While other chains are focusing on the MeMe market and are constantly attracted by various emergencies, Sonic Labs (formerly Fantom) is focusing on the development of DeFi. Sonic has announced a number of new measures to incentivize DeFi projects in the ecosystem, which has also caused the TVL on the Sonic chain to increase by 500% in the past month. What has Sonic done and how should retail investors participate in the Sonic ecosystem?
Old chain, new layout, what has Sonic done after AC brother’s return?
Fantom was a huge success in 2021, with its TVL peaking at $8 billion. But when lead developer Andre Cronje left and DeFi Summer came to an end, Fantom gradually disappeared. At the end of last year, AC returned and upgraded the Fantom brand to Sonic. The once star team used brand-new technology to build a new chain, which did achieve good results within two months of its release.
In just two months, Sonic has grown from 0 to over $500 million in TVL. A total of $110 million in external funds have flowed into Sonic, with Solana accounting for the majority, followed by Base and ETH. The DEX trading volume on Sonic has also exceeded the $1 billion mark.
How did Sonic do it in such a short time? First of all, for DeFi chains, stablecoin funding channels are definitely essential. After connecting USDT to Sonic, the total market value of stablecoins has risen by 59% this week. DeFiLlma shows that the total market value of stablecoins such as USDT, USDC, scUSD, stkscUSD, and USDC.e has exceeded the 100 million US dollar mark.
In addition to Euler, there are also native lending platforms Silo and staking platforms Beets that provide a large amount of liquidity for assets such as ETH. Sonic also nests three DeFi protocols, Lombard Finance, Ether.fi, and Rings Protocol, using the nesting staking model to bring users profit leverage and point bonuses. In a mutually beneficial situation, BTC liquidity is brought into Sonic, just like a triangle offense on a basketball court.
The starting point of the attack is Lombard Finance. Lombard is a DeFi project focused on Bitcoin. Its most famous product is the launch of LBTC, a liquid staking version of Bitcoin. Users who stake BTC on Ethereum, Base or BNB through Lombard will receive 1:1 LBTC.
The next step is Ether.fi, which cooperated with Lombard to launch the first Bitcoin liquid heavy-collateralized token eBTC. eBTC uses LBTC as collateral in the background, making it possible for eBTC holders to obtain multi-layered benefits, because they benefit from both LBTCs staking rewards backed by actual Bitcoin and Ether.fis heavy-collateralization strategy on Ethereum. eBTC can also be deposited in Rings on Ethereum to mint scBTC.
The endpoint of the attack is Rings, which allows users to deposit various tokens, from stablecoins to Ethereum and the LBTC and eBTC Bitcoin derivatives mentioned above. Users can deposit these assets into the Rings Protocol to mint sc versions of assets with income (in addition to scBTC, there are also scUSD and scETH). According to Sonics current reward mechanism, whether holding, using or staking these assets, you can get weekly income. Rings uses Veda Labs farming strategy to generate income from deposited assets and feedback to users through protocols on Ethereum and Sonic.
In order to increase the number of initial developers and new users, Sonic then almost simultaneously launched the DeFAI Hackathon and Sonic Meme Mania competition to expand the user base of AI and MeMe.
The prize for this hackathon is $295,000 USD equivalent in $S, which will support the construction of AI agents that perform social and on-chain operations in Sonic. It has attracted the attention of 18 AI projects and 485 technicians, and the registration deadline is February 25.
The Meme Contest has a total of 1 million $OS as prize money, and the highest market value among the current contestants is close to 7 million US dollars. The infrastructure of Meme coin on Sonic is still relatively imperfect. It is not known whether Sonic, as the fastest chain for transactions, will continue Solanas strategy to seize the Meme market while developing DeFi.
But the main new additions are for freeloaders and DeFi players. Sonic plans to airdrop a total of 200 million $S tokens as incentives, which will be released and unlocked over a one-year period. The first season will last for 6 months, accounting for 40-60% of the total airdrops. 25% of the airdrops are instant circulation tokens, and 75% are tradable locked NFT certificates. Users can trade NFTs or destroy part of them as $S liquidity and unlock them early according to the unlocking progress in the table below. The flexible airdrop unlocking mode has also attracted a large number of users.
There are rumors online about extremely high returns. What are the opportunities in the Sonic ecosystem?
How to get the airdrop?
The certificate for obtaining airdrops is points. There are three types of airdrop points: Passive points PP only need to hold whitelist assets in the Web3 wallet. Activity points AP need to provide whitelist assets as liquidity in participating projects. DApps points Gems Ecological developers can obtain the allocation of Sonic Gems for their contributions to the ecosystem.
Based on the APR estimated by on-chain analyst @phtevenstrong and the strategies provided, there are many ways for users to participate and obtain good returns.
$S tokens are currently fully circulated, and since there is no VC share, there is no risk of dilution. Currently, nearly half of the liquidity has been locked up, 31% of the total supply is staked + 5-10% of $S is locked in DeFi protocols. Assuming that 50% will be airdropped after 6 months, the average accumulated TVL during this period is estimated to be an additional 20% APR when TVL$300M, and an additional +12.5% APR when $500M.
Basic Points Mining Strategy
Rings Protocols scETH circulation strategy: By staking Ethereum (ETH) on Rings Protocol, scETH with income is minted. Then scETH is pledged on the Euler platform to borrow Wrapped Ether (WETH), setting a loan-to-value ratio (LTV) of 91.5%. The borrowed WETH is reinvested again, theoretically achieving 10x leverage. Without considering Rings points and rEUL rewards, the theoretical annualized rate of return (APR) of this strategy can reach 87.49%.
Silo Finances stS/S hedging cycle strategy
Borrow stS tokens on Silo Finance, set a 95% LTV, and achieve 20x leverage. Then pledge the borrowed stS tokens, and you can get 2.4% lending income and 5.3% staking income through staking. This whole process can add 10% point rewards to increase the total income. The basic income of this strategy is 7.7%, plus 10% point rewards, a total of 17.7%. The APR of the complete strategy can reach 74%.
Reverse Hedge Arbitrage Strategy
Borrow stS tokens on Silo Finance and get 8 times the points bonus. Then lend the stS tokens and get a 4.1% lending income. You can get a 0.5 Silo points bonus every day. The basic income of this strategy is 4.1% and a daily reward of 0.5 Silo points. Although the income is not high, the risk is relatively smaller.
After the MeMe market gradually calmed down, DeFi returned to the publics attention. Sonic, which specializes in DeFi, has achieved excellent growth in the first three months. After integrating the concept of DeFai, how to use Sonics high-performance chain and AI to create a new DeFi paradigm to gain a foothold under the pressure of hype in front and Monad in the back? It is hoped that more interesting innovations will emerge in the competition among many projects to bring new vitality to the market.
