Sonic Labs to pursue a ‘vertical integration’ strategy to bolster the value of the S token

Sonic, a Layer 1 blockchain, is pursuing a “vertical integration” strategy—building or acquiring key applications in-house—to redesign the value-accrual structure of its native token, S.

According to The Block on the 11th (local time), Sonic Labs said via X (formerly Twitter) that it will “build core economic infrastructure directly at the intersection of token utility, liquidity and usability,” laying out a restructuring plan aimed at strengthening the S-token ecosystem.

Sonic is an EVM-compatible Layer 1 formerly known as Fantom, targeting the processing of hundreds of thousands of transactions per second and near-instant finality. Until now, Sonic has framed value accrual around a “gas-fee-centric model,” in which rising user activity increases transactions and gas fees, thereby feeding back into token value.

Sonic Labs, however, said “over the past five years, this model has been thoroughly disproven,” arguing the network must move beyond simply selling blockspace. As rollups, alternative Layer 1s and modular architectures proliferate, blockspace scarcity has weakened, intensifying fee pressure, it explained.

Accordingly, Sonic is considering building its own “flagship primitives” and major products across core economic activity areas—including trading, credit, payments, clearing and risk markets—or acquiring and integrating top application teams across the industry. The plan is to reduce “value leakage” to external applications and link protocol revenue more directly to the S token.

Last year, Sonic introduced the “FeeM” model, under which application developers can take up to 90% of the fees they generate, with the remainder burned. It said the vertical integration strategy is not meant to replace this, but to reinforce a structure that returns revenue to token holders. Sonic Labs added that “once a revenue base accumulates, buybacks can be executed at a sustainable level.”

A comparable case is Optimism, which previously approved a buyback plan to allocate 50% of ecosystem revenue to purchasing OP tokens. Sonic also cited Hyperliquid as a reference example for a structure in which “applications and infrastructure are not separated.”

Meanwhile, Andre Cronje, who has contributed to the Sonic ecosystem, recently conducted a $25.5 million private token round for the on-chain exchange “Flying Tulip,” valuing the project at $1 billion.