The Shift from Speed to Stickiness
Mitchell Demeter, who took over as CEO of Sonic Labs just two months ago, believes the blockchain landscape has fundamentally changed. He thinks the era where layer 1 networks competed primarily on speed and low fees is over. Back in 2020 and 2021, being faster and cheaper than Ethereum was a major differentiator that attracted builders and users. But now, with so many fast and cheap chains available, block space has effectively become commoditized.
Demeter explains that the real battle now is about who can attract users and builders—and actually keep them. Builders, users, and capital move very easily today, so being fast and cheap is no longer enough. There has to be a reason for them to stay on your chain. This requires creating what he calls a “moat” around the ecosystem.
Protocol-Level Changes for Developer Experience
Sonic is now shifting its strategy toward protocol-level changes and Ethereum Improvement Proposals (EIPs) to make the builder environment more conducive and sticky. Demeter notes that while Ethereum moves slowly due to its massive ecosystem, smaller chains like Sonic can experiment more rapidly.
One concrete example they’re exploring is EIP-7903, which increases the contract size limit from the current 49 kilobytes. This would make it easier for developers to build more complex applications and create stickiness because moving entire infrastructure across chains becomes more difficult. The company is actively evaluating multiple EIPs and talking directly to builders about what they want to see implemented.
Redesigning Tokenomics for Value Capture
Demeter identified fixing tokenomics as one of his first priorities as CEO. He believes the industry is moving away from pure speculation toward sustainable business models. Investors now want to see how on-chain activity translates into real value creation and return to token holders.
Currently, Sonic’s fee model returns 90% of fees to builders and 10% to validators. While this creates a great user experience where apps can abstract away blockchain complexity—users don’t see gas fees or sign transactions—it doesn’t benefit token holders. Demeter compares this to early technology companies that eventually shift from issuing stock to buybacks.
Sonic is working on changing to a sliding-scale model where builders might receive around 15%, validators get 10%, and the rest is burned. This way, increased usage actually benefits token holders by creating scarcity. They’re also exploring licensing their technology to exchanges, governments, and banks, using that revenue to fund token buybacks and burns.
Building Sustainable Businesses
Demeter sees the broader crypto market going through a transition where liquidity has tightened and investors have become more sophisticated. Builders and users have more optionality, so chains can’t rely on narratives alone—they need to build real businesses.
He acknowledges that Sonic spent seven years building world-class technology but now needs to shift from a tech-only culture to a real business with marketing, communications, business development, and institutional sales. While he doesn’t have a crystal ball, his sense is that most of the pain is behind the industry, and liquidity will return—but driven more by fundamentals than blind speculation.
