Original title: Hello World. Hello Sonic.
Original author: Foxi_xyz, DeFi AI researcher
Original translation: Block Rhythm
Editors Note: The author introduces the background of Sonic, the design of Tokenomics, and the operating principle of the DeFi flywheel, analyzes the potential risks in the ecosystem, and explains in detail how to profit from this mechanism. By screening multiple projects in the Sonic ecosystem, the author recommends opportunities in areas including DEX, lending, derivatives, and meme to readers, aiming to help readers seize high-potential projects.
The following is the original content (for easier reading and understanding, the original content has been reorganized):
I made the Sonic Ultimate Operation Manual for you guys, especially if you are new to the DeFi flywheel. Andre Cronje is pitching 20+ projects a day, so I screened the good ones for you.
I started playing crypto because of the DeFi summer of 2020, and I’m glad that AC and its chain are finally back. Like the usual tutorials, this article will dive into the development of Sonic. However, I first want to introduce the risks of being in the DeFi flywheel ecosystem. I am not responsible for your losses, but I hope to explain the mechanism behind the DeFi flywheel to newcomers. (If you only want to know about CA, please jump to Part 4.)
Flywheel = Ponzi scheme? When will it run away?
At the heart of many DeFi flywheels lies the mismatch between the timing of capital deployment and the recognition of its true value — a phenomenon often summarized as “enter when no one knows, exit when everyone knows.”
Early liquidity injections generate momentum, attract more participants, and create a self-reinforcing growth loop. Essentially, early participants benefit through compounding rewards as liquidity accumulates and the system gains acceptance.
Andre Cronje introduced the ve(3, 3) token economics model through Solidly Exchange on Fantom. This model combines Curve Finances voting custody (ve) and Olympus DAOs (3, 3) game theory, aligning the incentives of token holders and liquidity providers, reducing selling pressure and enhancing sustainability.
The goal of the ve(3, 3) model is to reduce selling pressure and enhance liquidity by rewarding users with transaction fees for locked tokens. It aims to solve unsustainable inflation problems such as liquidity mining and focuses on fee generation rather than passive issuance.
Since Fantom has now been renamed Sonic, you can expect ve(3, 3), the DeFi flywheel, to remain the core concept of Sonic DeFi.
Flywheel is one of the driving forces behind the DeFi boom, and one of Andre Cronjes products is @yearnfi. Its token YFI has risen from $6 to over $30,000 in less than two months. And you know, like many other meme coins, there will be an end. Basically, the most important thing for all crypto projects, except Bitcoin, is when to enter and when to exit.
What is Sonic and why choose Sonic
No one cares, but Sonic was formerly known as Fantom. It is a high-performance Layer-1 solution with over 10,000 transactions per second and sub-second finality. Its native token $S is used for transaction fees, staking, and governance, and existing Fantom users can upgrade their $FTM tokens to $S at a 1:1 ratio.
Most people don’t really care about yet another low-latency Layer 1 because we already have so many similar projects in this space. So, there are three practical reasons why Sonic stands out:
Andre Cronje, a DeFi OG, has returned to lead his project.
Airdrop Program: Sonic is distributing 190.5 million $S (about 6% of total supply) through a rewards program to attract new users (see Section 3 for more information).
People are tired of meme coins and are starting to return to more basic DeFi games, as can be seen from the low price of $SOL.
Recent capital inflows also indicate market interest in Sonic, as shown in the following:
The native token $S has gained 113.5% in 14 days
Sonic TVL is up 70% in 7 days, best performance among all reasonably sized chains
The FDV/Fee ratio is 283x, 57% lower than its peers, suggesting that Sonic may be undervalued relative to its revenue generation.
New Tokenomics (boring but important)
Supply and Inflation
Fantoms FTM max supply is ~3.175 billion tokens (mostly fully diluted). Sonics $S token genesis supply is the same, ensuring existing FTMs are 1:1 exchangeable. However, $S is not a fixed supply token, it has controlled inflation to fund growth. About 6% of the total $S supply is minted for user and developer incentives (airdrops). This means that ~190.5 million $S will be airdropped about 6 months after launch. Therefore, there will be no new supply (unlocking) until June 2025, which may be a good time for short-term trading.
Additionally, $S will be inflated by 1.5% per year for the first 6 years (~47.6M $S in the first year) to support ongoing ecosystem funding. If fully utilized, the supply could reach ~3.66B tokens after 6 years. In contrast, the issuance of FTM is essentially complete with no new token rewards (minus any remaining staking rewards). Sonics approach intentionally introduces moderate inflation to invest in growth, but is strictly controlled - any unused funding tokens will be destroyed to avoid excessive inflation.
Fee Burning and Deflation
FTM’s economic model does not include significant fee burning - on Opera, gas fees are distributed to validators (15% to developers after 2022), so FTM is generally inflationary (staking rewards exceed any token burn).
S introduces multiple deflationary pressures to balance new issuance. As mentioned earlier, 50% of all transaction fees on Sonic are burned by default (transactions not in the gas reward schedule). This could make S net deflationary if network usage is high. Additionally, the airdrop design uses a vesting with burn mechanism: users can claim 25% of the airdrop immediately, but must wait for the rest. If they choose faster vesting, they will give up a portion to punish short-term selling.
Finally, any unused 1.5% of annual ecosystem funds will be burned. Taken together, these burns and controlled release schedules will likely offset most of the 6 years of inflation, helping $S gradually move toward deflation after the initial growth phase ends.
User Incentive Program
As mentioned earlier, Sonic is distributing 190.5 million $S tokens to reward users. You can earn the airdrop by:
Hold assets on the whitelist, make sure it is not in the CEX wallet
Use Sonics DeFi protocol, including staking $S, providing liquidity on DEX, yield farming, etc. Points for DeFi activities are weighted 2x that of just holding assets.
Opportunities in the ecosystem
You can get $S airdrops by holding assets or participating in the Sonic ecosystem. Sonic is a new ecosystem, so many new projects may have higher founder risks, but they may also become alpha opportunities for you to earn 10-100 times. The following are potential projects that I have carefully selected from four areas (DEX/Lending/Derivative/Meme). (All of these are non-paid, just my personal sharing)
There looks to be a lot of stuff in this picture, but most of them arent opportunities. Theyre not native to Sonic, or theyve been online for a while. Here are the actual opportunities.
DEX
@ShadowOnSonic
The leading native DEX on Sonic, with over 150 million TVL and 13.73 million USD weekly incentives. Its x(3, 3) token model provides users with flexibility, allowing for instant exit or vesting at a chosen time, unlike the long-term lock-up in ve(3, 3). It also has a PVP rebase mechanism to protect against dilution and encourage long-term holding by imposing a 50% voting power penalty on early exiters.
@MetropolisDEX
A DEX on Sonic with the Dynamic Liquidity Market Maker (DLMM) protocol that combines AMM and order book features. Players from Solana and farmers from Meteora will love this.
@vertex_protocol
A DEX that offers spot, perpetual contracts, and money markets, with cross-margin functionality. It has low fees (0% maker, 0.02% taker), fast order execution, and cross-chain liquidity. It is a true DeFi OG team.
@wagmicom
One of the native DEXs on Sonic with high trading volume. Processed $1.2 billion in less than two months. Users earned over $3.6 million in fees through LP strategies, enhanced returns based on Sonics speed and scalability. May become a strong competitor to Shadow.
Borrowing
@SiloFinance
Providing permissionless and risk-isolated markets. It supports rapid deployment of new trading markets without the need for integration, with an average daily trading volume of 125 million peak.
@eggsonsonic
Provides secured lending, executed by smart contracts, with features such as buy and sell fees and liquidation events.
@eulerfinance
A modular lending protocol that supports permissionless lending, similar to Ethereum’s Morpho.
@VicunaFinance
Provide leveraged income farming and provide unsecured loans.
Derivatives
@Rings_Protocol
A meta-asset protocol for yield-generating stablecoins. It provides deep liquidity for Sonic DeFi and funds the project through locked funds.
@spectra_finance
An interest rate derivatives protocol that allows yield trading and fixed interest rates. It provides liquidity providers with a hedge against yield fluctuations and earns additional interest.
@vfat_io
A yield aggregator that simplifies yield farming and rebalancing.
@GammaSwapLabs
A volatility trading platform that does not require oracles. It provides commission-free token trading and liquidity through AMM.
@NaviExSonic
A derivatives trading platform that provides pre-contracts.
Meme
@derpedewdz
The main NFT in the Sonic ecosystem.
@LazyBearSonic
Sonics native NFT distribution platform.
@TinHat_Cat
Sonic meme, has a good community.
