Sonic ve(3,3) flywheel return, detailed explanation of profit mechanism and ecological status

Author: arndxt

Compiled by: TechFlow of DeepTide

Sonic is one of the most overlooked projects in the field of cryptocurrency.

While Sei, Berachain, and Monad are still in the testing network hype stage, Sonic has already launched with over 80 years of operation. They are accumulating TVL (Total Value Locked) and rewarding developers in ways that other chains have never tried before.

10,000+ transactions per second, sub-second final confirmation time, and a FeeM model that returns 90% of gas fees to developers are building a DeFi flywheel.

More importantly, they also airdropped a token worth over 1.9 billion US dollars. Here are the things you need to pay attention to, and how to get an annualized yield of up to 145,000% (APY).

Source: @HarisEbrat

By the end of 2024, Fantom officially renamed @SonicLabs, re-entering the Layer-1 (L1) blockchain field, with a focus on transaction speed, ecological incentive mechanisms, and cross-chain interoperability.

In just a few months, Sonic's total locked value (TVL) has achieved significant growth, attracting a large number of new protocols choosing to deploy on its chain. Of particular note is Sonic's upcoming airdrop plan with a scale exceeding 190 million $S tokens, which has become an important incentive to attract DeFi developers and high-yield strategy participants.

1. Origin and Background: The Uniqueness of Sonic

When @SonicLabs was just launched, many people did not see it as a project worth paying attention to. After all, the market is already filled with numerous Layer-1 blockchains claiming to be "high-speed, low-cost" (L1).

However, Sonic is indeed unique, for the following reasons:

Already online and running stable: Unlike Sei, Berachain, and Monad, which are still in the testnet phase, Sonic has achieved real trading, liquidity, and user operations and plans to support sustainable development for up to 80 years.

Born to reward developers: Through the innovative FeeM model, Sonic returns 90% of the gas fees to decentralized application (dApp) developers, allowing projects to directly profit from user activity.

Huge airdrop plan: Sonic plans to airdrop over 190 million S tokens, rewarding users for staking, providing liquidity, and actively participating in the ecosystem.

Rooted in the best ideas of DeFi: Sonic adopts and improves the ve(3,3) model, while integrating advanced Ethereum Virtual Machine (EVM) extension technology, providing developers with a more efficient solution.

DeFi Flywheel Effect: The Cycle of Capital and Growth

The success of Sonic is closely related to the flywheel effect of DeFi. The core of this effect lies in the time difference between capital deployment and the realization of actual value:

Liquidity enters: After the funds flow in, the token price rises, attracting more users to join due to the fear of missing out (FOMO);

Early participants profit: The ecosystem begins to reward early participants, attracting more users to enter and driving the gradual expansion of the ecosystem;

New users pledge or reinvest: holders maintain ecological momentum by pledging or reinvesting tokens, keeping the flywheel effect running.

This model was first introduced in the Solidly Exchange launched on Fantom by the legendary figure in the DeFi field, Andre Cronje, in 2022.

Andre Cronje is the founder of Yearn Finance ($YFI), which skyrocketed from $6 to $30,000 during the DeFi summer in just two months.

The model combines the veToken mechanism of Curve Finance with the game theory of Olympus DAO: (,3)

Voting Delegation (ve) Mode: The longer the time users lock the tokens, the more rewards they will receive;

(3,3) Game Theory: By incentivizing users to stake instead of selling, reducing selling pressure, and enhancing ecological stability.

The design core of ve(3,3) is to enhance the protocol's liquidity through staking tokens, while providing lucrative rewards for long-term holders.

Unlike traditional liquidity mining models, ve(3,3) does not rely on high inflation token rewards to attract "short-term speculative capital." Instead, it incentivizes users who are willing to support the ecosystem development in the long term by distributing the fees generated by the protocol directly to token holders who lock their tokens.

The 'flywheel effect' behind this mechanism has been an important driving force for the rapid rise of the DeFi field.

Protocols that adopt the ve(3,3) model often attract a large amount of liquidity, as users seek higher returns by staking tokens, and the increase in the number of users further drives the growth of returns.

However, this pattern is not a perpetual motion machine.

Over time, the momentum of the flywheel effect will inevitably weaken. Liquidity cannot grow infinitely. Once early participants choose to cash out and exit, the ecosystem will transition from a "growth mode" to an "exit mode," causing the cycle to gradually stagnate.

This leads to the brief history of Sonic development:

Brand reshaping of Fantom

The once highly anticipated blockchain Fantom (FTM) has fallen into trouble after experiencing the Multichain bridging incident. The background of this event involves government asset seizures and system instability caused by bridging vulnerabilities, leading to a significant withdrawal of liquidity and stablecoins from the ecosystem, with the total value locked (TVL) plummeting and developer morale taking a heavy hit.

The Rise of Sonic

In December 2024, Fantom announced its rebranding as Sonic. This reshaping not only retains compatibility with the Ethereum Virtual Machine (EVM), (, but also brings several key technological upgrades, including a more secure cross-chain bridging mechanism and a more attractive token economic model aimed at developers. In addition, this reshaping also sees the return of Andre Cronje, a key figure in the Fantom community, and a shift in focus towards supporting a new direction for high-speed and parallel transaction execution. This series of changes signifies a comprehensive upgrade of Sonic in terms of technology and ecosystem, injecting new vitality to attract developers and users.

Why is it worth paying attention to at this moment?

Although many emerging L1 blockchains with advanced execution layers (such as Sei V2, HyperEVM, Monad, Berachain, MegaETH) are still in the test network or pre-launch stage, Sonic has already launched the mainnet and has withstood the pressure test of real TVL (Total Value Locked) fund inflows.

With sub-second final confirmation time and parallel trading engine, Sonic achieves the same speed as professionally optimized L1/L2 chains, attracting the attention of DeFi developers and mature yield farmers - they are ready to redirect funds to faster and lower-cost chains.

Second, Analysis of Key Advantages

Here is a summary of Sonic's highlights, from this picture ("What makes Sonic different from other chains?").

1. High speed

Sonic prioritizes high-speed trading, making it one of the fastest Layer-1 )L1( blockchains compatible with EVM. Key features:

High transaction throughput

Sonic focuses on high-speed, parallel execution, and efficient state management, making it superior to many existing EVM chains in terms of scalability and transaction cost optimization.

Ten thousand TPS throughput capacity was measured to exceed 10,000 TPS, with a daily transaction processing capacity breaking through 800 million transactions, supporting the outbreak of large-scale GameFi/DeFi ecosystem.

Parallel execution of leaderless sBFT consensus

Unlike traditional blockchain, Sonic's consensus mechanism can process multiple transactions in parallel, instead of relying on sequential execution.

This design improves speed while still maintaining security and finality.

Efficient state management

Status pruning (storage expansion reduced by 90%)

By removing unnecessary blockchain data, Sonic makes node operations more lightweight, while reducing the hardware requirements for validators. This helps to enhance decentralization as more participants can run full nodes.

Dynamic Gas Model

Even under high load, low fees can be ensured.

The network will automatically adjust the Gas fee according to demand to prevent a surge in fees due to congestion.

This mechanism is crucial for maintaining affordability in high-traffic scenarios (such as token issuance or DeFi transactions).

2. Interoperability

Sonic is designed for seamless cross-chain connections, allowing assets and liquidity to flow freely between blockchains.

Its interoperability model prioritizes security and reliability, addressing key weaknesses in existing multi-chain ecosystems.

Sonic gateway - Trustless native bridging

Not rely on the third party

Unlike traditional bridging methods that introduce centralized risks, Sonic's gateway is natively integrated into the protocol. This significantly reduces the risk of being attacked by hackers or malicious operations.

Fault Recovery System

Even if the network or bridge is offline, users can still retrieve assets

One of the main issues with blockchain bridging is the risk of downtime or vulnerabilities. Sonic's fault recovery system ensures asset recoverability even when the bridging is temporarily unavailable.

1:1 asset support, no need for wrapped tokens

Always support the assets moving between Sonic and Ethereum. Unlike creating wrapped tokens (such as wBTC, wETH), Sonic ensures that the native assets retain their original value. This not only enhances liquidity and usability but also reduces the smart contract risks associated with the wrapping mechanism.

3. Incentive Mechanism

Sonic provides the most developer-friendly incentive structure to promote ecosystem growth. Its incentive model closely links network success with developer profitability and user participation, driving the organic development of the ecosystem.

Gas fee currency (FeeM plan)

Developers receive 90% of the trading fee revenue

Unlike the traditional blockchain model of burning fees or allocating them to validators, Sonic directly refunds Gas fees to the applications that generate transactions. This creates a direct economic incentive for developers, encouraging them to build high-usage dApps (decentralized applications).

Performance-based rewards

High usage applications can earn Gems

Developers creating popular applications will receive additional Gems rewards, which can be passed on to users. This mechanism incentivizes both developers and end users to actively participate in the ecosystem.

Distribute $200 million worth of $S through the Sonic Innovators Fund

6% of the token supply is allocated to users

Users can earn points by interacting with eligible protocols, providing liquidity, or participating in governance. This structure encourages long-term participation and DeFi experimentation.

4. Smart Contract

Sonic enhances the Ethereum Virtual Machine (EVM) experience through a more optimized and flexible framework. Its smart contract improvements make it an ideal alternative to traditional EVM environments, offering higher cost efficiency, execution speed, and flexibility.

Sonic Virtual Machine (SVM)

Optimized smart contract performance

SVM optimizes contract execution based on Ethereum, reducing Gas fees and improving efficiency. This is particularly important for complex DeFi applications, automated trading strategies, and gaming environments.

Customized payment token for dApp

The application can use its native token to pay transaction fees

This feature allows projects to use their native tokens to cover Gas fees, improving user experience. Developers do not need to force users to hold $S tokens to pay Gas fees, but can set their own fee structure.

Seamless EVM compatibility

Deploy smart contracts based on Ethereum without modification

Developers can easily migrate their dApps from Ethereum, Arbitrum, Optimism, or other EVM-compatible chains to Sonic. This ensures a low-friction on-chain experience when migrating to Sonic.

Three, Token Economics and Airdrop Mechanism

The S token is the native asset of the Sonic network, with multiple functions:

Functions and Application Scenarios

Transaction fee: Used to pay Gas fees on the Sonic network.

Validator operation: Running validator nodes and ensuring the tokens required for network security.

Staking: Participants can stake S tokens to help secure the chain and receive rewards.

Governance: Token holders can vote on protocol changes and ecosystem decisions.

Inflation and Minting Mechanism

Linear inflation model

After six months of mainnet launch, Sonic will mint new tokens at a fixed rate.

An annual inflation rate of 1.5% (approximately 47.6 million S tokens added each year), lasting for six years.

The minted tokens will be used for network growth, marketing, partnerships, and the development of Sonic University.

Deflationary measures

Unused casting tokens will be destroyed at the end of each year.

This mechanism ensures that newly issued tokens are only used for ecosystem expansion, rather than accumulating in the reserve fund.

Destruction Mechanism

Sonic introduces a variety of destruction mechanisms to balance token issuance:

Unused minting token destruction: Any unused annual 1.5% inflation tokens will be destroyed.

FeeM Mechanism Destruction:

dApps participating in FeeM (Gas fee monetization) need to be approved.

Non-participating dApps: 50% of the transaction fees for these applications will be automatically destroyed.

Airdrop Destruction: Some token allocation and airdrop models include a vesting penalty mechanism, where part of the tokens will be destroyed when users withdraw tokens early.

Migration from Fantom Opera

Block reward transition

Validators and stakers migrating from Fantom Opera to Sonic will see Opera block rewards gradually decrease to zero.

The saved block reward will be reallocated to Sonic's validators as an incentive measure.

Staking Withdrawal Period

The S tokens pledged must adhere to a 14-day withdrawal period to maintain the standard security mechanism for releasing the pledge.

Supply and Inflation

Initial Supply: Sonic's initial total supply is the same as Fantom's (approximately 31.75 billion tokens) to enable a 1:1 FTM → S exchange.

Continuous Inflation: Sonic has introduced a 1.5% annual inflation mechanism, lasting up to 6 years, to fund ecosystem growth. Any unused tokens will be destroyed to prevent uncontrolled dilution.

Fee Destruction: By default, 50% of the transaction fees will be destroyed. With the growth of network usage, $S may become a deflationary token under high network activity.

190.5M $S Airdrop (June 2025)

Purpose: Attract new users, reward early participants, and stimulate DeFi usage on Sonic.

Points system: Users can accumulate 'points' in the following ways:

Hold whitelist assets (such as scUSD, stS, USDC.e, etc.) in the Sonic wallet.

Interacting with dApps (such as providing liquidity, borrowing).

Earn GEMS from specific protocols in the ecosystem (defined by developers).

Ownership Mechanism:

25% of the airdrop can be claimed immediately, and the remaining portion will be released linearly over about 9 months.

Users can also choose to accelerate the receipt, but they need to pay a fine, and some tokens will be destroyed.

The following is an example table of points and potential airdrop distributions:

Image: The exact figures may vary; check the MySonic dashboard for real-time data

Fourth, Gas fee monetization (FeeM) plan

Sonic's FeeM program is described as "applying the Web2 advertising revenue model to the blockchain". In this program, developers of specific dApps can earn up to 90% of the transaction gas fee income.

The main features are as follows:

When users interact with smart contracts, some transaction fees will automatically be transferred to the developer address (or specified treasury).

This cost-flow mechanism reduces the amount of token destruction and slightly reduces the default deflationary pressure of the blockchain.

Advantages:

Incentive alignment: dApps that generate actual usage can earn more revenue from transaction fees.

Attract developers: reduce reliance on external venture capital or token issuance.

Early data shows that top protocols can earn tens of thousands of dollars in transaction fees per week, incentivizing high-quality developers to deploy applications on Sonic, even in the fiercely competitive L1 market.

Five, Ecosystem and DeFi Protocols

Existing high-quality projects

Shadow on Sonic

A decentralized liquidity DEX using the x)3,3( model (inspired by ve)3,3().

High TVL (total value locked of over 100 million US dollars), with daily trading volume reaching 100 million US dollars or higher, is the top DEX on Sonic.

Liquidity providers can earn trading fees and protocol rewards (such as GEMS and xSHADOW) at the same time.

Stout

Loan agreement.

There may be synergies with scUSD or other stable assets.

Boom Sonic

A perpetual contract DEX focusing on advanced trading features, expected to be launched on Sonic.

Rome, Solis, XPRESS, Hermes Finance

Some projects that have not yet been launched, covering treasury-supported tokens, yield optimizers, or order book DEX mode.

Other protocols mentioned by the community

Snake

By staking $GSNAKE, you can earn an APR of 990%.

Introduced a stablecoin ($SNAKE) pegged to $S 1:1 and provided a high APR 'Forest' pool.

Alternatively, by staking $wS/$SNAKE on @VoltaFarm, you can earn over 144,510% APR, a platform that is an automatic compounding tool on Sonic.

EGGS

Offering over 1700% of APR.

Exercise caution when providing liquidity by setting the trading range—narrower ranges yield higher returns but with lower frequency, while wider ranges offer more stability but lower returns.

Users can also mint EGGS by depositing $S or other assets, and then use EGGS for leverage strategies.

Vicuna Finance

A lending platform that offers leveraged returns.

Early participants may receive token airdrops.

Rings Protocol, Spectra Finance, GammaSwapLabs

Propelling derivative, yield, and treasury protocols for advanced DeFi use cases on Sonic.

Six, income opportunities

DeFi gold diggers have come to see Sonic as the perfect place to chase high yields:

High APY DEX mining strategy

Trading pairs like S/USDC.e or USDC.e/EGGS can generate over 1000% annualized yield on Shadow, Snake, or other DEX (with certain volatility)).

Concentrated liquidity strategies can amplify returns when prices are maintained within a range.

Lending and Liquidity Mining

By staking $S through MySonic or third-party LSD providers (such as Beets, Origin), you can earn an annualized yield of about 5-8%.

Liquidity staking tokens (such as stS) can be redeployed to DEX pools for compounded returns.

Airdrop bonus

Protocol-specific "GEMS" or collaborative rewards can also boost airdrop points.

A possible mining strategy:

Exchange part of stablecoins (such as USDC) for $S on Shadow.

Pledge some $S to get stS or scUSD.

On a DEX with high APR rewards, create liquidity pools for stS/S or scUSD/USDC.e trading pairs.

Receive GEMS or xSHADOW, and re-stake or compound.

Observe the point growth on the MySonic points dashboard.

With reference to @phtevenstrong, you can earn over 300% annualized yield in Sonic's stablecoin mining.

Seven, Comparison with other L1

Sonic has a significant first-mover advantage in the new generation of high-performance EVM L1. While competitors are still in the testnet stage, Sonic has already attracted real liquidity and usage - this advantage may persist, especially since airdrops and the FeeM program can lock in developer loyalty.

Many 'fast L1' blockchains are currently being launched or about to go live.

Eight, Conclusion and Prospects

Sonic is a bold attempt aimed at replicating the success of Fantom and surpassing it through a new L1 economics, bridge security, and high-speed execution. Its core advantages include:

High throughput (about 10,000 TPS)

Sub-second finality (approximately 720 milliseconds)

Generous developers incentive (90% fee monetization, 1.9 billion $S airdrop)

Safer Cross-Chain Bridging (14-Day Fault Recovery Mechanism)

In the short term, the real usage, new liquidity, and widespread interest in parallel EVM execution have given Sonic an enviable advantage among competitors still in the testnet phase. Of course, the sustainability after the airdrop in June 2025 remains the biggest challenge facing the chain. With sustained user activity and developer confidence, Sonic is expected to carve out a place in the multi-chain future of DeFi.