Sonic Labs, the development team behind the Sonic layer-1 blockchain (rebranded from Fantom), has announced a strategic shift toward vertical integration and building chain-owned applications to redesign how value accrues to its native S token. In an X post linked to a longer thesis titled “Vertical Integration: The Missing Link in L1 Value Creation,” the team said it will increasingly build or acquire key protocol-level apps itself—rather than leaving most economic activity to third-party dApps—in order to keep more revenue inside the Sonic ecosystem and tie it directly to the S token. The new model focuses on Sonic owning “flagship primitives” and core products across areas such as trading, credit, payments, clearing/settlement and risk markets, either by developing them in-house or integrating acquired application teams. Sonic argues that as blockspace becomes cheaper and gas fees compress, a gas-fee–centric L1 model does not provide durable value capture for the native token; instead, product-level revenue from chain-owned financial infrastructure is meant to become a key economic driver. This approach is intended to reduce “value leakage” to external applications, ensure that fees and protocol income accrue back to the S token, and complement Sonic’s existing FeeM model, which shares up to 90% of app fees with builders while burning the remainder. Sonic Labs emphasizes that the chain will remain open and permissionless for independent developers, but that major economic rails will be vertically integrated so the network itself participates in and monetizes core activity. The team has already begun implementing the thesis, reporting that early vertical-integration revenues from products such as the network-integrated USSD stablecoin and Metropolis vaults have had roughly 4x the deflationary impact of fee-related burns over the same period, providing an initial proof of concept for the model. The strategy matters because it reflects a broader shift among L1s facing fee compression: instead of relying primarily on transaction fees, Sonic is attempting to align protocol revenue, token value, and critical economic infrastructure under one vertically integrated stack.

AI-generated background, compiled from web sources — not editorial content.

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