S Token
The S token is the native token of Sonic. It has multiple roles within the network:
Paying for transaction fees
Staking (minimum 1 $S)
Running validators (minimum 50,000 $S)
Participating in governance
Upon the launch of Sonic, FTM holders will be able to exchange 1 $FTM for 1 $S. We also expect you’ll be able to purchase S directly from decentralized exchanges on Sonic or key centralized exchanges in the near future.
— Tokenomics — Staking — Validator Rewards — Ecosystem Vault
Tokenomics
At Sonic’s launch, the total supply of 3.175 billion S will correspond to the total supply of 3.175 billion FTM, and the circulating supply of S will correspond to the circulating supply of FTM at the time. Users holding FTM will be able to convert to S at a 1:1 ratio.
As decided by multiple governance proposals, the additions below will gradually be implemented into the tokenomics of the $S token.
Airdrop
An additional 6% of the 3.175 billion S will be minted six months after Sonic launches exclusively used for the airdrop program, rewarding both Fantom Opera and Sonic users and builders. The airdrop features an innovative burn mechanism that rewards active participation and gradually reduces the total supply of S tokens.
Ongoing Funding
Six months after Sonic launches, the network will mint additional S tokens to:
Increase S adoption and global presence
Grow the team and scale operations to drive increased adoption
Implement robust marketing initiatives and DeFi onboarding campaigns
Launch the Sonic Spark and Sonic University programs to advance the future of Sonic technology adoption and innovation
To fund this program, an additional 1.5% of $S (47,625,000 tokens) will be minted annually for six years, starting six months after the mainnet launch.
However, to guard against inflation, the network will burn newly minted tokens not used during the year, ensuring that 100% of all newly minted tokens from this initiative are allocated toward network growth rather than being held by the treasury for later use.
For example, if Sonic Labs uses only 5,000,000 tokens in the first year, the Sonic Foundation will burn the remaining 42,625,000 tokens.
Block Rewards
We are migrating block rewards from Fantom Opera to Sonic. As validators and stakers move to Sonic, Opera's block rewards will be reduced to zero, and the saved funds will be used to reward Sonic validators. The Sonic Foundation will maintain Opera validators for now.
To achieve a 3.5% APR for Sonic without causing further inflation in the first four years, we're reallocating the remaining FTM block rewards from Opera to Sonic. These rewards are technically part of the initial 3.175 billion S supply, but the circulating supply at launch will be ~2.88 billion tokens. The annual difference of 70 million tokens will be distributed as validator rewards over the first four years, avoiding the need to mint new S tokens during this period for block rewards.
As a result, Opera's APR will drop to zero when Sonic launches. To preserve value and avoid new inflationary rewards at Sonic's inception, we will not mint new tokens for block rewards during the initial four years, as stated. After that period, S block rewards will resume by minting new tokens at a rate of 1.75% per year to reward validators.
Token Burn
We have three burn mechanisms in place that will decrease the emission of new S tokens:
If a user submits a transaction on an app that isn't participating in FeeM, 50% of the transaction fee will be burned.
Users who choose not to wait for the full 270-day maturation period for 75% of their airdrop will lose a portion of their S tokens, which will be burned.
From the 47,625,000 S tokens minted annually in the first six years of Sonic to fund growth, the network will burn any of the tokens not used during the year.
Staking
Sonic's staking mechanisms will be a simple 14-day set lock-up time and a 7-day withdrawal period, creating an ideal structure to leverage a liquid staking token market estimated to be worth over USD 500 million today.
Validator Rewards
To help secure the Sonic network by providing computing resources and staking a certain amount of $S, you can earn block rewards as well as transaction fees paid by users on Sonic.
Block Rewards
The target reward rate for validators on Sonic is 3.5% when 50% of the network is staked. The network mints tokens each epoch to provide this, except during Sonic's first four years when rewards stem from block rewards migrated from Opera, as outlined above.
The reward rate adjusts proportionally, e.g. if all $S tokens are staked, the annual reward is 1.75%. Conversely, if only 25% of $S tokens are staked, the annual reward is 7%.
Network Fees
Network fees are generated when users pay gas to interact with the network. Validators earn a percentage of these fees, which are distributed equally among all staked S tokens. For a detailed breakdown of how much a validator earns from gas fees, see here.
Ecosystem Vault
The Ecosystem Vault was initially launched on Fantom Opera to fuel the community ecosystem by sharing a percentage of total fees on the network with select apps in the community.
To extend this program to the Sonic chain, we'll revise the program to allocate quarterly disbursements from the Ecosystem Vault to the Sonic Community Council (SCC), an independently operated collective of ecosystem members who actively contribute to elevating the Sonic community via user-based programs, developer onboarding, and app support.
The amount will be decided at the discretion of the Sonic Foundation and reflect the SCC’s previous quarter performance.
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