign - instead of just rewarding large amounts of locked capital, the focus is on actual usage. This means that applications that don’t naturally need large TVL such as perps DEXs, NFTs, games, and others also get to benefit from the user adoption metrics of this campaign instead of just TVL heavy DeFi apps like lending protocols and AMMs.
Both historical Fantom activity and future Sonic engagement will be rewarded in this airdrop. Past activities that count could include providing liquidity, validating, holding staked coins like sFTMx, and NFT usage. Future qualification criteria could include providing liquidity on Sonic, staking, deploying contracts, participating in community events, and using the bridge. The exact criteria aren’t yet known, but based on the information the Sonic Labs team shared, we have to assume that activity will be rewarded higher than passively providing liquidity.
Additionally, the "Sonic Boom" program allows 30 projects to win extra airdrop allocations to distribute to their users.
Finally the airdrop includes a novel claiming mechanism with a 270-day vesting period. The system releases 25% of coins on day one, with the remaining 75% structured as NFT positions. Users can claim the rest of their airdrop at any point in time, but a share of their coins will be burned if they redeem early. The longer these positions remain unclaimed, the fewer coins get burned at redemption. Those wanting immediate liquidity without burning the coins can sell their NFT positions in a marketplace.
Source: https://docs.soniclabs.com/funding/airdrop
How has the market reacted so far?
Since Sonic's announcement in August 2023, Fantom's coin has shown modest gains. The price rose from $0.41 to $0.71, a 75% increase while Bitcoin moved up around 50% from $64,000 to almost $100,000. While nothing extraordinary, this is still a decent performance as Bitcoin outperformed many altcoins during that same period. However, it falls way short of top performers like Sui, which at the same time increased its price by 5x from $0.7 to $3.6. Especially after Bitcoin broke its all time high recently Fantom price has been lagging compared to other alt coins. This indicates that the market appears to be skeptical about Sonic. The market isn’t rushing in with much enthusiasm just yet.
The total value locked in Fantom's protocols is no highlight either. Despite the promise of an airdrop, the network's TVL remains steady at around $100 million - far below its peak of $8 billion during the last bull market.
This could potentially change when the Sonic mainnet launches, but recent history suggests caution. Other networks like Scroll saw temporary spikes in activity during their airdrops, only to watch that capital leave rapidly once the rewards dried up. High initial activity or TVL growth at launch might indicate short-term interest rather than lasting adoption.
Future Potential
Sonic enters a crowded market where blockspace is more abundant than ever. While Ethereum Layer-2s may not match Sonic's promised speed, they're fast enough to meet current demand. So most Solidity developers are choosing to build on these Layer-2s, leaving alternative Layer-1 networks struggling to attract both builders and users. Sonic will face this same challenge.
The team's emphasis on developer rewards through gas fee sharing faces its own hurdles. History suggests this might not be the compelling feature Sonic hopes for. Major applications like Uniswap, Aave, and Raydium have built successful businesses without gas rebates. NEAR Protocol tried a similar approach with limited success - what ultimately revived NEAR wasn't its developer incentives but its pivot toward AI applications. The challenge is compounded by Sonic's expected low transaction fees, which would make gas rebates less valuable.
For Sonic to succeed long-term, it needs to attract applications with its superior speed and scalability. Think modern DeFi protocols, perpetual DEXs, decentralized physical infrastructure networks, and sophisticated financial applications. The pieces are in place to make this happen - a substantial treasury for development and incentives, well designed incentive programs, and one of DeFi’s most inspirational leaders in Andre Cronje. The team appears to understand this and Andre Cronje is actively pursuing partnerships with credit card companies and international banks.
Simply becoming another high-speed blockchain hosting another meme coin casino won't ensure lasting success. While such activity might provide early momentum, Sonic needs to establish itself in a clear niche where its performance truly matters. The team's approach shows promise - from their carefully designed incentives campaign and airdrop to their institutional outreach. But succeeding in this competitive landscape requires more than good intentions. Sonic's future depends on turning these plans into concrete achievements that demonstrate the real value of their high-performance infrastructure.
