# 1. Introduction

Since Fantom upgraded to Sonic, the on-chain TVL and tokens have shown explosive growth trends. The introduction of the new FVM virtual machine, Carmen storage system, and Sonic Gateway has injected continuous development momentum into the ecosystem. The return of Andre Cronje and his influence in the DeFi field help attract quality projects to join Sonic and promote a positive cycle of the Sonic ecosystem through his four visions (fee monetization, transaction fee subsidies, dynamic fees, and native economic account abstraction).
The upgrade from Fantom to Sonic marks a rebirth for this veteran public chain, making Sonic one of the fastest-growing emerging chains. As long as the ecosystem's popularity and capital inflow are maintained, Sonic's TVL is expected to further increase, potentially challenging the locked asset scale of traditional mainstream public chains. This article will delve into the key data and driving factors behind the growth of the Sonic ecosystem, focusing on its technological upgrades, popular projects, and token market performance, and explore the new trends and investment opportunities in DeFi that Sonic may lead in the future.

# 2. Changes from Fantom to Sonic Upgrade

The renaming and upgrading of Fantom to Sonic is not just a change of name, but also represents significant improvements in the underlying architecture. The core of this upgrade includes the Fantom Virtual Machine (FVM), storage system optimization (codenamed Carmen), and the Sonic Gateway cross-chain gateway. These upgrades aim to comprehensively enhance network performance, scalability, and interoperability, providing a better experience for developers and users.

1. Technical Upgrade Content

1) Fantom Virtual Machine (FVM): Sonic introduces its self-developed FVM to replace the original EVM execution environment. FVM is fully compatible with EVM, allowing existing Ethereum contracts to be seamlessly migrated to Sonic, reducing development and migration costs. More importantly, FVM has been deeply optimized for parallel processing and instruction sets, with its smart contract execution speed and throughput improved several times compared to EVM. Test results show that FVM improves transaction processing speed by 8.1 times and reduces on-chain data storage requirements by 98%. This means that on Sonic, transaction confirmations can be completed in sub-second levels, with users hardly feeling any delay; at the same time, network resource utilization is higher, consuming less computational and storage resources per transaction. For developers, FVM provides more comprehensive debugging tools and supports more programming languages beyond Solidity and Vyper, giving developers more flexibility. In summary, FVM greatly alleviates the performance bottlenecks of the previous EVM, providing a fertile ground for complex DApps on Sonic.
2) Carmen Storage System Optimization: As the blockchain runs over time, the explosive growth of state data can place a heavy burden on nodes. To address this, Sonic has adopted a brand new Carmen state database. This solution can trim and compress historical data on demand, significantly reducing the storage requirements for nodes. After the upgrade, the amount of data required to run a validating node has decreased from about 2000GB to 300GB; the storage requirements for a full archival node have dropped from over 11TB to less than 1TB. The drastic reduction in storage burden lowers the operational costs for nodes, enabling more ordinary participants to run nodes, thereby increasing the network's decentralization and security. At the same time, Carmen supports parallel processing of data requests, maintaining efficient responses even under high loads. For frequently accessed data (such as DeFi protocol states), the system employs intelligent strategies to ensure fast reading, while older and less frequently used data is compressed and archived. All of this ensures that the Sonic network can maintain performance and scalability at a low cost even in large-scale application scenarios.
3) Sonic Gateway Cross-Chain Gateway: To enhance interoperability with ecosystems like Ethereum, Sonic has launched the native cross-chain bridge Sonic Gateway. It is a decentralized bridging solution that connects the Ethereum mainnet and the Sonic network, enabling secure two-way cross-chain asset transfers. Through Sonic Gateway, users can quickly transfer ERC-20 assets from Ethereum to Sonic (arriving in about 10 minutes), while transferring back from Sonic to Ethereum takes about 1 hour. The bridge has a comprehensive security mechanism, such as built-in fault protection: if the gateway is unusable for 14 consecutive days, users can retrieve their original assets on the Ethereum side, eliminating the risk of assets being stuck for long periods. Additionally, the gateway monitors the status of both ends through cross-chain "heartbeat" signals to ensure the safety of user funds. Compared to typical Ethereum Layer 2 solutions, Sonic's cross-chain transfers do not require a 7-day challenge period. It is worth mentioning that while Sonic is highly integrated with Ethereum, it is not a Layer 2 expansion but a hybrid L1+L2 network: from Ethereum's perspective, Sonic connects to the mainnet like an L2, but it remains an independent L1, combining the speed and security of L1.

2. Impact of the Upgrade

The technical changes brought by the upgrade from Fantom to Sonic have profound impacts on developers, users, and the entire ecosystem:
1) Developer Level: The high performance and EVM compatibility of FVM allow Ethereum developers to migrate contracts with almost no barriers while enjoying faster execution speeds and lower gas costs. The improvement of debugging tools and multi-language support reduces development difficulty. More importantly, Sonic has proposed a vision of fee monetization that returns 90% of transaction fees to application developers (i.e., most transaction fees will reward DApp developers rather than miners/validators), which will greatly incentivize developers to build and continuously operate applications on Sonic.
2) User Level: The user experience on the upgraded Sonic network has significantly improved. Transaction confirmations are as fast as sub-second levels, allowing users to achieve "instant transactions"; gas fees are also expected to remain low (the team even plans to subsidize fees to lower the payment threshold for users as much as possible). Additionally, the secure and fast cross-chain bridge allows users to conveniently transfer assets between Ethereum and Sonic, enjoying the advantages of both sides. In the future, as features like account abstraction go live (allowing interaction without complex wallets), the entry barrier for new users into the Sonic ecosystem will be further lowered.
3) Ecosystem Level: The technological upgrades solidify the foundation for the prosperity of the Sonic ecosystem. On one hand, the improvements in performance and scalability alleviate the bottlenecks experienced during the Fantom period, making it likely to accommodate some of the application demands overflowing from Ethereum, becoming a new hotspot for deploying DeFi and GameFi projects. On the other hand, the enhanced cross-chain interoperability attracts external assets and users to the ecosystem: Sonic Gateway opens up capital flows from Ethereum, and Chainlink CCIP oracles have also connected to Sonic, all of which lower the barriers for external assets and users to enter Sonic. Meanwhile, the return of Andre Cronje and his leadership injects trust and appeal into the ecosystem.

Source: https://dune.com/soniclabs/sonic-overview-dashboard

# 3. Sonic Ecosystem Performance and Potential Projects Review

1. Recent Performance of the Sonic Ecosystem

According to DefiLlama data, the TVL of the Sonic chain skyrocketed from about $27 million on January 1, 2025, to about $730 million on February 24, representing an increase of over 26 times in just two months. The S token (which is a 1:1 exchange of the original Fantom FTM token) has shown an overall upward trend since the mainnet launch in January 2025, performing strongly in the secondary market. CoinGecko data shows that in mid-February, the circulating market cap of S briefly exceeded $3.1 billion, ranking in the top 50 of the total market cap in the crypto market. Many community opinions believe that its valuation still has room for improvement relative to the ecosystem scale. Currently, the locked assets on the Sonic chain have exceeded $700 million, while the market cap of S is about $3 billion, with a market cap/TVL ratio around 4, significantly lower than some mature public chains.

Source: https://defillama.com/chain/Sonic

The main reasons for the rapid growth of the Sonic ecosystem are as follows:
1) The inflow of cross-chain funds is a direct driver: The official launch of the Ethereum bridge (Sonic Gateway) at the end of 2024 significantly lowered the barriers for external funds to enter the Sonic ecosystem. This has allowed a large amount of assets to bridge from Ethereum and other chains to Sonic, resulting in significant new capital inflows. According to statistics, the TVL of the Sonic chain grew by as much as 180% in the past month, reflecting increased market confidence and continuous capital inflow.
2) The deployment and prosperity of new projects have also increased the on-chain locked assets: Since the genesis of the Sonic network, a number of decentralized applications have been launched. Leading DeFi protocols are competing to settle in, bringing rich liquidity and user assets to the ecosystem. For example, the launch of top lending protocols and decentralized exchanges has attracted users to transfer assets to the Sonic chain for mining, staking, etc., thereby pushing up the TVL.
3) The rise in local token prices also amplifies the value of locked assets: The native token S of Sonic has experienced continuous growth since its launch, which has increased the dollar value of on-chain assets priced in S, thereby partially contributing to the rise in TVL.

2. Review of Potential Projects in the Sonic Ecosystem

The Sonic ecosystem has currently formed a thriving landscape with simultaneous development in lending, DEX, stablecoins, yield aggregation, derivatives, and NFTs. There are well-known protocols like Silo and Beethoven that operate robustly, as well as innovative dark horse projects like Shadow and Wagmi, and differentiated newcomers like Avalon. Projects in various fields are flourishing, collectively supporting the rapid growth of Sonic's TVL and user base.

1) Silo Finance (Token $SILO): Silo is a permissionless isolated lending market that allows users to borrow one asset while using another as collateral. Silo's isolation design ensures that each asset has an independent lending pool, reducing the risk contagion between different assets and attracting a large amount of funds for lending. According to DefiLlama data, as of February 27, Silo's TVL has reached $210 million.
2) Beethoven X (Token $BEETS): Beethoven X is an AMM exchange on the Fantom chain based on the Balancer mechanism, which has been revitalized by migrating to Sonic. Beethoven offers multi-asset pools and smart portfolio investment features, allowing users to earn returns while providing liquidity. This also indicates that established DeFi projects that have weathered bull and bear markets still possess appeal in new environments. Its TVL on Sonic is about $147 million.
3) Avalon Labs (Token $AVL): Avalon is a decentralized finance platform focused on Bitcoin assets, currently with a TVL of about $117 million on Sonic. Avalon’s unique feature is providing CeDeFi lending services, allowing investors to collateralize BTC and other assets to obtain stablecoin loans, thereby unlocking the value of Bitcoin on-chain. With this unique positioning, Avalon has attracted many users who value BTC returns, bringing BTC assets into the Sonic ecosystem.
4) Shadow Exchange (Token $SHADOW): Shadow is a newly emerging local DEX within the Sonic ecosystem, featuring concentrated liquidity AMM and other characteristics. After growth in February, its TVL has rapidly climbed and currently exceeds $125 million, ranking third in the entire ecosystem. According to Andre Cronje, Shadow's project positioning and token model are x(3,3), which improves upon the Solidly-style ve(3,3) model—users can share transaction fee revenues even without locking tokens, while choosing to lock xSHADOW can earn more incentives. Additionally, the exit mechanism deducts 50% of voting rights from early unlockers to avoid short-term arbitrage in liquidity mining. This design encourages long-term holding and protocol value accumulation.
5) SwapX (Token $SWAPX): SwapX has a TVL of about $50 million on the Sonic chain. As a comprehensive DeFi protocol, SwapX supports not only regular token swaps but also staking, yield farming, and other extended features, claiming to provide "innovative DeFi services beyond ordinary swaps."
6) Vertex Protocol (Token $VRTX): Vertex is planning to offer a decentralized exchange on Sonic that integrates spot trading, perpetual contracts, and lending, supporting zero-fee orders and efficient matching.
7) Spectra Finance (Token $SPECTRA): Focused on interest rate derivatives, Spectra allows users to hedge against fluctuations in yields, providing fixed-rate trading and yield swaps. Such protocols provide liquidity providers with tools to combat interest rate volatility and enrich the DeFi layer of Sonic through complex derivatives.
8) PaintSwap (Token $BRUSH): The high speed and low fees of Sonic also create fertile ground for NFT and cultural projects. The popular NFT marketplace PaintSwap from the Fantom era has confirmed its landing on Sonic, meaning that users can trade NFTs and participate in the art and collectibles market on Sonic.

# 4. Opportunities and Challenges Facing the Sonic Ecosystem

With its recent remarkable growth, the Sonic ecosystem has initially established a foothold. Looking ahead, whether Sonic can maintain its strength and secure a place among public chains will depend on its ability to seize the next phase of opportunities and address potential challenges.

1. Opportunities for the Sonic Ecosystem

1) Continued Expansion of the DeFi Landscape: Currently, Sonic covers lending, DEX, derivatives, and more in the DeFi field, but there is still room for expansion. For example, perpetual contract trading platforms are expected to become the next hotspot. With projects like Vertex landing, Sonic has the opportunity to attract contract trading users and accumulate more funds. Additionally, on-chain options and insurance markets, which currently lack absolute leaders on other chains, will further enrich Sonic's DeFi product matrix and attract a broader user base.
2) Rise of NFTs and GameFi: Sonic's high throughput and low gas fees provide a natural advantage for NFT minting, trading, and blockchain gaming. Currently, NFT markets and platforms have settled in, and if a landmark NFT series or blockbuster chain game is born on Sonic in the future, it will greatly enhance its user base and daily activity. Especially in the GameFi sector, Sonic's near-zero latency interaction experience can meet the high-frequency operational needs of games. If the Sonic team actively supports gaming and metaverse projects (for example, by providing developer fund incentives), there is an opportunity to share in the next NFT/GameFi boom.
3) Deepening Cross-Chain Interoperability: Sonic has integrated into the Ethereum ecosystem through Sonic Gateway, and there is still much to be done in cross-chain aspects in the future. One point of interest is the interconnection with other emerging chains: besides Ethereum, Sonic can connect assets from networks like Arbitrum, Optimism, and even Solana, becoming a hub for multi-chain liquidity. Furthermore, with the deployment of cross-chain technologies like Chainlink CCIP, developers can build more cross-chain applications on Sonic, such as cross-chain lending and asset transfer tools, further strengthening Sonic's presence across ecosystems.
4) Infrastructure and Developer Ecosystem: The Sonic official plans to implement a series of measures this year to lower the barriers for users and developers, including fee subsidies, dynamic fees, and account abstraction. If these improvements are realized, users may hardly feel gas fees when using Sonic DApps, and they may even be able to experience them directly without downloading specific wallets. Such a smooth user experience will significantly expand Sonic's potential user base. At the same time, the plan to share fee profits with developers, once implemented, will greatly increase the returns for developing applications on Sonic, attracting more talented teams to settle in.

2. Potential Challenges for the Sonic Ecosystem

1) Can Early Heat Convert into Long-Term Retention: Currently, Sonic's explosive growth has a certain "event-driven" nature, such as significant upgrades, renaming, novel high-yield projects, and airdrop expectations. Whether the capital and user enthusiasm brought by these factors can remain after the noise is a major test. If there is a lack of sustained application support, there may be a situation where short-term TVL peaks and then declines. Once liquidity mining rewards or airdrop effects diminish, speculative funds may flee, and Sonic needs real user demand to support it. Therefore, the ecosystem must seize the opportunity to launch truly sticky products during the boom to improve user retention rates.
2) Security and Technical Risks: While rapidly developing, security risks cannot be ignored. Although the new FVM virtual machine and Carmen storage have been tested, there is no guarantee against vulnerabilities. Additionally, various newly deployed DeFi protocols may have contract security risks. Any serious security incident (such as a cross-chain bridge hack or a major protocol vulnerability) could damage Sonic's reputation and trigger capital outflows. Therefore, the team and community need to pay close attention to security audits and risk prevention, establish emergency response mechanisms, and enhance user trust. Moreover, whether Sonic's high performance comes at the cost of a certain degree of centralization is also worth noting—while lowering the validator threshold is beneficial, ensuring sufficient and decentralized node participation is necessary for stable mainnet operation.
3) Intense Market Competition: The public chain field is highly competitive, and Sonic faces not only "direct competition" from Ethereum and its Layer 2 solutions but also challenges from other emerging L1s. For example, Solana also excels in performance and has already accumulated a certain ecosystem foundation; new chains like Aptos and Sui are also attracting developer attention. Sonic needs differentiated advantages to stand out. Currently, its advantages lie in its close connection with the Ethereum mainnet and support for the migration of mature DeFi projects. However, as Layer 2 technology develops and the Ethereum ecosystem itself strengthens its performance (such as launching zkEVM), Sonic must rapidly grow its own ecosystem to form network effects, or it may be surpassed.

# 5. Conclusion

The Sonic ecosystem is currently in a period of rapid growth, with the benefits of infrastructure upgrades and market enthusiasm winning it a valuable window of opportunity. The next 6-12 months will be a critical phase for Sonic to transition from "rapid growth" to "sustained prosperity." If the team can deliver on its promised technical visions (such as fee incentives and account abstraction), attract and retain heavyweight applications, while safeguarding security, then Sonic has the potential to write the next success story akin to Solana. Of course, to truly achieve the influence of Solana, Sonic still needs time and data to prove itself. But at least for now, Sonic has firmly captured the market's attention, and its future development is worth continuous attention and evaluation from every blockchain investor.

About Us

Hotcoin Research, as the core research and investment center of the Hotcoin ecosystem, focuses on providing professional in-depth analysis and forward-looking insights for global crypto asset investors. We build a "trend judgment + value excavation + real-time tracking" integrated service system, through in-depth analysis of cryptocurrency industry trends, multi-dimensional evaluation of potential projects, and all-weather market volatility monitoring, combined with weekly dual updates of the "Hot Broadcast Selection" strategy live broadcast and "Blockchain Today Headlines" daily news delivery, to provide precise market interpretations and practical strategies for investors at different levels. Leveraging cutting-edge data analysis models and industry resource networks, we continuously empower novice investors to establish cognitive frameworks and assist professional institutions in capturing alpha returns, jointly seizing value growth opportunities in the Web3 era.

Risk Warning

The cryptocurrency market is highly volatile, and investment itself carries risks. We strongly recommend that investors conduct investments based on a full understanding of these risks and within a strict risk management framework to ensure the safety of their funds.