Original Title: "Sonic DeFi Ecosystem Explosion: USDC Whale Get on Board, TVL Rising Against the Trend by 83%, How Many Times Can Token S Rise?"

Original Author: Lawrence, Mars Finance

In the turbulent past month of the cryptocurrency market, the TVL of almost all mainstream public chains has faced a decline.

However, amidst this haze, the Sonic network has become a bright spot, achieving the fastest TVL growth among Layer1 public chains with its breakthrough growth. With Circle announcing the official deployment of native USDC and cross-chain protocol CCTP V2 on Sonic, the network's TVL (Total Value Locked) has surpassed 854 million USD, an astonishing increase of 83%. This leap, driven by technological innovation and capital support, is redefining the competitive landscape of Layer1 public chains.

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

The native USDC and CCTP V2 cross-chain protocol will soon land on Sonic. This means:

· 1 Billion Level Liquidity Injection: As the first high-performance chain that directly supports native USDC, Sonic can accommodate over 28 billion dollars of stablecoin inventory from the Circle ecosystem;

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

· Compliance Upgrade: The institutional-level auditing 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 in the past month, surging over 160%. The market share of competing products such as DAI and FRAX has dropped by 22 percentage points, indicating a strong recognition of infrastructure upgrades by Whale funds.

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

In the past month, while most public chains have fallen into a stagnation in TVL, Sonic has attracted funds at an average daily rate of 13 million USD. By the time of writing, the TVL of the Sonic chain has surpassed 850 million USD, ranking 12th in the Layer1 leaderboard. It has grown over 83% in the past month, outpacing all public chains.

Its growth momentum comes from three core protocols:

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

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

2. Beets (liquid staking, TVL 187 million USD)

Convert the staked Token S into interest-generating asset stS, achieving an annualized return of 23% through automatic compound interest strategies. Users can stake $stS again on Aave V3 to build a "yield nesting" model, with actual APY exceeding 35%.

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

On March 3, Aave deployed a lending market on Sonic, a high-performance blockchain evolved from Fantom. This is Aave's first Layer 1 expansion this year, marking another step in its cross-chain expansion efforts. On the first day of launch, it triggered the supply limit, with the Sonic Foundation and Aave DAO jointly providing $15.8 million in liquidity incentives, causing the USDC deposit APY to soar to 19% at one point, with daily liquidation volume dropping to $370,000, and risk control outperforming most competitors.

Sonic co-founder Andre Cronje (AC) also retweeted, stating that the current APY for Sonic Token S is 15.9%. If you invest 6.28 million USD today, you will earn 1 million USD after one year. This is much higher than the yields from staking other Layer 1 tokens.

In addition, Sonic has seen the emergence of several new DeFi protocol stars in just over a month, with impressive data. Readers can also choose projects that suit them from perspectives like APY and risk, aiming to achieve a good stable return during the current volatile phase of the crypto market.

Technical Breakthrough: Algorithmic Stablecoin Breakthrough and AC's "PTSD Dilemma"

"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 addressed the fatal flaws of predecessor projects like UST through a dynamic collateral rate adjustment algorithm and a multi-level liquidation protection mechanism. Despite the significant technological breakthrough, AC candidly admitted that "the PTSD from the LUNA collapse has not yet faded."

In response, DeFi researcher highonalpha said: "It's uncertain whether it should be directly pegged to S or pegged to different protocols... The price being tied to S could be good, but $UST and $USDN definitely have potential scars, and the blockchain itself is significantly more important than the algorithm."

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 issuing more, to avoid liquidity dilution;

· Three-tier interest rate model: Dynamically adjusts borrowing rates based on the collateral ratio, allowing APY to fluctuate elastically within the range of -5% to +25%, suppressing speculative selling;​

· Cross-Chain Circuit Breaker Mechanism: If the price deviates from 1 USD for more than 48 hours, it automatically triggers the redemption of cross-chain assets to prevent systemic risk from spreading.

The contradictory mindset of Sonic's co-founder reflects the deep dilemmas in the algorithmic stablecoin space—there is no perfect solution for algorithmic stablecoins—and the $40 billion worth of wealth evaporated due to historical collapses like UST makes it far more difficult to restore market confidence than to achieve technological breakthroughs.

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

In May 2024, Sonic completed a $10 million strategic financing round led by Hashed, with follow-on investments from institutions such as SoftBank, Aave DAO, and Bitkraft. This funding is precisely directed towards three major areas:

**· Developer Incentive Pool: 30% of the gas fee sharing subsidy for DApps, driving the number of ecosystem protocols to surge from 62 to 312;

· Compliance Infrastructure: 40% invested in the Sonic Pay payment system to obtain the EU EMI license and Singapore MPI license;

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

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

From the key indicators, Sonic has formed 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 USD TVL is only 32.7% of Solana's;

· A healthier staking economy: A staking rate of 62% is higher than Sui and Aptos, with an annual deflation rate of 1.8% providing value support;​

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

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

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

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 batch of liquidity pools 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, EVM trading aggregator Enso announced that it has officially launched on the Sonic network. Enso Shortcuts is providing support for the Royco market to earn rewards from Sonic. Sonic has kicked off the first season of Sonic Points, allocating a portion of its approximately 200 million S airdrop to its ecosystem. Royco makes earning and comparing rewards simple, while Enso handles protocol integration and deposit operations behind the scenes.

With top protocols like Pendle and Enso successively getting on board, Sonic's DeFi Lego has shown unique opportunities:

1. Yield Tokenization (Pendle × Rings)

By splitting the principal and yield rights of scUSD/scETH, users can lock in 40%+ fixed APY or leverage betting on 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%, 92% lower than Visa's cross-border rate. The daily transaction volume of internal test users has exceeded 12,000.

3. Meme Craze (THC, GOGLZ)

The community Token's weekly rise exceeded 200%, and the DEX trading volume share surged to 37%, replicating the early wealth effect of the 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 technological performance + economic model + ecological incentives. The current market cap/TVL ratio is at the bottom range for public chains, with a higher safety margin compared to SUI at the same stage. If TVL breaks through 2 billion USD within the year (annual growth rate of 150%), the price of S Token is expected to hit the 2-3 USD range (corresponding market cap of 6-9 billion USD), reminiscent of the market trend from August to December 2024, where 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: Amplify returns by minting yield tokens through Pendle or using Shadow's x(3,3) model;

**· Risk hedging: **Pay attention to the airdrop unlocking schedule and use tools such as contracts to avoid short-term volatility.

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

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