From Fantom to Sonic Labs: A Second Startup Attempt for the Layer 1 Chain

From the once-starry public chain Fantom to the current Sonic Labs, 2024 is set to be a transformative year for this Layer 1 chain

Once a shining star among public chains, Fantom is now preparing for a "second startup" as Sonic Labs, complete with a foundation rebrand, mainnet upgrade, and token swap. However, despite these efforts, Sonic still faces challenges such as dwindling TVL, ongoing controversies over token issuance, and lingering cross-chain security concerns.

Sonic's key technical narrative revolves around high performance, thanks to its sub-second transaction speed and full support for EVM. These features aim to attract developers and users, enabling a fast and smooth interactive experience. Additionally, Sonic claims to have optimized both the consensus and storage layers, introducing technologies such as live pruning, node synchronization acceleration, and database slimming to enhance node confirmation and recording efficiency.

While "high TPS" is no longer a novelty among public chains, it remains a core metric for user and project acquisition. A fast and smooth interactive experience can lower the barrier for users to engage with blockchain and opens up possibilities for complex contracts, high-frequency trading, and metaverse gaming applications.

Sonic's cross-chain strategy also involves Sonic Gateway, a technology listed in the official technical documentation with specific introductions to its security mechanisms. The Sonic Gateway employs validators running clients on both Sonic and Ethereum, providing decentralized and tamper-proof "Fail-Safe" protection.

From a design perspective, Sonic's main updates aim to attract a new round of developers and funding through hardware configurations such as tens of thousands of TPS, sub-second settlement, and EVM compatibility, allowing this veteran public chain to return to the market's view with a new image and performance.

When Sonic first launched, it set an initial supply (total amount) of 3.175 billion tokens, the same as FTM, ensuring that old holders could receive S on a 1:1 basis. However, a closer examination reveals that the issuance may only be part of Sonic's strategy, as the token economics also contains many practices related to total supply balance.

According to the official documentation, starting six months after the mainnet launch, 1.5% (approximately 47.625 million S) will be issued annually for network operations, marketing, DeFi promotion, and other purposes, continuing 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 initial four years, the 3.5% annual validator rewards for the Sonic mainnet primarily come from the unused FTM "block reward share" from Opera, thus avoiding a large minting of new S at the start, which could lead to severe inflation. After four years, the issuance of new tokens will resume at a rate of 1.75% for block rewards.

To hedge against the inflationary pressure brought by this issuance, Sonic has designed three destruction mechanisms:

Fee Monetization Burn: If a DApp does not participate in FeeM, 50% of the Gas fees generated from transactions in that application will be directly burned; this acts as a higher "deflation tax" on applications that do not join the cooperative 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 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 in that year; 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 suppress inflation. The most noteworthy aspect is the "burning" under the FeeM mechanism, as it is directly linked to the participation level and transaction volume of DApps, meaning that the more applications that do not participate in FeeM, the greater the deflationary effect on-chain; conversely, with more FeeM applications, the "deflation tax" decreases, but developer shares increase, forming a dynamic balance between profit-sharing and deflation.

The launch of Sonic, the milestone of 1 million blocks, and the announcement of the cross-chain bridge have indeed increased its visibility in the short term. However, the current reality is that the ecosystem's prosperity is far from its peak era. The full competition among Layer 2, Solana, Aptos, Sui, and other public chains has already ushered the market into an era of multi-chain diversity. High TPS is no longer the only selling point. If Sonic cannot spark one or two "flagship projects" within its ecosystem, it may