Hotcoin Research | Sonic’s Phoenix Rebirth: The Secret Behind Explosive Ecosystem Growth from Fantom to Sonic

1. Introduction

Since Fantom’s upgrade to Sonic, on-chain TVL and token activity have exploded. The introduction of a new FVM virtual machine, the Carmen storage system, and the Sonic Gateway has continuously fueled development. Andre Cronje’s return and his influence in DeFi have attracted top projects and promoted Sonic’s ecosystem through his four visions — fee monetization, fee rebates, dynamic fees, and native economic account abstraction. This upgrade marks a phoenix rebirth for the veteran chain, propelling Sonic into one of the fastest-growing emerging networks. As long as enthusiasm and capital continue to flow in, Sonic’s TVL could surge further, potentially rivaling the lock-up scales of traditional chains. This article analyzes the key data and drivers behind Sonic’s growth — focusing on its technical upgrades, popular projects, and token market performance — and explores the future DeFi trends and investment opportunities it may lead.

2. Changes from Fantom to Sonic

Technical Upgrades

• Fantom Virtual Machine (FVM):
  Sonic replaces the old EVM with its self-developed FVM, which is fully EVM-compatible. This allows existing Ethereum contracts to migrate seamlessly while benefiting from deep optimizations for parallel processing. Testing shows an 8.1× increase in transaction speed and a 98% reduction in on-chain data storage, enabling near-instant confirmations and lower resource consumption. FVM also offers improved debugging tools and supports additional programming languages, easing development and expanding flexibility.
• Carmen Storage System:
  To address the growing state data burden, Sonic introduces the Carmen state database, which trims and compresses historical data on demand. Validator node storage drops from roughly 2000GB to 300GB, and archival nodes fall from over 11TB to under 1TB. This substantial reduction cuts operating costs, encourages broader node participation, and enhances decentralization and security. Carmen’s parallel processing and intelligent data handling ensure high performance even under heavy load.
• Sonic Gateway Cross-chain Bridge:
  The Sonic Gateway is a decentralized bridge that connects Ethereum and Sonic, enabling secure two-way asset transfers. ERC-20 assets can move from Ethereum to Sonic in about 10 minutes and vice versa in roughly 1 hour. With built-in fail-safes and continuous “heartbeat” monitoring, the bridge ensures user funds are secure without lengthy challenge periods. Notably, Sonic operates as a hybrid L1+L2 network — integrated with Ethereum like an L2 yet retaining the speed and security of an independent L1.

Impacts of the Upgrade

• For Developers:
  FVM’s high performance and compatibility allow nearly frictionless migration of Ethereum contracts, with faster execution and lower gas fees. Enhanced tools and multi-language support lower development barriers. Moreover, Sonic’s plan to return 90% of transaction fees to DApp developers offers strong incentives to build and maintain applications on the platform.
• For Users:
  Users benefit from sub-second transaction confirmations and low gas fees — with potential fee subsidies further reducing costs. The secure, fast cross-chain bridge enables effortless asset transfers between Ethereum and Sonic. Upcoming features like account abstraction promise to simplify interactions even further for newcomers.
• For the Ecosystem:
  The upgrades resolve previous bottlenecks and position Sonic to capture overflow demand from Ethereum, making it an attractive destination for DeFi and GameFi projects. Enhanced cross-chain interoperability and strategic integrations (like Chainlink CCIP) lower entry barriers for external assets and users, while Andre Cronje’s leadership boosts ecosystem credibility.

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

3. Ecosystem Performance and Promising Projects

Recent Performance

According to DefiLlama, Sonic’s TVL surged from about $27 million on January 1, 2025, to roughly $730 million by February 24 — a 26× increase in two months. The newly rebranded S token (converted 1:1 from FTM) has demonstrated a strong uptrend, with its market capitalization briefly surpassing $3.1 billion, securing a spot among the top 50 cryptocurrencies. With over $700 million in locked assets and a market cap-to-TVL ratio of around 4 — significantly lower than that of many established blockchains — some analysts believe there is still considerable growth potential.

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

Key drivers include:

• Cross-chain Capital Influx: The launch of the Ethereum bridge at the end of 2024 significantly lowered barriers for external funds, with TVL growing 180% in the past month alone.
• New Projects and Token Appreciation:The proliferation of new DeFi applications, coupled with the rising value of the S token, has driven up on-chain asset valuations, further contributing to TVL growth.

Promising Projects

Sonic’s ecosystem now features a broad range of applications, including lending, DEX, stablecoins, yield aggregators, derivatives, and NFTs. Notable projects include:

• Silo Finance ($SILO): A permissionless, isolated lending market where users can borrow one asset using another as collateral. Its segregated lending pools reduce risk contagion, attracting significant liquidity. As of February 27, its TVL reached $210 million, according to DeFiLlama.
• Beethoven X ($BEETS): Originally a Balancer-style AMM exchange on Fantom, Beethoven X has been revitalized on Sonic, offering multi-asset pools and smart portfolio management features. Its presence on Sonic demonstrates how seasoned DeFi protocols can thrive in new ecosystems. Currently, its TVL stands at approximately $147 million.
• Avalon Labs ($AVL): A CeDeFi (centralized-decentralized finance) platform focused on Bitcoin-based assets. Avalon allows investors to use BTC as collateral for stablecoin loans, unlocking Bitcoin’s on-chain liquidity. This unique positioning has attracted BTC holders seeking additional yield opportunities. Its TVL currently stands at approximately $117 million.
• Shadow Exchange ($SHADOW): A native DEX on Sonic, featuring concentrated liquidity AMM mechanisms. Over the past month, its TVL surged past $125 million, making it the third-largest protocol in the ecosystem. Unlike the traditional ve(3,3) model, Shadow employs an x(3,3) tokenomics system, allowing both locked and non-locked token holders to share fee rewards. Additionally, the protocol penalizes early unlocks by deducting 50% of voting power, discouraging short-term yield farming and incentivizing long-term participation.
• SwapX ($SWAPX): A comprehensive DeFi protocol that supports token swaps, staking, and yield farming. It is positioned as offering “next-generation DeFi services beyond traditional swaps.” Currently, its TVL is around $50 million.
• Vertex Protocol ($VRTX): Plans to launch a decentralized exchange (DEX) integrating spot trading, perpetual contracts, and lending services, with a focus on zero-fee order placements and optimized trade execution.
• Spectra Finance ($SPECTRA): A protocol specializing in interest rate derivatives, allowing users to hedge against yield fluctuations through fixed-rate lending and structured yield products, further enriching Sonic’s DeFi ecosystem.
• PaintSwap ($BRUSH): Originally a popular NFT marketplace on Fantom, PaintSwap has officially migrated to Sonic, leveraging Sonic’s low fees and high-speed transactions to facilitate NFT trading, digital art commerce, and collectibles.

4. Opportunities and Challenges

Opportunities

• Expansion in DeFi: Sonic has already established a strong foundation in DeFi with lending, DEXs, and derivatives, but there is significant room for growth. The introduction of perpetual contract trading could attract more derivative traders and deepen liquidity, especially with upcoming projects like Vertex. Additionally, on-chain options and insurance remain underdeveloped across many chains, providing an opportunity for Sonic to expand its DeFi product suite and appeal to a broader user base.
• NFT and GameFi Growth: Sonic’s high throughput and low gas fees make it an ideal environment for NFT minting, trading, and blockchain gaming. If a breakout NFT collection or a blockbuster GameFi project gains traction within Sonic, it could significantly increase user adoption and daily activity. Particularly in GameFi, Sonic’s near-instant transaction finality offers a seamless experience for games that require high-frequency interactions. If the team actively supports game and metaverse projects through developer grants and incentives, Sonic could secure a strong position in the next NFT/GameFi boom.
• Deepening Cross-chain Interoperability: Sonic has already integrated with Ethereum via Sonic Gateway, but further expansion into other leading chains such as Arbitrum, Optimism, and Solana could enhance its role as a multi-chain liquidity hub. Additionally, emerging cross-chain solutions like Chainlink CCIP could allow developers to build cross-chain lending platforms, asset bridges, and interoperability tools, strengthening Sonic’s presence in the broader blockchain ecosystem.
• Enhanced Infrastructure and Developer Ecosystem: Sonic’s roadmap includes transaction fee subsidies, dynamic fees, and account abstraction, which could create a near-zero-fee experience for users. Moreover, a revenue-sharing model for developers could make Sonic an attractive environment for building new applications. If successfully implemented, these initiatives lower entry barriers for users and developers alike, fueling greater adoption.

Challenges

• Sustaining Long-term Growth: Sonic’s recent surge in TVL and user activity has been partially driven by short-term events such as major upgrades, rebranding, high-yield projects, and airdrop speculation. The key challenge is to convert this temporary surge into sustained user engagement and real application usage. Without sticky use cases and long-term incentives, there is a risk of TVL peaking and then declining once the speculative rewards diminish. To mitigate this, Sonic must prioritize building real utility-driven applications that encourage user retention.
• Security and Technical Risks: As Sonic rapidly develops, security remains a critical concern. While FVM (Sonic’s virtual machine) and Carmen (its storage system) have undergone testing, newly deployed systems are inherently vulnerable to undiscovered exploits. Additionally, various DeFi protocols within Sonic could introduce smart contract risks. Any major security breach, such as a bridge hack or protocol exploit, could severely damage Sonic’s reputation and trigger capital outflows. To address this, Sonic must prioritize rigorous security audits, establish emergency response mechanisms, and strengthen trust among users and developers. Another concern is whether Sonic’s high-performance architecture sacrifices decentralization, particularly in terms of validator distribution and network stability.
• Fierce Market Competition: Sonic faces stiff competition from Ethereum and its Layer2s, as well as other emerging L1s like Solana, Aptos, and Sui. To maintain its edge, Sonic must rapidly expand its ecosystem and develop unique advantages.

5. Conclusion

Sonic is currently in a high-growth phase, driven by significant infrastructure upgrades and strong market enthusiasm. The next 6–12 months will be critical as Sonic transitions from rapid expansion to long-term sustainability. If the team delivers on its technical roadmap (e.g., transaction fee incentives, account abstraction), attracts and retains top-tier applications, and maintains a strong security foundation, Sonic has the potential to become the next Solana-style success story. However, achieving Solana-level influence will require time and data to validate its long-term impact. For now, Sonic has firmly captured the market’s attention, making it a project that blockchain investors should closely monitor and evaluate.

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