Sonic Ecosystem Is Booming, What Are the Trend Opportunities?

[TL；DR]:

Recently, the TVL on the Sonic chain has surged from $26 million to $1.3 billion, with a growth rate far exceeding that of mainstream public chains such as Solana and Base. The price of the token S has rebounded from $0.4 to $0.6, an increase of more than 50%.

By the end of 2024, Andre Cronje (AC) led the team to complete the technical architecture reconstruction and eco innovation of Fantom‘s transition to Sonic, enabling Sonic to have both high-performance Layer 1 and EVM compatibility, and attracting developer and user participation through token economic reconstruction.

The top five protocols of Sonic account for 83% of TVL. The rebuilding of trust in algorithmic stablecoins, the liquidity of long-tail projects, and the overall pessimistic environment of the crypto market remain potential risks for Sonic (S).

Introduction

The most well-known public chain with the most outstanding performance in recent times is Sonic. As a high-performance new public chain upgraded from Fantom, Sonic has achieved a TVL increase of more than 40 times this year. As BTC gradually stabilizes, the price of Sonic (S) has also rebounded rapidly, and its recent increase has led the forefront of Layer1.

This article will deeply analyze the driving factors of Sonic’s eco explosion, reveal its technical advantages, economic model, project innovation, and market opportunities, and provide investors with trend insights and participation suggestions. Let’s take a look.

TVL Soars, Sonic Technology Empowers and, Eco Explodes

After the recent crypto market fell into a macro recession, unfavorable strategic reserves of cryptocurrencies and a series of downturns, it finally ushered in a new bright spot - the Sonic eco TVL surged from $26 million at the beginning of the year to $1.37 billion today, ranking 12th among Layer 1 public chains. A series of popular DeFi protocols are also entering the market one after another, making the Sonic eco rise rapidly, attracting the attention of whale funds and providing rich participation opportunities for developers, yielding farmers, and ordinary users.

Source: DefiLlma

As reflected in the coin price, Sonic (S) has also experienced a passive decline since March due to the sluggish overall market. However, after BTC successfully stabilized above $80,000, we noticed that Sonic (S), with a TVL/market cap ratio of only 1.9, was in a low valuation area. After the market crash and failure were gradually repaired, S took the lead in rebounding, steadily rising from a low of $0.4 to $0.6, an increase of more than 50%, becoming the fastest rebounding token in the Layer1 sector.

Source: Gate.io

Sonic’s rise is no accident. Its technical architecture provides the underlying support for the eco explosion. As the first public chain to achieve sub-second confirmation (within 1 second) and 10,000 TPS throughput, Sonic uses real-time data pruning technology and a two-layer database structure (LiveDB and ArchiveDB) to significantly reduce storage costs while ensuring security. This performance advantage completely solves the pain points of “high latency and high cost” in the Fantom era.

Top protocols such as Aave V3 and Pendle from the original Ethereum eco have deployed the chain. The former, through a $15.8 million joint incentive plan, made the USDC deposit APY reach 19% at one point; the latter, in cooperation with Rings Protocol, launched a yield tokenization solution that attracted $43 million in deposits within 24 hours of its launch, and the APY of fixed-rate products exceeded 40%.

Source: Messari

The community-driven Meme Mania event ignited the enthusiasm of retail investors. Among the eight recent entries, two meme coins, GOGLZ, replicated Solana’s early wealth effect with a daily trading volume of $8 million and a 200% weekly increase in THC. Although the trading volume and popular effect are still limited, there is finally momentum of catching up. The developer incentive mechanism FeeM model (refund of 90% of gas fees) and the 190 million S token airdrop plan have increased the number of eco protocols from 62 to 312, forming a complete matrix of Lending, DEX, Perp, and NFT.

From Fantom to Sonic, Technological Upgrades Restore Market Confidence

Fantom launched its mainnet in 2018, building a high-throughput public chain based on the Lachesis consensus protocol. Still, it did not develop smoothly due to the efficiency bottleneck of the early technical framework. After the crypto bear market in 2022, the Fantom eco fell into trouble due to founder Andre Cronje’s departure and has been unable to make any breakthroughs.

In 2023, the team announced the Sonic upgrade plan, which aims to completely reconstruct the underlying architecture. In the fourth quarter of 2023, the Sonic testnet was launched, using an optimized asynchronous consensus mechanism to achieve sub-second confirmation speed and 2,000+ transactions per second, and introduced FVM (Fantom Virtual Machine) to improve the efficiency of smart contract ution. By 2024, the proposal will focus on enhancing cross-chain interoperability, and native data storage capabilities through phased upgrades of the core layer.

By the end of 2024, Andre Cronje (AC) will lead the team to complete the technical architecture reconstruction and eco innovation of Fantom’s transition to Sonic, which mainly includes three upgrade dimensions:

FVM virtual machine: Through parallel ution and instruction set optimization, it breaks through the StateDB bottleneck of EVM (accounting for 84% of processing time), increases transaction speed by 8.1 times, and reduces storage requirements by 98%. This change reduces Sonic’s verification node threshold from 2,000GB to 300GB, expands the number of full nodes from 7 to 21, and significantly improves the degree of decentralization.

Carmen storage : It uses dynamic data trimming technology to retain only the frequently accessed DeFi protocol status, compress and seal historical data, and improve the on-chain resource utilization to the forefront of the industry.

Sonic Gateway cross-chain bridge: natively integrated with Ethereum, 10-minute fast arrival (1 hour for the reverse), built-in 14-day fault protection mechanism. Compared with the 7-day challenge period of Optimistic Rollup, its “instant finality” and asset nativeness (no need for encapsulation) have become the core attraction of cross-chain migration of capital.

This upgrade enables Sonic to have high-performance Layer 1 and EVM compatibility, providing underlying support for DeFi, Games, and other scenarios, while attracting developer and user participation through token economic reconstruction.

Source: Artemis

For example, Aave V3 attracted $15.8 million in liquidity on the first day of its launch on Sonic, with deposit APY reaching 19% at one point, thanks to the efficient ution and low-cost advantages of FVM. This deployment validates Sonic’s appeal to top DeFi protocols.

The Logic of Rise and Future Concerns, the Game Between Sonic Efficiency and Risk

Sonic not only continues to work hard on high performance and decentralization, but also activates the eco with large-scale airdrops of up to 6% and the developer Sonic Boom incentive program.

Specifically, Sonic returns 90% of the gas fees to dApp developers through the FeeM model, which greatly stimulates development enthusiasm in terms of cost, while FVM’s compatibility and debugging tools lower the threshold for developers to join in terms of technical difficulty. As a result, the number of Sonic eco protocols has increased from 62 to 312, an increase of more than 4 times.

Source: Defillma

Sonic eco projects cover areas such as lending, DEX, and liquidity staking, and innovative mechanisms with high returns are emerging in an endless stream, such as:

Shadow Exchange: With the support of FeeM, the protocol design was optimized, and TVL increased from 0 to $125 million, forming a positive feedback loop between funds and users. The token price increased by more than 500% in one week after its launch.

Beets.fi: TVL reaches $187 million. Users stake S to obtain stS certificates, and the automatic compounding mechanism provides an annualized return of 23%.

Eggs Finance: The market cap of the EGGS token is $12.7 million, and the short-term APY of the EGGS/S pool is as high as 1800%, attracting early speculators.

Pendle × Rings: Attracted $43 million in deposits in 24 hours, users split the principal and income rights, locking in 40%+ fixed APY or leveraged income.

After talking about Sonic’s series of ecos and technological progress, let’s talk about the hidden concerns that affect the price of coins. The primary challenge is to reconstruct trust in algorithmic stablecoins. Recently, Sonic Labs launched a new algorithmic stablecoin that offers an annual interest rate of up to 23%, trying to avoid the “death spiral” tragedy of Terra‘s collapse through technological upgrades and dynamic adjustment of returns. However, the stablecoin model linked to S still needs time to verify, and community acceptance must be slowly cultivated.

In addition, 83% of the TVL on Sonic is concentrated in the top five protocols. The lack of liquidity of long-tail projects may exacerbate capital stampede. This phenomenon of excessive concentration of traffic and the lack of sufficient technical advantages over other Layer1s highlight the fragility of Sonic’s current eco. More importantly, the crypto market has not yet fully recovered from the March crash, just as when the U.S. stock market and BTC plummeted in February, Sonic’s TVL growth rate briefly slowed down.

Source: @arndxt_xo

In general, the explosion of Sonic’s eco stems from the combined efforts of technological innovation, capital inflow, and community drive. From the 28-fold increase in TVL, to the potential of token S, to the diversified innovation of the project, Sonic has demonstrated unique competitiveness in the Layer 1 track. But history tells us that there has never been a permanent winner in the public chain war - Ethereum’s liquidity fragmentation crisis, Solana’s centralization and PVP controversy, and Aptos‘ narrative bubble are all lessons from the past. Whether Sonic can cross the gap between short-term outbreaks and long-term retention depends on the continuous verification of technical security, the improvement of the stickiness of eco applications, and the control of the direction of the macro cycle. Investors still need to participate rationally.