Sonic, a new Layer-1 blockchain built from the ground up by the team behind the Fantom blockchain has gone from strength to strength since the start of the year. As 2025 commenced, it had just $27 million in total value locked, but that number had mushroomed to more than $991 million as of April 21.
The network relies on a highly customized DAG architecture to deliver Solana-like performance, with rapid transactions, instant finality and almost zero fees, making it perfect for DeFi applications.
That explains why Sonic’s ecosystem is buzzing with activity, as hot DeFi projects like Silo Finance, BEETS and Rings enjoy rampant growth.
1: Silo Finance
Silo Finance takes its name for its novel lending model, in which each lending pool is “siloed” from the others to minimize the risk for users. With Silo, each of its assets are paired with a “bridge asset” such as a stablecoin, ensuring that the risks aren’t shared across the entire protocol.
This risk-isolation model, where each lending pool contains an isolated asset plus a base asset, ensures there is no chance of cross-contamination occurring.
Thanks to this design, DeFi users can borrow assets such as Sonic’s S token without putting themselves at too much risk, should one of its markets collapse. One bad asset will not take down the entire protocol, and that kind of reassurance is almost non-existing elsewhere in DeFi. It’s a big advantage that makes Silo Finance especially attractive to conservative lenders, as it enables them to supply liquidity without exposing themselves to other, unrelated assets, which is not the case on traditional lending pools.
Besides the lower risk, the “silo” model also ensures greater capital efficiency because Silo doesn’t need to compensate for the risk associated with unrelated tokens. This means correlated assets such as liquid staking tokens have more borrowing power, while each market can customize its interest rate curves based on the asset’s unique conditions.
2: Shadow Exchange
One of the leading decentralized exchange platforms on Sonic, Shadow Exchange employs a concentrated liquidity AMM model similar to Uniswap V3, but what really sets it apart is its unique tokenomics.
The platform’s native SHADOW token utilizes an evolved version of the ve(3,3) model that was first conceived by Andre Cronje at Solidly, where users can stake the tokens to receive xSHADOW. While there’s a minimum lockup time, users can still exist whenever they wish, but should they unstake early they’ll pay a penalty fee that’s distributed among those who are still staking. So the longer you stay, the more you win.
The concentrated liquidity model enables traders to get lower prices, while liquidity providers can earn generous fees, helping to attract plenty of liquidity to the platform.
This model has helped Shadow Exchange become one of Sonic’s breakout projects, and in Febryary its market cap rose from less than $5 million to more than $32 million in just a couple of weeks, representing an impressive 500% gain.
3: Rings
The yield-bearing stablecoin protocol Rings allows users to deposit stablecoins such as USDC or USDT, or ETH to mint scUSD and scETH tokens with no fees.
When users mint scUSD or scETH on Sonic, Rings takes the collateral and deposits the collateral into a Veda boring vault on Ethereum, where it actively generates yield. At the end of each epoch, the yield from this vault is used to create newly-collateralized scETH and scUSD, which is then distributed to Sonic-based dApps according to the results of its regular gauge votes.
The dApps that receive these tokens can then stake them via Rings on Sonic and receive staked scUSD or staked scETH, which is once again sent to the Veda boring fault to be used in yield generating activities.
In addition, users who mint scUSD and scETH tokens are also given veNFTs which provide voting rights for the regular gauge votes.
As of April 21, Rings had accumulated more than $108 million in TVL, making it one of the most valuable yield-bearing stablecoins on Sonic.
4: Beets Finance
Beets is a project that began life on Fantom as a Balancer-style AMM, but has since morphed to become the core staking and liquidity engine for Sonic.
Beets offers native staking of S and liquid staking, where users can receive and stake stS tokens to increase their rewards. By holding stS, users will get the normal auto-compounded staking rewards while retaining liquidity to participate in other DeFi yield-generating activities. To facilitate this, Beets has partnered with various protocols to create a number of liquidity pools and yield farming mechanisms, such as its partnership with Origin, where it pairs stS with wrapped Origin Sonic or wOS tokens.
With its combination of staking, liquid staking and liquidity pools, Beets has helped to turbocharge liquidity in the broader Sonic ecosystem, leveraging its AMM heritage to provide numerous stable yield-generating opportunities for investors.
5: Eggs Finance
Last but not least is the leveraged yield farming protocol Eggs Finance, which aims to help S-token holders generate rewards without giving up custody of their assets.
It’s based on an “internal yield-loop”, where investors can stake S tokens to mint EGGS, which is a derivative asset that’s pegged to S. Users have to pay a 2.5% fee to mint EGGS, and this price increases as the community mints more tokens, creating a system that’s more beneficial for early minters.
Using their EGGS, DeFi investors can put them down as collateral to borrow more S tokens, which can then be used to mint more EGGS in a “leveraged looping” cycle, or alternatively deposit them elsewhere, such as in Beets or Shadow’s liquidity pools.
EGGS is a complex, super-leveraged DeFi strategy that’s quite unique on Sonic, and it has attracted a number of critics who point out the risky nature of its mechanics. Nonetheless, it has helped to drive significant liquidity to other Sonic-based protocols, helping to boost the overall ecosystem.
