sonic

Sonic Labs is aiming to expand the use of its S token by developing and acquiring key protocol applications. The company is shifting away from relying solely on gas fees, instead integrating its token across trading, payments, and risk-related markets to create a more connected ecosystem.
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Sonic Labs, the team behind the Layer 1 blockchain formerly known as Fantom, has unveiled a strategic shift aimed at increasing long-term demand and value capture for its native token, S. In a post published Wednesday on X titled “Vertical Integration: The Missing Link in L1 Value Creation,” the project outlined plans to directly build — and potentially acquire — core applications designed to expand the economic utility of the S token.
The announcement signals a move beyond the traditional Layer 1 value accrual model centered primarily on gas fees. Instead, Sonic intends to internalize key economic primitives across its ecosystem, positioning itself not just as infrastructure, but as an active operator of high-impact on-chain products.
Rethinking the “Gas Fee” Value Model
Sonic is an EVM-compatible Layer 1 blockchain targeting extremely high throughput, with ambitions of processing hundreds of thousands of transactions per second and near-instant finality. According to third-party performance trackers such as Chainspect, Sonic ranks among the highest-throughput networks within the EVM ecosystem.
Historically, the value thesis for many Layer 1 networks — including Sonic — followed a simple formula:
More users → more transactions → more gas fees → token deflation and value accrual.
However, Sonic Labs now argues that this “gas-only” model has proven insufficient in a rapidly evolving blockchain landscape.
“Over the past five years, this thesis has been thoroughly challenged,” the team wrote. With the rise of rollups, modular blockchain designs, and high-performance alternative Layer 1s, blockspace is no longer scarce. As scalability improves across the industry, competition intensifies and transaction fees face structural compression. Users and liquidity can migrate between ecosystems more easily than ever.
In this environment, relying solely on gas fees for token value capture may limit long-term sustainability.
Vertical Integration: Owning the Economic Core
Sonic’s proposed solution is vertical integration — directly building or acquiring essential applications within its own ecosystem.
While maintaining its permissionless and open developer model, Sonic plans to internalize key economic infrastructure rather than allowing value to “leak” entirely to third-party applications built on top of the chain.
Although specific acquisitions or product launches have not yet been disclosed, the team indicated that its vertically integrated ecosystem may include:
Trading infrastructure
Credit and lending primitives
Payments systems
Clearing and settlement layers
Risk markets
By controlling or co-owning these core components, Sonic aims to align protocol-level revenue more directly with token utility and long-term value creation.
FeeM Model and Sustainable Buybacks
Last fall, Sonic introduced a monetization mechanism called FeeM, which allows application developers to retain up to 90% of the fees generated by their apps. The remaining portion is burned, contributing to deflationary pressure on the S token.
According to Sonic Labs, the new vertical integration strategy will complement — not replace — FeeM. Instead, it aims to route more economic activity into structures that directly benefit the S token.
“As these revenue streams grow, Labs may implement sustainable token buyback programs,” Sonic stated.
This approach mirrors recent industry developments. Optimism, for example, recently approved a plan to allocate 50% of ecosystem revenue toward OP token buybacks. Similarly, Sonic referenced Hyperliquid as a case study in vertical integration, noting that its perpetual DEX operates as both the application and the underlying blockchain — ensuring all trading fees and liquidations directly reinforce token value.
Strategic Positioning in a Competitive L1 Landscape
The shift reflects broader industry dynamics. As blockchains compete on scalability and efficiency, differentiation increasingly depends on ecosystem depth, native liquidity, and integrated economic design.
Sonic’s strategy suggests a move toward tighter alignment between infrastructure and applications — potentially including mergers and acquisitions of high-quality teams building within the ecosystem.
Adding to market interest, Andre Cronje — a prominent DeFi architect closely associated with Sonic and founder of protocols such as Yearn — recently raised $25.5 million in a private token round for a new on-chain exchange called Flying Tulip, reportedly valued at $1 billion. While independent from the Sonic announcement, the development underscores continued product innovation within the broader ecosystem.
A Structural Evolution Rather Than a Short-Term Shift
Sonic’s pivot does not signal abandonment of decentralization or open development. Instead, it represents a recalibration of how value is captured in an increasingly competitive and scalable blockchain environment.
By focusing on ownership of core economic layers — while preserving permissionless participation — Sonic aims to create a more durable feedback loop between network usage, protocol revenue, and token utility.
Whether this vertically integrated model proves effective may depend on execution, adoption, and broader market conditions. However, the move highlights a growing recognition among Layer 1 networks that infrastructure alone may no longer be sufficient to secure long-term token value.
This article is for informational purposes only and does not constitute financial or investment advice. Readers should conduct independent research and evaluate risks carefully before making any financial decisions.
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