In the turbulent past month of the cryptocurrency market, almost all mainstream public chains have experienced a decline in TVL.

However, amidst this haze, the Sonic network has become a beautiful landscape, becoming the fastest-growing Layer 1 public chain in terms of TVL growth. With Circle announcing that native USDC and the cross-chain protocol CCTP V2 will be officially deployed on Sonic, the network's TVL (total locked value) has surpassed 854 million USD, with an astonishing increase of 83%. This leap, driven by a combination of technological innovation and capital support, is redefining the competitive landscape of Layer 1 public chains.

Strategic Cooperation: Circle's "Trust Voting" and On-Chain Prosperity

The native USDC and CCTP V2 cross-chain protocol are about to land on Sonic. This means:

· 1 Billion Level Liquidity Injection: As the first high-performance chain to directly support native USDC, Sonic can accommodate over $28 billion in stablecoin supply from the Circle ecosystem;

· Cross-Chain Efficiency Revolution: CCTP V2 will reduce the cross-chain asset transfer time from an average of 15 minutes to under 2 minutes, with Gas costs decreasing by 76%;

· Compliance Upgrade: The institutional-level audit and compliance framework of USDC paves the way for Sonic to expand into RWA, payment, and other scenarios.

Sonic's on-chain stablecoin supply has increased from 100 million USD to 260 million USD over the past month, surging over 160%. In this period, the market share of competing products such as DAI and FRAX has dropped by 22 percentage points, indicating a strong acknowledgment from whale investors towards infrastructure upgrades.

TVL Soars Against the Trend: The "Three Driving Forces" Behind the 83% Growth

In the past month, while most public chains have been trapped in the stagnation of TVL, Sonic has absorbed funds at an average daily rate of 13 million USD. As of the time of writing, the TVL of the Sonic chain has surpassed 850 million USD, ranking 12th in the Layer 1 leaderboard. It has grown over 83% in the past month, leading all public chains.

Its growth momentum comes from three core protocols:

**1. Silo Finance (Lending, TVL 194 million USD)**​

Adopting a risk isolation pool design, supporting over-collateralization of non-standard assets such as BTC and ETH. Its unique "dynamic interest rate curve" keeps the borrowing APY always 30% below the liquidation threshold, with a bad debt rate of only 0.17%, making it the preferred choice for institutional arbitrage.

2. Beets (Liquid Staking, TVL 187 Million USD)

Convert staked tokens into interest-bearing assets stS to achieve an annualized return of 23% through an auto-compounding strategy. Users can stake $stS to Aave V3 for the second time to build a "yield nesting doll" model, and the actual APY exceeds 35%.

3. Aave V3 (Lending, TVL 180 million USD)

On March 3rd, Aave launched a lending market on the high-performance blockchain Sonic, which evolved from Fantom. This marks Aave's first Layer 1 expansion this year, further advancing its cross-chain expansion efforts. On the first day of launch, the supply cap was triggered, and the Sonic Foundation, in collaboration with Aave DAO, provided $15.8 million in liquidity incentives, causing the USDC deposit APY to soar to 19%, with daily liquidation volume dropping to $370,000, demonstrating better risk control than most competitors.

Sonic co-founder Andre Cronje (AC) also retweeted, the current APY of Sonic token S is 15.9%. If you invest 6.28 million dollars today, you will earn 1 million dollars after a year. This is much higher than the yields of other Layer 1 token staking.

In addition, Sonic has seen multiple DeFi protocol newcomers emerge in just over a month, with impressive data. Readers can also choose projects that suit them from the perspectives of APY, risk, etc., to achieve a good stable income during the current fluctuating phase of the cryptocurrency market.

Technical Breakthrough: Algorithmic Stablecoin Breakthrough and the "PTSD Dilemma" of AC

"We have cracked the algorithmic stablecoin problem, but historical trauma makes me hesitant." Sonic co-founder Andre Cronje (AC) made this shocking statement in a tweet on March 21. His team claims to have solved the fatal flaws of predecessor projects like UST through a dynamic collateral rate adjustment algorithm and a multi-tier liquidation protection mechanism. Despite the significant technological breakthroughs, AC still admits that "the PTSD from the LUNA crash has not faded."

Regarding this, DeFi researcher highonalpha said: "I'm not sure whether it should be directly pegged to S or tied to different protocols... The price being linked to S might be good, but $UST and $USDN definitely have potential pitfalls, and the blockchain is more important than the algorithm itself."

In addition, some people have proposed the following solutions:

· Anti-Death Spiral Design: When the stablecoin becomes unpegged, the system prioritizes destroying governance tokens instead of minting more, avoiding liquidity dilution;

· Three-tier Interest Rate Model: Dynamically adjust borrowing rates based on collateral ratio, allowing APY to fluctuate flexibly within the range of -5% to +25%, suppressing speculative selling;​

· Cross-chain Circuit Breaker Mechanism: If the price deviates from 1 dollar for more than 48 hours, it will automatically trigger cross-chain asset redemption to prevent the spread of systemic risk.

The contradictory mindset of the co-founder of Sonic reflects the deep-seated dilemmas in the algorithmic stablecoin sector—there is no perfect solution for algorithmic stablecoins—and the evaporation of wealth in the order of 40 billion dollars caused by historical collapses like UST makes restoring market confidence far more difficult than technological breakthroughs.

Capital Entry: The "Value Voting" and Valuation Game of Top Institutions

In May 2024, Sonic completed a $10 million strategic financing led by Hashed, with follow-on investments from institutions such as SoftBank, Aave DAO, and Bitkraft. The funds were precisely allocated to three major areas:

· Developer Incentive Pool: 30% is used for DApp's Gas fee sharing subsidies, driving the number of ecological protocols to surge from 62 to 312;

· Compliance Infrastructure: 40% investment in Sonic Pay payment system, obtaining EU EMI license and Singapore MPI license;

· Cross-chain Security: 30% allocated for the development of the Fail-Safe mechanism for Sonic Gateway, expanding the number of validating nodes from 7 to 21.

The current circulating market value of $S is 1.6 billion USD, with a market value/TVL ratio of only 1.9, placing it in a value pit among mainstream Layer 1s. In comparison:

From key indicators, Sonic has a dual advantage in performance efficiency (TPS/Gas fee) and valuation rationality (market cap/TVL):

· Capital efficiency is 306% higher than Solana: The market value corresponding to every $1 TVL is only 32.7% of Solana's;

· A healthier staking economy: A staking rate of 62% is higher than Sui and Aptos, and the annualized deflation rate of 1.8% provides value support;​

**· Institutional Holding Concentration: ** The top 10 addresses hold 39% of circulating tokens, which is 17 percentage points higher than SUI, indicating strong control signals in the market.

"The value of $S is still severely underestimated." Analyst Lucas Wong from the crypto fund UOB Ventures pointed out that if Sonic's TVL breaks $2 billion this year (with an annual growth rate of 150%), and based on the industry average market cap/TVL ratio of 4, the token price is expected to reach $1, representing a 100% upside compared to the current $0.5.

Senior trader NihilusBTC stated that S is breaking out of the descending wedge, and once it reverses, it may reach a price of $0.99.

The Eve of Ecological Explosion: Where is the Next Wealth Code?

On February 28, Pendle has officially launched on the Sonic network, with the first liquidity pools launched in collaboration with Rings: stkscUSD (May 29, 2025) stkscETH (May 29, 2025) Rings Protocol is a yield-bearing stablecoin protocol. Users can mint scUSD/scETH using various stablecoins or ETH assets. scUSD and scETH can be staked in the Veda vault (becoming stkscUSD and stkscETH) and earn yields through blue-chip DeFi protocols like Aave.

On March 19, the EVM trading aggregator Enso announced that it is officially live on the Sonic network. Enso Shortcuts is providing support for the Royco market to earn rewards from Sonic. Sonic has launched the first season of Sonic Points, allocating part of its approximately 200 million S airdrop to its ecosystem. Royco simplifies the process of earning and comparing rewards, while Enso handles protocol integration and deposit operations in the background.

With top protocols such as Pendle and Enso gradually moving in, Sonic's DeFi Lego has revealed unique opportunities:

1. Tokenization of Earnings (Pendle × Rings)

By splitting the principal and yield rights of scUSD/scETH, users can lock in a fixed APY of 40%+ or leverage interest rate fluctuations. The first batch of pools attracted $43 million in deposits within 24 hours of launch.

2. On-chain Payment (Sonic Pay)

Supports direct consumption of USDC via Apple/Google Pay, with a fee of only 0.3%, which is 92% lower than Visa's cross-border rate. The average daily transaction volume for beta users has exceeded 12,000.

3. Meme Craze (THC, GOGLZ)

The weekly increase of community tokens exceeded 200%, and the DEX trading volume share surged to 37%, replicating the wealth effect seen in the early Solana ecosystem.

Investment Conclusion: Undervalued Layer 1 Alpha Opportunity

From a fundamental perspective, Sonic has built a sustainable DeFi growth flywheel through the triple innovation of technical performance + economic model + ecological incentives. The current market cap/TVL ratio is at the bottom range of public chains, with a higher safety margin compared to SUI at the same stage. If TVL breaks through 2 billion USD this year (annualized growth rate of 150%), the price of S token is expected to hit the 2-3 USD range (corresponding to a market cap of 6-9 billion USD), reminiscent of the period from August to December 2024, when the public chain newcomer SUI rose from 0.46 USD to 5.36 USD.

Investor Strategy Recommendations:

​· Long-term holding: Allocate S spot and participate in staking (APY 15.9%), capturing ecological growth dividends;

· Leverage Strategy: Amplifying returns by minting yield tokens through Pendle or using Shadow's x(3,3) model;

· Risk Hedging: Pay attention to the airdrop unlock schedule and use tools such as contracts to avoid short-term fluctuations.

The rise of Sonic is not only the rebirth of the Fantom ecosystem but also a benchmark case of "efficiency revolution" in Layer1 competition. In the return of the DeFi narrative in 2025, its valuation reconstruction may become one of the core plots of this cycle.

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