1. What is Sonic?

Sonic is a Layer 1 blockchain focused on high performance, originally evolving from Fantom and launched in 2024 after technical upgrades and rebranding. Sonic's core technical features include:

• Ultra-high Throughput: Officially claims to support 10,000 TPS (transactions per second), with some test data mentioning even higher numbers (such as 370,000 TPS). This far exceeds Ethereum's (approximately 20 TPS) and Fantom Opera's 200 TPS.

• Fast Confirmation Times: Transaction confirmation times are between 720 milliseconds and 1 second, outperforming competitors like Solana (which takes about 12.8 seconds for full confirmation), making its "fastest EVM chain" claim a key promotional point.

• EVM Compatibility: Fully compatible with EVM, allowing developers to directly migrate existing Solidity or Vyper projects, thus lowering the development barrier.

• Sonic Gateway: A decentralized cross-chain bridge that supports the rapid transfer of assets with networks like Ethereum, balancing both security and efficiency.

Sonic is positioned as a developer-friendly, efficient, and low-cost public chain, specifically targeting DeFi, GameFi, and enterprise-level applications.

You might ask, what is the difference between Sonic and other Layer 1s?

Here we use a table to compare different Layer 1s:

As you can see, Sonic combines EVM compatibility (like Ethereum) with high performance (approaching Solana/Aptos), filling the gap between the two. At the same time, its Fee Monetization is a unique mechanism, whereas other public chains rely mostly on foundation grants or have no direct revenue sharing. Its transaction fees and confirmation times are at the forefront of the industry, second only to Solana and Aptos/Sui, but with stronger compatibility.

On the consensus level, Sonic has optimized and upgraded Fantom's Lachesis consensus mechanism. It uses a DAG to achieve parallel transaction processing, combined with aBFT to provide security and finality, balancing performance and decentralization. Lachesis offers deterministic finality, meaning once a transaction reaches consensus, it is irreversible. This feature is crucial for DeFi and high-frequency trading, as it prevents risks like double-spending or delayed confirmations.

With the technical background above, let's see how Sonic has been driving traffic to itself since its launch in late 2024.

2. Shadow Exchange - The Origin of the Wealth Effect

Project Introduction:

@ShadowOnSonic, based on the CLMM (Concentrated Liquidity Market Maker) model, saw its token $SHADOW increase 33-fold within 20 days of its launch, with a circulating market cap of about $26 million. Its core mechanism uses the x(3,3) model, where users stake $SHADOW to generate xShadow, gaining governance voting rights and a share of transaction fees, with a peak APR of 5500%. Where there's a gold mine, there are miners. The gold rush effect, combined with the clear airdrop expectations for the Sonic ecosystem, has attracted a wave of veteran DeFi farmers.

Let's take a closer look at what x(3,3) is and understand this flywheel model.

Introduction to the x(3,3) Model

Three-Token Model:

• $SHADOW Token: Provides instant liquidity, suitable for "agile traders" who like to trade quickly. Users can use it to seize short-term opportunities in market fluctuations without any lock-up restrictions, maintaining high flexibility.

• xSHADOW Token: Obtained by staking $SHADOW, suitable for long-term investors. It gives users voting rights and 100% of the protocol fees, but if they exit early, they face a 50% penalty (these penalties are rewarded to other xSHADOW holders who remain). Users can also choose a phased exit (vesting), redeemable at a 1:0.5 ratio in 15 days, or a 1:1 ratio in 6 months, with a 14-day cancellation window.

• x33 Token: By converting xSHADOW to x33, users can get a token that both auto-compounds its growth and maintains liquidity. The returns on x33 grow automatically with each epoch, while users can still trade it on the market (e.g., in x33/SHADOW or x33/USDC pairs). This is particularly attractive to investors who want to accumulate long-term returns without being fully locked up.

Difference from the traditional ve(3,3) model:

Compared to Solidly's ve(3,3) model, it offers more liquidity options. Solidly's ve(3,3) model requires users to lock their tokens for a longer period (usually up to a year), which limits liquidity and flexibility. In contrast, Shadow's x(3,3) model allows users to convert xSHADOW into $x33, a form that retains the long-term lock-up benefits and governance rights while maintaining the token's liquidity, allowing users to use their assets more flexibly when needed.

Flywheel Model

Here, we quote a tweet from a KOL on March 6th:

Fundamental Analysis: The Positive Cycle of X33 and Fee Monetization

Holding X33 -> Earn double passive points + quadruple event points -> Redeem for S tokens (200 million airdrop pool)

Market Psychology Analysis: The Community Frenzy around Shadow Exchange

Shadow Exchange's 24-hour fees reach $220k -> Ranks seventh globally, expected to surpass PancakeSwap -> User confidence is at its peak

A quick tip: The Sonic network has a confirmed airdrop for June 2025. Users can earn passive points by holding assets or actively earn points by participating in DeFi and gaming tasks. This clear airdrop expectation is one of the main reasons for the large influx of users to Sonic, and Shadow has successfully captured this wave of traffic.

But interestingly, the arguments in the tweet above seem to be a paradox as of today, March 11th. The price of $S dropped by 2.8% today, while $SHADOW rose by 17.3%, and $x33 rose by 25.9%. [For comparison: ETH 📉 7.17%, BEAR 📉 3.48%, HYPE 📉 5.56%]

I think we can look at this from two angles:

1. The community has a high level of confidence in the project itself, choosing "safe-haven assets" within the ecosystem during a downturn.

2. Selling S to buy SHADOW / x33 can be seen as a leveraged long on the Sonic ecosystem, betting on both airdrop expectations and the growth of the project's token—a "kill two birds with one stone" strategy.

Recommended Strategies

• Conservative Strategy: Deposit into the S/stS LP pool -> 118% APY + 1x hedge on Hyperliquid -> Lock in 10-13% returns & Sonic AP.

• It is currently not recommended to buy SHADOW & x33. Reasons:

3. Ecosystem Project Overview

Spot DEX

Lending & Yield

GameFi

Meme Coins

NFTs

Marketplace: PaintSwap Sonic - https://paintswap.io/sonic

Airdrop Expectations

• Amount: 190,500,000 $S, representing about 6% of the current total supply.

• Time: To be distributed in June 2025.

• Scope: The airdrop will reward different types of participants, including:

• How to Participate:

4. Current Situation and Thoughts

Since its launch in late 2024, Sonic has seen significant growth in TVL, which currently stands at $665m. The number of active addresses is close to 860,000, and the daily trading volume on its DEX exceeds $314 million. This data indicates that a lot of hype is flowing into Sonic.

However, let's take a calm look behind this "data prosperity." What is supporting these numbers?

We believes it is:

• Developer Dividends: The FeeM model and the Innovator Fund provide direct economic returns, attracting developers to build active dApps, similar to the Yield Farming craze of the 2020 DeFi Summer.

• Capital Inflow: The growth of TVL from $27 million to several hundred million dollars shows capital confidence in Sonic, reminiscent of the funds that poured into Compound and Aave in 2020.

• Community Driven: The meme craze and airdrop events are recreating the retail frenzy of DeFi Summer. The performance of projects like $SHADOW and $EGGS is reminiscent of the early explosions of YFI and SUSHI.

• Leadership: The return of Andre Cronje and his legendary status in the DeFi space give Sonic a "god-tier project" aura, similar to what was seen in 2020.

• Technical Advantages: With 10,000 TPS, <1 second confirmation times, and <$0.01 gas fees, Sonic is on par with Solana in terms of performance and superior to Ethereum (20 TPS) and BSC (100-200 TPS), making it suitable for high-frequency DeFi and GameFi applications. Additionally, its built-in native cross-chain bridge eliminates reliance on third-party protocols, making cross-chain transfers cheaper and more secure.

What are Sonic's current limitations? Or rather, what are its potential challenges?

• Market Environment: The overall crypto market in 2025 is sluggish. The volatility of major coins like BTC and ETH could suppress the performance of altcoins (like $S). The original DeFi Summer was dependent on a bull market backdrop.

• Ecosystem Maturity: Although Sonic's ecosystem is growing rapidly, the number of dApps (65) and their diversity still lag behind Ethereum (thousands) or Solana (hundreds). It lacks a flagship "killer app."

• Speculative Risk: High-multiple returns and the meme craze could lead to a bubble, similar to TON's "short-term boom followed by a fallback" scenario.

• Competitive Pressure: High-performance chains like Solana, Base, and Aptos have already captured market share. Sonic needs to differentiate itself quickly and capture user mindshare.

• Tokenomics: The 1.5% annual inflation rate and the 2.88 billion tokens in circulation by the end of the year could create selling pressure, affecting long-term confidence.

We believes that the current strategies are mostly rehashes and upgrades of previous DeFi narratives. Whether Sonic can become a true "DeFi Summer" depends on its ability to incubate phenomenal projects like Uniswap or Aave and maintain technical stability and user stickiness. At the same time, June 2025 is a critical juncture. After the official airdrop, how much of the bubble will disappear, and how many users will choose to stay? May-June is also when AC's own project, flyingtulip, is scheduled to launch. Whether it can succeed at once and create the next DeFi legend remains to be seen.