- Sonic network debuts with 3.175B S tokens matching Fantom’s original supply for stability.
- Validators on Sonic earn 3.5% APR with flexible rewards based on staked token percentage.
- Unused S tokens from Sonic’s annual 47.625M funding will be burned to curb inflation.
The Fantom network has upgraded to the Sonic network utilizing the recently launched S token. This upgrade incorporates new features to increase transaction speed, staking options, and governance. The newly introduced tokenomics structure and various incentives for stakeholders aim to enhance the network’s adoption and long-term viability.
Staking and Validator Rewards in the Sonic Network
Sonic, backed by the S token, offers the option of staking, where users can participate in the network’s validation and earn rewards. After staking the S tokens through the MySonic platform, users should be aware that they cannot withdraw their tokens for the next 14 days if they decide to liquidate them. One key factor in staking is choosing proper validators. These staked tokens can also be penalized if a validator is punished for mistakes or wrongdoing.
Validators are among the most essential components of the Sonic network because they provide protection and reliability. To earn block rewards and transaction fees, individuals must run a validator and stake enough S. The target is 3.5% annually for validators when 50% of the total network supply is staked. The reward rate will be dynamic according to the total percentage of S tokens staked, thus making for a dynamic reward rate.
Tokenomics and Funding for Sonic’s Growth
The tokenomics of S token has been well designed to support the network’s long-term sustainability and encourage more adoption. During the launch, the total S tokens issued equaled the 3.175 billion FTM tokens, keeping a strong correlation with the past network. However, some critical changes to the tokenomics are anticipated in the following six months, including the distribution of more S tokens six months after the product’s launch. This airdrop will benefit Fantom and Sonic users and developers who are engaging in ecosystem development.
The financing of the network’s growth is also reflected in the tokenomics. Six months after the launch, 1.5% of S tokens (47.625 million) will be minted annually for six years to support Sonic’s growth. This funding will be directed towards global outreach, the enlargement of the team, and promotional activities to promote the use of the Sonic network. Also, any remaining tokens from this funding will be burned to reduce inflation’s effects and ensure that the tokens are utilized appropriately.
Related: Michael Saylor Plans to “Burn the Keys” on His Bitcoin Holdings
Burn Mechanisms to Control Inflation
Sonic has put in place several burn mechanisms through which the token supply is regulated to avoid the issuing of tokens. There is the Fee Monetization Burn, where 50% of transaction fees received from non-participating apps will be burned. Further, those who decide to take their airdrop tokens at an early stage will have a part of their tokens burnt. These burn mechanisms are ways of decreasing the total supply of the S tokens, which can assist in sustaining the value of the S token and scarcity.
