The recent crypto crash sent most altcoins to yearly lows, but a few have remained resilient. One of these is Sonic, which has been emerging as the next top Layer One. Its upcoming airdrop of over 190 million S coins has resulted in exponential growth in both price and total value locked. This growth appears to be just getting started.
Deep Dive into Sonic
In this article, we will explore:
- The origins of Sonic
- How Sonic works
- What it is planning for the future
- How high its S coin could go this cycle
Disclaimer
My name is Nick. Stay tuned! I’ll start by saying that nothing in this video is financial advice. It’s purely educational content intended to inform you about Sonic. Also, note that nobody at the Coin Bureau team holds S as part of their crypto portfolios at the time of posting. We will be as objective as possible as always.
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The Evolution from Phantom to Sonic
Background on Phantom
Sonic was previously known as Phantom, which we covered in May last year. Sonic is the new and improved version of Phantom. Its mainnet launched in December and has been growing fast since January.
Phantom was originally founded in 2018 by a South Korean computer scientist named An Buik. It raised $41 million in an ICO that same year but allegedly began as vaporware, promising cutting-edge tech that didn’t work. Fortunately, two crypto developers—Michael Kong and Andre Cronje—managed to build something functional.
Phantom’s Growth and Challenges
Phantom’s mainnet launched in December 2019 with a proof-of-stake consensus mechanism called LA Casus, securing a DAG-based blockchain. This technology allowed for 2,000 transactions per second, a significant speed at the time.
Phantom gained traction in the previous cycle due to Andre Cronje, the founder of Yearn Finance, who was considered one of the best DeFi developers in crypto. However, when the crypto bear market hit in 2022, Phantom’s Total Value Locked (TVL) collapsed, and its price fell by almost 95%.
Andre had reportedly left Phantom before the crash but later revealed he had merely stepped away from the public eye. In late 2022, when the market was at its lowest, Andre revealed that the Phantom Foundation still had a $300 million treasury.
The Birth of Sonic
Sonic’s Launch and Separation from Phantom
In late 2023, Phantom announced the Sonic upgrade, initially meant as an upgrade but later becoming a separate blockchain by early 2024. Large Phantom investors reportedly pushed for this shift.
Throughout 2024, Phantom released multiple updates related to Sonic, including:
- The establishment of Sonic Labs and the Sonic Foundation
- Raising an additional $110 million
- The distinction between Sonic Labs (Bahamas-based) and the Sonic Foundation (Cayman Islands-based)
Regulatory Considerations
Phantom was previously overseen by a single entity, the Phantom Foundation. Sonic, on the other hand, now has two entities, likely for regulatory reasons, to facilitate listing S coin on US exchanges.
How Sonic Works
Consensus Mechanism and Speed Improvements
Sonic operates on an improved version of Phantom’s proof-of-stake DAG-based blockchain. Its key improvements include:
- LA Casus Optimization (Expected Q3 2024) – Enhancing consensus for higher efficiency.
- Storage Optimization with Carmen – Faster transaction validation through an advanced storage protocol.
- Fewer Validators for Higher Speed – Phantom had 65 validators; Sonic has 40, increasing speed to 10,000 TPS.
- Fee Structure Adjustments – Whitelisted dApps earn 90% of blockchain fees from transactions.
Sonic Gateway and Cross-Chain Connectivity
Sonic introduced the Sonic Gateway, a cross-chain bridge between Sonic and Ethereum. Key features include:
- Validator-secured bridge
- Fail-safe mechanism allowing withdrawals on Ethereum if Sonic goes offline for 14+ days
- 10-minute asset bridging between Ethereum and Sonic
Sonic’s Tokenomics
Staking and Validator Requirements
- Becoming a validator requires staking 500,000 S coins (~$400,000 at current prices).
- Delegation is possible with as little as 1 S coin with an annual staking reward of 5.5%.
- Staked coins are locked for 14 days and malicious validators are penalized.
Supply and Allocation
Sonic’s launch supply matches Phantom’s: 3.175 billion S coins. However, modifications include:
- An additional 190 million S coins minted for an airdrop (~6% of total supply).
- New coin minting begins six months after launch and continues for six years.
- Inflationary effects depend on utilization, as unused minted coins will be burned.
On-chain analysis indicates a high concentration of supply among whales, with 95% of supply in the top five wallets.
Potential and Price Predictions
Comparing Sonic to Phantom
In 2021, Phantom hit:
- A $3 price
- A $8 billion market cap
If Sonic reaches Phantom’s past market cap, its price could again hit $3. If Sonic surpasses Phantom’s achievements, $10 is a plausible target, giving Sonic a $20 billion market cap.
Challenges Sonic Faces
Despite its potential, Sonic faces several hurdles:
- Competition – Over 150 Ethereum Layer 2s already exist.
- Adoption Issues – Phantom’s past controversies could deter developers and investors.
- Gatekeeping by Large Players – Exchanges like Coinbase may hesitate to list S coin.
Critical Missing Ingredients
To maximize its growth, Sonic still lacks:
- Listing on major US exchanges like Coinbase
- Native stablecoin support, crucial for DeFi activity
Upcoming Milestones and Future Outlook
Key Developments
- June 2024 – First round of S airdrops (25% unlocked).
- Q3 2024 – LA Casus consensus optimization.
- Cross-chain expansion – Adding support for more blockchains via Sonic Gateway.
- DeFi and SocialFi Growth – Sonic aims to onboard new DeFi, GameFi, and AI-driven dApps.
- On-chain credit scores – Allowing undercollateralized loans and more advanced financial utilities.
Will Sonic Succeed?
If Sonic successfully onboards major DeFi players and resolves regulatory hurdles, it could outcompete Ethereum’s Layer 2s. However, it must overcome institutional gatekeeping, liquidity fragmentation, and adoption resistance.
Conclusion
Sonic presents a radical new approach in crypto, different from its competitors. History suggests that disruptive strategies often win in this space. However, it remains to be seen whether large players in the crypto industry will allow Sonic to reach its full potential.
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