In August, Fantom announced its complete rebrand to Sonic Labs for its upcoming chain, Sonic. While separate from Fantom's Opera network, FTM tokenholders can exchange their tokens 1:1 for S tokens, Sonic’s native token, at the network’s launch. The Sonic network is expected to go live in December 2024.
Sonic Labs revealed plans to airdrop 190,500,000 S tokens (worth over $200 million at the time of writing) to developers, early Sonic users, and loyal Opera users. The tokens will be airdropped with a linear vesting schedule and burn mechanism to encourage long-term holding.
Sonic revealed Sonic Gateway, a secure, decentralized bridge between Ethereum and Sonic. With efficient token transfers and a fail-safe mechanism allowing users to withdraw funds on Ethereum during prolonged failures, Sonic Gateway prioritizes user confidence and system reliability.
The Opera network experienced growth across key metrics in Q3, with daily transactions up 32%, staked FTM increasing 2%, and circulating market cap rising 18%.
Primer
Fantom Opera (FTM), a Layer-1 protocol launched in 2019, focuses on fast and cost-efficient transaction execution. Initially gaining traction as a DeFi hub with development support from Andre Cronje, Fantom now hosts dozens of DeFi protocols, including Equalizer Finance, Beethoven X, and SpiritSwap. Beyond DeFi, Fantom supports NFTs and gaming applications like Estfor Kingdom.
The Fantom Foundation developed Fantom's Proof-of-Stake consensus mechanism, “Lachesis.” Lachesis secures Fantom’s Opera chain, an EVM-compatible smart contract platform. Unlike traditional consensus mechanisms, Lachesis allows nodes to verify transactions asynchronously, bypassing the need to incorporate blocks sequentially. This design accelerates transaction execution.
The network’s native token, FTM, is central to payments, governance, and staking rewards. Validators must stake a minimum of 50,000 FTM ($34,500 as of quarter-end) to participate in securing the network. Delegators can also stake FTM to earn rewards. For a detailed overview of Fantom, refer to our Initiation of Coverage report.
In March 2024, Fantom unveiled Sonic (S), a new high-throughput chain. By August, Fantom rebranded as Sonic Labs to align with the new chain’s launch. While Sonic will function independently of Fantom’s Opera network, FTM tokenholders can exchange their tokens 1:1 for S tokens upon the network’s launch. Additional details about Sonic can be found here.
After a broader market cooldown in Q2, FTM outperformed its peers in Q3. Its circulating market cap increased 18% QoQ, from $1.65 billion to $1.95 billion. This growth outpaced other smart contract platforms, with SOL gaining 5% and ETH, AVAX, and BNB declining by 24%, 5%, and 2%, respectively. FTM’s outperformance elevated its market cap ranking by four spots, moving from 49th to 45th.
Opera’s fee revenue, representing gas fees paid to validators, declined in Q3. In USD, fee revenue fell 48% QoQ, from $109,000 to $57,000. When measured in FTM, revenue decreased 13% QoQ, dropping from 145,000 FTM to 126,000 FTM. However, fee revenue showed signs of recovery in the final week of Q3, reaching $11,273 compared to a weekly average of $4,860, potentially indicating a trend reversal.
Supply Dynamics
The FTM token experienced supply dynamic changes between Q4 2022 and Q1 2023. Notably, the Ecosystem Vault and Gas Monetization Program were introduced (more details in the Ecosystem section). They reduced the burn rate of transaction fees from 30% to 5% and reallocated the remaining 25%.
The Ecosystem Vault, which captures 10% of all gas fees paid on Fantom, saw its balance grow to 1.7 million FTM by the end of Q3, up 7% QoQ. Due to FTM’s price appreciation, the Vault’s USD value increased 26% QoQ, from $0.9 million to $1.2 million.
By the end of the quarter, FTM’s circulating supply reached 2.8 billion. The annualized inflation rate was 3% — unchanged from the previous quarter. Additionally, as of September 30, 11.3 million FTM (i.e., 0.3% of its total 3.2 billion supply) had been burned.
Network Overview
Usage
Opera’s network activity in Q3 2024 highlighted strong transaction growth, despite a decline in daily active addresses. The network averaged over 294,000 daily transactions, marking a 32% QoQ increase from 223,000. The ongoing Meme Season (more details in the Ecosystem section) and a series of Galxe campaigns likely drove this growth. Despite the rise in transactions, average daily active addresses declined by 4%, ending the quarter at 30,500. However, daily active addresses peaked at 43,335 in the final week of Q3, potentially indicating a downward trend reversal.
New addresses on Opera showed consistent growth in Q3 2024. Average daily new addresses increased by 1% QoQ, from 4,155 to 4,201. Daily new addresses peaked at 61,000 in mid-August after initiating the second Galxe quest in the Road to Sonic series. Ecosystem initiatives and technological upgrades (discussed in subsequent sections) are expected to contribute to new address growth in future quarters.
Security and Decentralization
The Opera network employs a Delegated Proof-of-Stake (DPoS) consensus mechanism called “Lachesis.” This system relies on validators running a local Directed Acyclic Graph (DAG) composed of “event blocks,” which record transactions on Opera. Each validator independently orders transactions and event blocks, calculating the exact sequence of events. Event blocks are categorized as “confirmed” or "unconfirmed" based on their status within the consensus process.
As validators create event blocks, theyshare them with other validators across the network. These event blocks propagate through the network as validatorsincorporate them into their local DAGs. When two-thirds of all validators, weighted by stake,reach a consensus on a batch of confirmed event blocks, the batch isfinalized as a block and added to the blockchain.
At the start of 2024, the Sonic Foundation (previously Fantom) reduced staking requirements to make operating a validator more accessible. Following the approval of a governance proposal, the minimum stake to operate a validator was reduced from 500,000 FTM to 50,000 FTM. This change increased the number of active validators from 23 to 69 during 2024, a level that remained stable in Q3.
Staked FTM experienced inflows for the third consecutive quarter, rising 1.5% QoQ to 1.3 billion FTM. Supported by FTM’s price appreciation, the total dollar value of staked tokens grew 16% QoQ, from $780 million to $905 million.
Introducing Sonic
Since its launch in 2019, Fantom’s Opera network has served as a foundational smart contract platform. Over time, the Fantom team sought to revamp the network but faced challenges due to the network’s live operation — analogous to upgrading a plane mid-flight. To address this, the team devised a solution to introduce key technical enhancements.
In March 2024, The Fantom team announced their solution: a new high-throughput chain named Sonic (ticker S). By August 2024, Fantom rebranded to Sonic Labs. Throughout Q3, Sonic unveiled several vital technical features and initiatives for the new chain, culminating in the launch of the Sonic testnet in September.
Some of the key technical features of Sonic include:
TPS and TTF: Sonic theoretically achieves 10,000 ERC-20 transfer transactions per second with sub-second time to finality.
SonicVM: An optimized virtual machine designed to improve smart contract execution efficiency, potentially reducing gas costs and enhancing overall network performance.
SonicDB: A database with live pruning, a unique feature that automatically removes historical data, reducing validator storage requirements as the chain grows.
In addition to the key technical features, Sonic is debuting six core initiatives:
Fee Monetization: Rewards builders with up to 90% of the fees generated by their applications.
Sonic Gateway: A secure bridge for transferring assets between Ethereum and Sonic.
S Airdrop: Designed to incentivize early adopters and kickstart economic activity on the network.
Dynamic Fee Functionality: Allows builders to customize gas fees for users interacting with their contracts.
Innovator Fund: Allocates 200,000,000 S tokens from the Sonic Lab treasury to support infrastructure development and strategic partnerships.
Sonic and Sodas: A series of developer-focused networking events hosted worldwide, funded by Sonic Labs.
Some of these initiatives are already underway, while the full rollout will coincide with the launch of infrastructure and support from data providers such as Chainlink, Pyth, Dune, Alchemy, Safe, and others. With its diverse infrastructure and builder-first incentives, Sonic positions itself as a leading blockchain for developers.
Fee Monetization Program
A distinguishing feature of Sonic is the Fee Monetization Program (FeeM). This program allows developers to earn up to 90% of the gas fees generated by their applications. The approach is similar to platforms like YouTube or X, where creators receive a share of the revenue they generate. By sharing gas fee revenue, Sonic incentivizes developers and retains builders through a sustainable income stream.
The program addresses a critical challenge in the crypto industry: fragmented liquidity caused by appchain adoption. Developers sometimes migrate their applications to dedicated chains to capture gas fee revenue or optimize costs. However, this migration can lead to losing valuable applications and talent for the host chain, while appchains lose composability and liquidity from the original chain. Unichain is a current example of this dynamic. By rewarding developers for building high-usage smart contracts, FeeM aims to prevent this loss and retain talent and liquidity within Sonic.
Transactions on Sonic will follow one of two fee distribution flows under the monetization program. For applications not participating in the program, 50% of the transaction fee will be burned, while the remaining 50% will be split between validators and the ecosystem vault. For participating applications, up to 90% of the transaction fee will go to the app’s developer(s), with the remaining 10% tipped to validators.
Innovator Fund
In addition to the Fee Monetization Program, Sonic Labs revealed the Innovator Fund. The fund includes an allocation of 200 million S tokens (worth over $130 million at quarter-end) to incentivize partner migration and attract infrastructure providers. Key consumer app integrations include Curve, Pendle, and Equalizer, while major infrastructure providers include Chainlink, Dune, and Safe.
Sonic Gateway
Over the past two years, bridge exploits have resulted in losses exceeding $2.5 billion. Recognizing the security risks associated with cross-chain applications, Sonic is introducing a secure bridge between Ethereum and Sonic, called Sonic Gateway.
Sonic Gateway is designed to enable efficient token transfers between the two networks without compromising decentralization or security. Transfers from Ethereum to Sonic are expected to take up to 10 minutes, while transfers from Sonic to Ethereum may take up to one hour. Validators operating nodes on both networks will secure the bridge, ensuring that no centralized entity can access funds in transit. This design establishes a secure, decentralized connection.
To further bolster system security and user confidence, Sonic Gateway will include a fail-safe mechanism. This feature allows users to withdraw their funds on Ethereum if the bridge or chain experiences a failure. If issues persist for more than 14 days, users can unlock the native assets they bridged over from Ethereum. This mechanism acts as a form of insurance for bridge users and could unlock additional liquidity for the ecosystem.
The S token serves as Sonic's native token, which will be used for paying transaction fees, staking, validator operations, and governance participation. Upon Sonic’s launch, FTM holders will be able to exchange their tokens 1:1 for S. The total supply of S tokens, set at 3.175 billion, will mirror the existing total supply of FTM. Six months after launch, 6% of the 3.175 billion S will be minted for the airdrop program.
Sonic Token Airdrop
Sonic Labs plans to airdrop 190,500,000 S tokens to incentivize developers, early Sonic users, and loyal Opera users. The airdrop implements a linear vesting schedule and burn mechanism to encourage long-term holding. On the first day of the airdrop, 25% of the tokens will be unlocked, while the remaining 75% will vest over nine months as ERC-1155 NFT positions.
Users may claim the remaining tokens before the nine-month vesting period ends but will incur a burn penalty. The table below illustrates the number of tokens burned based on when users claim their tokens.
This airdrop design aims to prevent immediate selling pressure and encourages long-term use of the new chain.
Sonic Boom and Sonic Arcade
On August 20, 2024, Sonic Labs launched the first phase of its airdrop program, Sonic Boom. Sonic Boom is aimed at developers and incentivizes teams to earn Sonic Gems (points) by building applications. The bounty program will reward 30 winning teams for developing applications across categories such as Lending, Payments, Yield, dePIN, AI, and more.
The program's second phase, Sonic Arcade, was announced at the end of Q3 2024. Built on the Sonic testnet, Sonic Arcade includes three play-to-earn games: Plinko, Mines, and Wheel. Users can play these games to earn airdrop points while experiencing Sonic’s speed.
The Road to Sonic
On August 7, 2024, Sonic Labs kicked off The Road to Sonic, a series of Galxy Campaigns running through Q3 and into early Q4 2024. Users can earn S token airdrop points by completing onchain activities, such as trading, staking, and playing games on the Opera network. Applications featured in the campaign include Estfor Kingdom, Beethoven X, Lynx, Polter Finance, Spooky Finance, and Equalizer Exchange.
Ecosystem Overview
DeFi
During the broader market downturn, Fantom’s total TVL declined in Q3 2024. In USD terms, TVL fell 36% QoQ, dropping from $170 million to $108 million. When measured in FTM, TVL decreased 46% QoQ, from 289 million FTM to 157 million FTM. By the end of the quarter, Fantom ranked 42nd among all chains by USD-denominated TVL.
Opera maintained one of the most diverse DeFi ecosystems among smart contract platforms in Q3 2024. Its DeFi Diversity Score, which measures the number of protocols comprising the top 90% of TVL, decreased by 1 to 20.
Together, these six protocols accounted for over $105 million (65%) of Opera’s DeFi TVL and collectively added $25 million in Q3. This growth partially offset the overall decline in Fantom’s TVL.
The largest gains in TVL share for Q3 were recorded by WigoSwap, a native DEX on Fantom launched in February 2022. Inflows began picking up toward the end of the quarter, driven primarily by WFTM, which accounted for 90% of WigoSwap’s TVL by the end of Q3 2024.
Average daily DEX volume on Fantom decreased 35% QoQ, falling from $17 million to $11 million. However, average daily DEX volume increased 10% YoY, rising from $9.7 million to $10.7 million.
By the end of Q3, Fantom hosted 31 different DEXs. Competition among these platforms has intensified over the past year. Once dominated by SpookySwap, the market saw WigoSwap surpass SpookySwap in trading volume during Q1 2024. For the third consecutive quarter, WigoSwap remained the leading DEX on Fantom by trading volume.
In Q3 2024, the top six DEXs by average daily trading volume were:
Collectively, these six DEXs accounted for 85% of Fantom’s DEX trading volume in Q3.
Stablecoins
In Q3 2023, Fantom was impacted by the Multichain exploit (details available in the Q42023 report). Before the exploit, most stablecoins on Fantom were bridged through Multichain. Following the exploit, all stablecoins bridged through Multichain lost their backing.
On January 30, 2024 (effective November 30, 2023), the High Court of Singapore granted a default judgment in Fantom’s favor against Multichain. On July 8, Judicial Commissioner Mohamed Faizal delivered the final judgment, paving the way for the assignment of a third-party liquidator to recover and distribute missing or frozen assets to affected parties. The Fantom Foundation will partially fund this liquidation process.
Before the exploit, the Fantom Foundation had already taken steps to diversify stablecoin liquidity on Fantom. By Q3 2023, two independent third-party bridging solutions were used: Axelar (axlUSDC and axlUSDT) and LayerZero (lzUSDC and lzUSDT). As these bridges are independently operated, they are not managed by the Fantom Foundation.
In April 2024, Fantom announced that USDC bridged through Wormhole (USDC.e) would serve as the canonical stablecoin on the network. By Q3, USDC had become the dominant stablecoin on Fantom, accounting for 53% of the stablecoin market cap. Its market cap decreased slightly by 0.6% QoQ, from $186 million to $185 million.
Opera Gas Monetization Program
A key growth initiative in Fantom’s ecosystem is the Gas Monetization program, which rewards high-quality applications by sharing a portion of the transaction fees they generate. This program provides developers with a sustainable income stream, incentivizing long-term engagement.
In Q3 2023, the Fantom Foundation introduced a quarterly bonus for the Gas Monetization program. To qualify, applications must have completed at least 125,000 transactions on Fantom and been live on the network for at least three months. Since not all applications meet the criteria, a portion of FTM transaction fees without a designated recipient accumulates in the program. The Fantom Foundation redistributes these FTM tokens to the top 12 earning projects.
For Q3, the total quarterly bonus was 90,000 FTM, allocated as follows:
Ranks #1-3: 40% (each received 12,000 FTM)
Ranks #4-6: 30% (each received 9,000 FTM)
Ranks #7-9: 20% (each received 6,000 FTM)
Ranks #10-12: 10% (each received 3,000 FTM)
The top-ranked projects in Q3 were Beethoven X, PaintSwap, and Equalizer.
Meme Season
On May 2, 2024, Sonic Labs introduced Meme Season, a competition to incentivize meme culture on Fantom Opera and Sonic. The program allocated 10 million sFTMx in prizes to reward teams and holders of memecoins that participated and excelled in the competition. Rankings were determined based on a combination of market cap, gas usage, and trading volume for each memecoin.
The competition consisted of two rounds in 2024. The first round ran from June 1 to June 30, with 1 million sFTMx being rewarded to the top 3 memecoins. Prizes were distributed, with 80% allocated to holders and 20% to the team. Announced in Q3, the winners of the first round were: HOOPS, THC, and sGOAT.
The second round took place from July 22 to September 5, with 750,000 FTM allocated to the winning memecoins. The second-round winners were HOOPS, sGOAT, fSONIC, FIERY, TANGO, and THC.
Raby Wallet: Sonic Labs partnered with Rabby, a leading wallet provider, to offer gas-free trading for users. This program sponsors up to 10 DEX transactions per user on Opera for 90 days, starting July 22, 2024.
These partnerships position Sonic Labs to attract users to the new chain while fostering developer engagement and success.
Closing Summary
Q3 2024 marked significant progress for Sonic, highlighted by key technological advancements, innovative incentive programs, and the successful launch of its testnet.
Sonic's focus on a seamless user experience and robust developer incentives position It as a strong contender among smart contract platforms. Features such as theoretical 10,000 TPS and sub-second finality aim to deliver fast and efficient performance. Incentivization initiatives like the Gas Fee Monetization Program and Innovator Fund, coupled with partnerships with top infrastructure providers, underscore Sonic’s focus on becoming the most builder-focused chain.
To further drive ecosystem growth, Sonic announced plans to airdrop approximately 200 million S tokens (valued at over $130 million at quarter-end) to reward early adopters and stimulate activity. Initial airdrop campaigns, Sonic Arcade and Sonic Boom, began in Q3, introducing mechanisms to encourage long-term token holding and active network use.
With these initiatives, ongoing developer incentives, and the planned December 2024 launch, Sonic is well-positioned for a pivotal Q4.
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