S (S) Tokenomics

Overview

Sonic (token: S), formerly Fantom (FTM), is a Layer-1 blockchain with a native token that underpins its ecosystem. The tokenomics of Sonic are designed to support network security, incentivize participation, and foster long-term ecosystem growth. Below is a comprehensive breakdown of the token economics, including issuance, allocation, usage, incentives, locking, and unlocking mechanisms.

1. Issuance Mechanism

• Initial Supply: At launch (December 2024), S will have an initial total supply of 3.18 billion tokens, mirroring the maximum supply of FTM.
• Migration: FTM holders can swap FTM for S at a 1:1 ratio for six months post-launch. For the first 90 days, swaps are bidirectional; after that, only FTM→S swaps are allowed.
• Block Rewards: For the first four years, Sonic will use the remaining FTM block rewards (migrated as S) to incentivize validators (~70.07 million S/year, ~2.21% of supply). No new S tokens are minted for block rewards during this period.
• Inflation: After four years, S will become inflationary, with new tokens minted at a target rate of 1.75% of total supply per year (assuming 50% of supply is staked). Additionally, 1.5% of the initial supply (~47.63 million S/year) will be minted annually for six years as operational funding for Sonic Labs, with unused tokens burned at year-end.

2. Allocation Mechanism

Initial FTM Allocation (for reference, as S mirrors FTM supply):

Sonic-Specific Allocations:

• Airdrop: Six months after launch, 6% of the supply (~190.5 million S) will be minted and airdropped to historic Fantom Opera users and new Sonic users.
• Innovator Fund: Up to 200 million S allocated to support ecosystem projects and developer grants.

3. Usage and Incentive Mechanisms

• Network Utility: S is used for transaction fees, staking, validator operations, and governance.
• Staking: Validators must stake a minimum of 50,000 S. Delegators can stake any amount above 1 S.
• Block Rewards: Validators and delegators earn rewards from block emissions and transaction fees.
• Fee Monetization Program (FeeM): Developers can earn up to 90% of the gas fees generated by their applications, incentivizing app development and retention.
• Airdrop Incentives: Airdrop recipients are incentivized to hold and use S through a vesting and burn mechanism (see below).

4. Locking Mechanism

• Staking Lock: S tokens staked to validators are subject to a maximum lock-up period of 14 days, enabling liquid staking protocols and easier participation.
• Airdrop Vesting: Airdropped S tokens are distributed as ERC-1155 NFT positions (fNFTs). Upon claiming, 25% is immediately unlocked; the remaining 75% vests linearly over 270 days (9 months). Early claims of unvested tokens result in a burn penalty.

5. Unlocking Time

• FTM→S Swap: 1:1 swap available for six months post-launch (first 90 days bidirectional, then one-way).
• Airdrop Unlock: 25% of airdropped S is unlocked at claim; 75% vests over 270 days. Users can claim early but forfeit (burn) the unvested portion.
• Staking Unlock: Unstaking S requires a 14-day withdrawal period.

6. Token Burn Mechanisms

• Airdrop Burn: Unvested airdrop tokens claimed early are burned.
• Fee Monetization Burn: If an app does not participate in FeeM, 50% of its transaction fees are burned.
• Operational Funding Burn: Unused operational funding tokens are burned at year-end.

7. Summary Table

8. Additional Notes

• Eligibility: Users from certain countries (e.g., US, Cuba, Iran) are excluded from the airdrop.
• Governance: Multiple governance votes shaped the migration, airdrop, and inflation schedule.
• Ecosystem Support: The Innovator Fund and airdrop are designed to bootstrap developer and user activity.

References for Further Reading

• Sonic Documentation: S Token
• Sonic Airdrop Details
• App Token Migration Guide
• Fee Monetization Program
• Innovator Fund

This structure ensures a robust, incentive-aligned, and deflationary-leaning token economy for Sonic, with mechanisms to reward long-term participation and ecosystem growth while minimizing short-term sell pressure.