Sonic's Ultimate Playbook: How to Seize the DeFi Boom Opportunity?
Original Article Title: Hello World. Hello Sonic.
Original Article Author: Foxi_xyz, DeFi & AI Researcher
Original Article Translation: ChatGPT
Editor's Note: The author introduced Sonic's background, Tokenomics design, and how the DeFi flywheel operates, analyzed potential risks in the ecosystem, and explained in detail how to benefit from this mechanism. Through screening multiple projects in the Sonic ecosystem, the author recommended opportunities in areas such as DEX, lending, derivatives, and memes to help readers capture high-potential projects.
The following is the original content (slightly rearranged for clarity):
I have created the ultimate guide to Sonic for you, especially if you are not familiar with the DeFi flywheel. Andre Cronje promotes over 20 projects every day, so I have picked out good projects for you.
I got into crypto because of the 2020 DeFi summer, and I am glad AC and his chain are back. Like usual tutorials, this article will delve into Sonic's development. However, I first want to introduce the risks in the DeFi flywheel ecosystem. I am not responsible for your losses, but I aim to explain the mechanism behind the DeFi flywheel to newcomers. (If you only want to know about "CA," please skip to the fourth part.)
Flywheel = Ponzi Scheme? When to Exit Scam?
Many DeFi flywheels revolve around the mismatch between the timing of capital deployment and its recognition of true value—a phenomenon often summed up as "enter when nobody knows, exit when everybody knows."
Early liquidity injections build momentum, attract more participants, and create a self-reinforcing growth cycle. Essentially, early participants benefit from compounding rewards as liquidity accumulates, and the system gains recognition.
Andre Cronje introduced the ve(3,3) tokenomic model on Fantom through the Solidly Exchange. This model combines Curve Finance's voting escrow (ve) and Olympus DAO's (3,3) game theory, adjusting the incentive mechanism for 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 who lock up tokens with transaction fees. It aims to address the unsustainable inflation issue seen in practices like liquidity mining, focusing on fee generation rather than passive issuance.
As Fantom has now been rebranded as Sonic, you can expect ve(3,3), the DeFi Flywheel, to still be a core concept of Sonic DeFi.
The flywheel is one of the driving forces behind DeFi's prosperity, and one of Andre Cronje's products is @yearnfi. Its token YFI surged from $6 to over $30,000 in less than two months. However, as you know, like many other meme coins, there is ultimately an end. Essentially, besides Bitcoin, the most crucial thing for any crypto project is knowing when to enter and when to exit.
What is Sonic and Why Choose Sonic
No one cares, but Sonic, formerly known as Fantom, 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, as we already have many similar projects in this space. So, Sonic stands out for three practical reasons:
· DeFi OG Andre Cronje coming back to lead his project.
· Airdrop strategy: Sonic is distributing 190.5 million $S (about 6% of the total supply) through a reward plan to attract new users (more information in Part Three).
· People are tired of meme coins and are returning to more fundamental DeFi plays, as seen in the price slump of $SOL.
Recent funding inflows also indicate market interest in Sonic, with:
· The native token $S rising by 113.5% in 14 days
· Sonic TVL has increased by 70% in the last 7 days, outperforming all chains of reasonable scale
· FDV/Fee ratio is 283x, 57% lower than peers, indicating Sonic may be undervalued relative to its revenue generation
New Tokenomics (Dry but Important)
Supply and Inflation
Fantom's FTM has a max supply of around 31.75 billion tokens (most already fully diluted). Sonic's $S token has the same genesis supply, ensuring existing FTM can be swapped 1:1. However, $S is not a fixed-supply token; it has controlled inflation to fund growth. Approximately 6% of the total $S supply is minted for user and developer incentives (airdrops). This means about 1.905 billion $S will be airdropped around 6 months post-launch. Therefore, there will be no new supply (unlocks) until June 2025, which might present a good short-term trading opportunity.
Additionally, $S will undergo 1.5% annual inflation over the first 6 years (about 47.6 million $S in the first year) to support ongoing ecosystem funding. If fully utilized, the supply could reach around 3.66 billion tokens after 6 years. In contrast, FTM's issuance is essentially complete, with no new token rewards (beyond any remaining staking rewards). Sonic's approach deliberately introduces moderate inflation for investment growth but tightly controlled—any unused fund tokens will be burnt to avoid excessive inflation.
Fee Burn and Deflation
FTM's economic model does not include significant fee burning—on Opera, gas fees are distributed to validators (15% to developers post-2022), making FTM generally inflationary (staking rewards outweigh any token burns).
S introduces multiple deflationary pressures to offset new issuance. As mentioned earlier, 50% of all transaction fees on Sonic are default burnt (transactions not part of the gas reward scheme). If network usage is high, this could turn S into a net deflationary asset. Furthermore, the airdrop design employs a "burnt attribution" mechanism: users can immediately claim 25% of the airdrop but must wait for the remainder. If they opt for quicker attribution, they will forfeit a portion as a penalty for short-term selling.
Finally, any unused 1.5% of the ecosystem fund will be burned. Overall, these burn and controlled release mechanisms may offset most of the 6-year inflation, helping $S gradually move towards deflation after the initial growth phase.
User Incentive Plan
As mentioned earlier, Sonic is distributing 190.5 million $S tokens to reward users. You can earn the airdrop in the following ways:
· Hold assets on the whitelist, ensuring it is not in a CEX wallet
· Engage with Sonic's DeFi protocol, including staking $S, providing liquidity on DEX, yield farming, etc. DeFi activity is weighted 2x compared to just holding assets.
Opportunities in the Ecosystem
You can receive $S airdrops by holding assets or participating in Sonic's ecosystem. Sonic is a new ecosystem, so many new projects may carry higher founder risk but could also present alpha opportunities for a 10-100x return. Here are some potential projects I've handpicked from four areas (DEX / Lending / Derivative / Meme). (All of these are non-sponsored, just my personal picks)
The image seems to have a lot going on, but most are not "opportunities." They are either not native to Sonic or have been live for some time. Here are the actual opportunities.
DEX
@ShadowOnSonic
A leading native DEX on Sonic, with a TVL exceeding 150 million and weekly incentives of 13.73 million USD. Its x(3,3) token model provides users with flexibility, allowing for instant withdrawal or vesting over a selected time, unlike the long-term lockup in ve(3,3). It also features a PVP rebase mechanism, implementing a 50% voting power penalty on early exits to protect against dilution and incentivize long-term holding.
@MetropolisDEX
An AMM-based DEX on Sonic, featuring a 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 offering spot, perpetual, and money market trading with cross-margin functionality. It boasts low fees (0% maker, 0.02% taker), fast order execution, and cross-chain liquidity. It is backed by a true DeFi OG team.
@wagmicom
One of the native DEXs on Sonic with high trading volume. It processed over $1.2 billion in less than two months. Users have earned over $3.6 million in fees through LP strategies, leveraging Sonic's speed and scalability to enhance yield. It may emerge as a strong competitor to Shadow.
Lending
@SiloFinance
Offers permissionless and risk-isolated markets. It supports rapid deployment of new trading markets with no integration required, hitting a peak daily trading volume of $125 million.
@eggsonsonic
Provides collateralized lending executed via smart contracts, featuring functionalities such as trading fees and liquidation events.
@eulerfinance
A modular lending protocol supporting permissionless lending, similar to Ethereum's Morpho.
@VicunaFinance
Offers leveraged yield farming and provides uncollateralized loans.
Derivatives
@Rings_Protocol
An elemental asset protocol catering to yield-bearing stablecoins. It provides deep liquidity to Sonic DeFi and funds projects through fund locking.
@spectra_finance
An interest rate derivative protocol that allows for yield trading and fixed rate. It provides liquidity providers with hedging against yield volatility and earns them additional interest.
@vfat_io
A yield aggregator that simplifies yield farming and rebalancing.
@GammaSwapLabs
A volatility trading platform that does not require an oracle. It offers zero-fee token trading and liquidity through AMM.
@NaviExSonic
A derivatives trading platform that provides perpetual contracts.
Meme
@derpedewdz
The primary NFT in the Sonic ecosystem.
@LazyBearSonic
A native NFT issuance platform for Sonic.
@TinHat_Cat
Sonic meme with a strong community.
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