Sonic Labs unveils fee monetization system to drive native token deflation

Sonic Labs is releasing a refined tokenomics model featuring an updated fee monetization (FeeM) structure to promote a deflationary system for its native token, according to a Tuesday post from CEO Mitchell Demeter.

The new FeeM system introduces tiered rewards for builders ranging from 15% to 90% based on network usage. There will be a fixed 10% allocation to validators, while the remainder will be burned. Transaction fees on the Sonic blockchain are paid in S tokens.

By rewarding builders and validators, Sonic aims to promote ecosystem growth. Simultaneously burning the remaining tokens is expected to support its deflationary economics.

"Our goal is to increase deflation and strengthen long-term value alignment," Demeter said in a post on social media platform X. The new system will be formalized via an onchain governance vote, Demeter wrote.

Demeter, who assumed the CEO role six weeks ago, outlined other changes in the "upcoming phase" of Sonic. These include a U.S. expansion that was approved by governance in August, which is expected to bolster institutional and policy engagement.

Sonic will also adopt select Ethereum Improvement Proposals (EIPs) and introduce Sonic Improvement Proposals (SIPs) to enhance developer usability and interoperability.

"The real challenge ahead is functionality," Demeter said. "We aim to make Sonic not just the fastest network, but the most dynamic and developer-friendly ecosystem in the industry."

Demeter said these changes are crucial for Sonic to shift its focus from performance benchmarks toward business-oriented upgrades designed to achieve fundamental growth.

Sonic Labs focuses on the growth of EVM-compatible Layer 1 blockchain Sonic. It launched the S cryptocurrency in August 2024, following its rebranding from the Fantom Foundation. S fell 2.21% in the past 24 hours to trade at $0.14, and currently holds a market capitalization of $546.8 million, according to The Block's S price page .