Sonic SVM chain on Solana is introducing a new burn mechanism to boost buying pressure on its token and liquidity.
Solana-based (SOL) Sonic SVM (not to be confused with Sonic, formerly Fantom) is making a key change to its tokenomics. On Monday, May 19, in a press release shared with crypto.news, Sonic SVM announced an overhaul to its token burn model. Under the new mechanism, 50% of all transaction fees will be used to buy SONIC tokens on the open market.
Sonic SVM is a Solana-based blockchain built using the Solana Virtual Machine. It acts as a sort of layer 2 network, focused on monetizing user attention in apps.
Previously, these Sonic SVM tokens were sent to a burn address, reducing supply to indirectly support the price. Now, the updated burn model will generate direct buying pressure on SONIC, which may have a more immediate effect on its price and benefit token holders, according to Chris Zhu, CEO at Sonic SVM.
“This redesigned mechanism represents a fundamental shift in how we think about long-term token value. Rather than simply burning tokens, we’re implementing a strategic approach that creates strategic demand while building protocol-owned liquidity. This supports our growing ecosystem of games and applications while rewarding our community of token holders,” Chris Zhu, Sonic SVM.
Sonic SVM to use fees for boosting liquidity
The upcoming update also includes changes to how Sonic SVM fees work. Notably, Solana tokens, which represent a 12.5% share of Sonic fees, will be staked on the Solana mainnet, generating staking rewards.
These rewards will go to users who hold vested SONIC tokens and contribute to liquidity pools for Sonic’s SVM chain. Alan Zhu, co-founder and chief product officer at Sonic, noted that the system is designed to scale liquidity alongside network usage.
“As we continue scaling our infrastructure to support millions of users across our gaming and social platforms, this value accrual mechanism ensures our token economy grows in tandem with network usage. The more the network is used, the stronger the buy pressure and deeper the liquidity becomes,” Alan Zhu, Sonic.