S (S) tokenomics

The S token is the native utility and governance token of the Sonic network, a high-performance Layer-1 blockchain that evolved from the Fantom ecosystem. Launched in December 2024, the S token mirrors the supply dynamics of the original FTM token while introducing new inflationary and incentive structures designed to support long-term network growth and developer activity.

Issuance Mechanism

The S token launched with an initial total supply of 3.18 billion, matching the maximum supply of FTM. The issuance follows a phased approach:

• Initial Supply and Migration: FTM holders can upgrade to S on a 1:1 basis. For the first 90 days after launch, this migration was bidirectional (FTM ↔ S). After 90 days, the process transitioned to a one-way swap (FTM → S).
• Migrated Block Rewards: Upon launch, the remaining inflationary block rewards from Fantom Opera were migrated to Sonic. These fund validator incentives for the first four years at a rate of approximately 70.07 million S per year (roughly 2.21% of the initial supply).
• Perpetual Inflation: After the initial four-year period, the network will transition to perpetual inflationary emissions to fund block rewards. The target rate is 1.75% per year, assuming 50% of the total supply is staked.
• Operational Funding: Starting six months after launch, the network will mint additional tokens at an annual rate of 1.50% of the initial supply (~47.63 million S) for six years. these are directed to Sonic Labs for network growth, with any unused tokens burned at year-end.

Allocation Mechanism

The allocation of the S token supply is designed to prioritize community engagement and ecosystem development.

Additionally, specific pools were established for strategic initiatives:

• Airdrop Program: 190.5 million S (6% of initial supply) was minted for airdrops to historic Opera users and new Sonic users.
• Innovator Fund: Up to 200 million S was allocated from the treasury to accelerate partner migration and support new ventures.

Usage and Incentive Mechanism

The S token serves several core functions within the ecosystem:

• Medium of Exchange: S is used to settle all network transaction fees and can be used for on-chain activities such as purchasing NFTs or providing liquidity in DeFi protocols.
• Staking and Security: Users can stake S to secure the network. Operating a validator requires a minimum stake of 50,000 S. Delegators can also stake their tokens with existing validators to earn a pro-rata share of block rewards, minus the validator's commission.
• Governance: Staked S tokens grant holders the right to participate in governance votes to shape the future of the network.
• Fee Monetization (FeeM): A unique incentive for developers where they can earn up to 90% of the gas fees generated by their applications, while the remaining 10% is directed to validators.

Locking and Unlocking Mechanisms

Sonic employs a sophisticated vesting and locking strategy to manage circulating supply and discourage immediate selling pressure.

Staking Locks

The new staking system features a 14-day withdrawal period for users who wish to unlock their staked S tokens. This is a significant reduction from previous requirements, intended to facilitate a better experience for liquid staking protocols.

Airdrop Vesting and "Deflationary" Unlocking

The airdrop program uses a unique linear decay mechanism. While 25% of the airdrop was available immediately, the remaining 75% is distributed as ERC-1155 NFT positions that vest over 270 days (nine months).

Users have the option to claim their vested tokens early, but doing so incurs a burn penalty. The amount of tokens burned decreases linearly as the user approaches the end of the 270-day period. This "game theory" approach encourages long-term holding while providing an exit for those willing to sacrifice a portion of their allocation.

General Vesting Timeline

While the initial claim represented only 15% of the total supply at launch, the remaining allocations (Investors, Foundation, etc.) are scheduled to vest gradually. Based on current projections, the total SONIC supply is expected to be fully vested by January 2029. Notably, the "Ecosystem" and "HyperGrid Rewards" portions do not have strictly predefined vesting schedules, allowing for flexible distribution based on network needs.