Sonic DeFi ecosystem explosion: USDC whale gets on board, TVL skyrockets by 83%, how many times can Token S rise?

From a fundamental perspective, Sonic has built a sustainable Decentralized Finance rise flywheel through the triple innovation of technical performance + economic model + ecological incentives.

Written by: Lawrence

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

However, amidst the gloom, the Sonic Network has become a bright landscape, achieving the fastest rise in TVL among Layer1 public chains with its groundbreaking growth. With Circle announcing the official deployment of native USDC and cross-chain protocol CCTP V2 on Sonic, the network's TVL (Total Locked Value) surpassed 854 million USD, showing 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

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Native USDC and CCTP V2 cross-chain protocol are coming to Sonic. This means:

1. 1 billion-level liquidity injection: As the first high-performance chain to directly support native USDC, Sonic can accommodate over 28 billion USD in stablecoin supply from the Circle ecosystem.
2. Cross-chain efficiency revolution: CCTP V2 will compress the asset cross-chain time from an average of 15 minutes to within 2 minutes, and Gas costs will be reduced by 76%;
3. Compliance Upgrade: The institutional-level auditing and compliance framework of USDC paves the way for Sonic to expand into RWA, payment, and other scenarios.

The Sonic on-chain stablecoin supply has risen from 100 million USD to 260 million USD over the past month, a surge of over 160%. Among them, the market share of competitors such as DAI and FRAX has dropped by 22 percentage points, indicating strong recognition from whale funds for infrastructure upgrades.

TVL Surges Against the Trend: The "Three Driving Forces" Behind the 83% Rise

In the past month, while most public chains were stuck in the stagnation of TVL, Sonic absorbed funds at an average rate of 13 million USD per day. As of the time of writing, Sonic's chain TVL has surpassed 850 million USD, ranking 12th on the Layer 1 leaderboard. In the past month, it has risen over 83%, leading all public chains.

Its rise 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 innovative "dynamic interest rate curve" ensures that the borrowing APY is 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 the staked token S into interest-bearing asset stS, achieving an annualized return of 23% through an automatic compound interest strategy. Users can re-stake $stS in Aave V3 to build a "yield nesting" model, with an 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 forward in 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 a daily liquidation volume as low as $370,000, and risk control better than most competitors.

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

In addition, Sonic has seen multiple new DeFi protocol stars emerge in just over a month, with impressive data. Readers can also choose projects that suit them from the perspective of APY, risk, etc., to achieve a good stable return during the current volatile stage of the crypto market.

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

"We have cracked the algorithmic stablecoin problem, but historical trauma makes me hesitate." 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-level liquidation protection mechanism. Despite the significant technological breakthrough, AC still admits that "the PTSD from the LUNA crash has not faded."

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

In addition, some have proposed the following solutions:

• Anti-death spiral design: When the stablecoin depegs, the system prioritizes the destruction of governance tokens rather than issuance, avoiding liquidity dilution;
• Three-tier interest rate model: dynamically adjusts 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 the redemption of cross-chain assets to prevent the spread of systemic risk.

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

Capital Influx: The "Value Vote" and Valuation Game of Top Institutions

In May 2024, Sonic completed a $10 million strategic financing led by Hashed, with follow-on investments from SoftBank, Aave DAO, Bitkraft, and other institutions. This funding was precisely allocated to three major areas:

• Developer Incentive Pool: 30% allocated for Gas fee sharing subsidies for DApps, driving the number of ecological protocols 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 validation nodes from 7 to 21.

The current circulating market value of $S is 1.6 billion dollars, 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 dollar TVL is only 32.7% of Solana's;
• The staking economy is healthier: 62% staking rate is higher than Sui and Aptos, and the annualized deflation rate of 1.8% forms value support;
• Institutional holding 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." Lucas Wong, an analyst at crypto fund UOB Ventures, pointed out that if Sonic's TVL breaks 2 billion dollars this year (annual growth rate of 150%), based on the industry average market cap/TVL ratio of 4, the token price is expected to reach 1 dollar, indicating a 100% rise potential compared to the current 0.5 dollars.

Veteran trader NihilusBTC stated that S is breaking out of a descending wedge, and once it reverses, it may reach a price of 0.99 US dollars.

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 introduced 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 has officially launched on the Sonic network. Enso Shortcuts is supporting the Royco market to earn rewards in Sonic. Sonic has initiated 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 easy, while Enso handles protocol integration and deposit operations behind the scenes.

With top protocols like Pendle and Enso moving in, Sonic's Decentralized Finance Lego has revealed unique opportunities:

1. Yield Tokenization (Pendle × Rings)

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

2. On-chain payment (Sonic Pay)

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

3. Meme Fever (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 Decentralized Finance rise flywheel through the triple innovation of technical performance + economic model + ecological incentives. The current market cap/TVL ratio is in the bottom range of public chains, with a higher safety margin compared to SUI at the same stage. If the TVL breaks through 2 billion dollars this year (with an annual growth rate of 150%), the S token price is expected to reach the 2-3 dollar range (corresponding to a market cap of 6-9 billion dollars), reminiscent of the market trend from August to December 2024, when the public chain newcomer SUI rose from 0.46 dollars to 5.36 dollars.

Investor strategy recommendations:

• Long-term holding: Allocate S spot and participate in staking (APY 15.9%), capturing ecological rise dividends;
• Leverage Strategy: Amplify returns by minting yield tokens through Pendle or using the Shadow's x(3,3) model;
• Risk hedging: Pay attention to the airdrop unlocking schedule and use contracts and other tools to avoid short-term fluctuations.

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