- Sonic Labs focuses on strengthening the value of its S token.
- Sonic plans to build and acquire core applications and infrastructure, with integrated revenue streams.
Sonic Labs, the blockchain development company formerly known as Fantom Foundation, announced that it is going to focus on measurable value creation by building and acquiring products that directly strengthen the value of the S token.
The article, published on X by Sonic Labs on February 11, titled “Vertical Integration: The Missing Link in L1 Value Creation,” explained that Sonic is changing away from its traditional Layer 1 growth model, which focused on expansion that generates activity but fails to produce lasting economic value
Sonic team said, “We are evolving Sonic into an ecosystem where core infrastructure, applications, and liquidity are intentionally aligned around reinforcing the S token’s economics. This alignment is designed to ensure that usage, liquidity, and incentives translate directly into sustained demand for the S token.”
Gas Fee Model Faces Pressure
Sonic believes that relying solely on gas fees to generate value is becoming less successful. As more blockchains are coming and scaling technology advances, blockspace becomes more accessible and less scarce. This increased competition is pushing transaction prices lower. So, Layer 1 networks struggle to create lasting value, even if they host a lot of activity.
So, the Sonic team stated, “This is why the next chapter of Layer 1 evolution is not just about scalability. It is about vertical integration: a protocol’s ability to own, internalize, and monetize its most important economic activities.”
For that, Sonic cited successful examples like Hyperliquid, which designed the main trading application to be the chain itself, so that each trade and fee directly benefits the HYPE token. According to Sonic, vertical integration allows for this type of design
Vertical Integration: Building Core Applications and Infrastructure
In order to execute, “Sonic will acquire and integrate high-quality application teams from across the industry to develop foundational ecosystem primitives in-house.” Where that application will handle trading, lending, payments, settlements, credit systems, and risk markets. With that, it will ensure that the value created doesn’t leave Sonic, noted in the article.
Also, Sonic Labs noted that its existing Fee Monetization system, FeeM, could be integrated with apps to help the network scale more, while boosting the S token ecosystem
Further, these revenue sources, which are fueled by actual income from integrated core applications and infrastructure that grow with the network, can fund long-term buybacks of the S token
Before Sonic, this buyback plan was recently approved by the Ethereum Layer 2 Optimism, it would redirect 50% of the ecosystem’s revenue toward OP token purchases
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