onchain crawler by day, machine learning expert by day.
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onchain crawler by day, machine learning expert by day.
Date of Publication:* May 27, 2025*
Prepared by:* smartymetrics*
Introduction
The Sonic blockchain, a high-performance Layer 1 evolved from Fantom, has emerged as a significant player in the decentralized finance (DeFi) landscape since its mainnet launch in December 2024. With a total value locked (TVL) exceeding $900 million as of May 2025, Sonic's ecosystem is bolstered by its Fee Monetization (FeeM) program, which allocates 90% of network fees to protocols, incentivizing development and innovation. This report provides a detailed analysis of four lending protocols on Sonic (Aave, Euler, Silo, and Stability), using data from the provided Dune dashboard I created (https://dune.com/ismarty/sonic-lending), DeFiLlama and official project documentation. Key metrics such as TVL, active loans, utilization rates, and wallet activity are examined to understand their operational dynamics, strengths, risks, and future potential.
Key Takeaways
Fee Sharing Mechanism: Sonic’s FeeM program shares 90% of transaction fees with protocols, creating a sustainable revenue model for developers.
Protocol Performance: Silo leads with a TVL of $511.3 million and a utilization rate of 50.37%, followed by Aave ($394.3 million, 16.94%), Euler ($124.9 million, 34.49%), and Stability ($2.1 million, 43.91%).
TVL Dynamics: TVL peaked in May 2025 but shows signs of stabilization, with Silo dominating the lending market.
Risk Concerns: Silo high utilization raises concern in market volatility period as it could result in massive liquidations.
Growth Potential: Sonic’s high throughput and low fees position it as a competitive DeFi hub, but protocol-specific enhancements are needed.
TVL discrepancy: The TVL sourced from dune has some noticeable discrepancy from what is displayed on defillama.
Executive Summary
Sonic blockchain has cultivated a thriving DeFi ecosystem, with lending protocols Aave, Euler, Silo, and Stability contributing to a collective TVL of over $900 million, as reported by DeFiLlama. The FeeM program, which allocates 90% of network fees to protocols, has driven developer engagement by tying revenue to on-chain activity. Silo leads in TVL at $511.3 million, followed by Aave at $394.3 million, Euler at $124.9 million, and Stability at $2.1 million. Utilization rates vary, with Stability at 43.91%, Silo at 50.37%, Euler at 34.49%, and Aave at 16.94%, reflecting diverse borrowing demands. Daily active loans peaked at over $500 million in May 2025, while wallet activity indicates growing user adoption, with 32,220 total active wallets. Sonic’s strengths lie in its high throughput and fee-sharing model, and TVL inconsistencies in Silo require monitoring. The future outlook remains positive, with potential for further protocol innovation and ecosystem expansion.
TVL: Understanding the Dynamics
The Dune dashboard’s TVL chart shows the total value locked across Sonic’s lending protocols from January to May 2025, peaking at around $1 billion in early April before stabilizing at $900 million by May 25. The growth trajectory reflects:
Early Growth (January - February): TVL rose steadily, driven by Sonic’s mainnet launch and protocol deployments like Euler in February, 2025.
Peak and Correction (March - April): A surge in TVL, particularly from Silo, coincided with high utilization rates (43.91% for Silo), but a slight decline followed, possibly due to market corrections or user withdrawals.
Stabilization (May): TVL stabilized, suggesting maturing market dynamics.
Analysis: The TVL dynamics highlight Silo’s dominance but the slight decline post-April suggests users may be reallocating funds or reacting to external market conditions. There is TVL discrepancy from what is observed with Defillama which warrants cross-verification with other on-chain data sources.
Active Loans: Understanding Active Loan Dynamics from the Daily Chart
The daily active loan chart on the Dune dashboard shows loan activity from January to May 2025, peaking at $500 million in mid-May before stabilizing around $400 million by end of May 25. Breakdown by protocol includes:
Stability: $258.2 million in active loans, the highest, aligning with its high TVL and utilization rate.
Aave: $80.4 million, reflecting moderate borrowing demand given its lower utilization rate (16.94%).
Euler: $43.1 million, consistent with its TVL and focus on looping strategies.
Silo: $933.6 thousand, the lowest, possibly due to its risk-isolated model limiting broader adoption.
Outstanding Loans by Token: WETH ($27.8 million), USDC ($74.9 million), and Wrapped Sonic ($190.6 million) dominate, indicating Wrapped Sonic as the most borrowed asset, likely due to its native utility on the chain.
Analysis: The peak in Mid-May correlates with TVL growth, suggesting high borrowing demand, possibly driven by Stability’s stablecoin activities.
Utilization: Understanding the Dynamics
Utilization rates, as shown in the Dune dashboard’s line chart, reflect borrowing demand relative to supplied assets from February to May 2025. Rates fluctuated between 15% and 60%, with current rates as follows:
Silo: 50.37%, the highest, indicating strong borrowing demand relative to its supply.
Stability: 43.91%, reflecting significant activity, possibly tied to stablecoin lending.
Euler: 34.49%, moderate, aligning with its focus on advanced strategies like looping.
Aave: 16.94%, the lowest, suggesting underutilized capital, possibly due to conservative risk parameters.
Analysis: High utilization in Silo and Stability indicates efficient capital use but also potential liquidity risks if demand spikes. Aave’s low rate suggests room for growth, possibly by adjusting risk parameters or incentivizing borrowing. The fluctuation in rates over time reflects market volatility and protocol-specific adoption trends.
Active Wallets
The Dune dashboard’s wallet activity charts provide insights into user engagement:
Total Active Wallets: 32,220, indicating a sizable user base.
Daily Active Wallets (DAU): The line chart shows DAU peaking at 2,500 in March 2025, correlating with TVL and loan activity peaks, before stabilizing at around 1,500 by May.
User Distribution (Pie Chart): 51.9% of wallets hold Stability assets, 27.6% Aave, 18.0% Euler, and a small fraction for Silo, reflecting Stability’s dominance in user adoption.
Analysis: Aave and Euler drove most activity in March, but user engagement fell sharply by May after a quick spike in activity in late April, possibly due to market conditions or reduced incentives. Stability remains stable while Silo sees mini activity.
Core Strengths: What Fuels the Sonic Chain Lending Protocols
Fee Monetization Program: Sonic’s FeeM program, sharing 90% of fees generated by users of protocols with the protocols, incentivizes development and ensures sustainable revenue, as detailed in Sonic Documentation.
High Throughput and Low Fees: Sonic’s 10,000 TPS and sub-second finality, enable efficient lending operations. Theoretically, Sonic is said to have 400,000 TPS.
Protocol Diversity: Aave offers standard lending, Euler provides looping strategies (leverage borrowing and depositing), Silo focuses on risk-isolated markets (where each asset pair operates in its own silo to prevent systemic risk contagion), and Stability focuses on stablecoin-related activities.
Incentive Programs: Protocols like Euler ($100,000 rEUL rewards) and Aave ($800k AAVE tokens) leverage incentives to attract liquidity, enhancing user engagement.
Areas for Growth
Aave Utilization: Aave’s low utilization rate (16.94%) suggests underutilized capital, which could be addressed by adjusting risk parameters or offering more incentives.
Silo Adoption: Silo’s low active loans ($932k) but high active wallet share (52%) indicate a need for broader marketing or feature enhancements to compete with Stability and Aave.
Stability Transparency: Stability’s operations, possibly tied to stablecoin lending, lack clarity, necessitating better documentation to build user trust.
Cross-Chain Expansion: Protocols like Silo plan to expand to Ethereum, Arbitrum, and Base, which could increase their reach and TVL.
Risks to Monitor
Regulatory Concerns: Stability’s potential link to Sonic’s algorithmic stablecoin, which pivoted to a UAE dirham-based model due to regulatory pressure, poses risks, as reported in Sonic Stablecoin Pivot.
TVL Discrepancy: The value of TVL obtained from the dune dashboard is far different from what is obtained from defillama which means further investigation is required.
Liquidity Risks: High utilization rates in Silo (50.37%) and Stability (43.91%) could strain liquidity during market downturns, risking liquidations.
Future Outlook
Sonic’s lending ecosystem is poised for growth, driven by its FeeM program and high-performance infrastructure. Stability’s being the least among its pairs as regards active loan suggests weak demand for stablecoin-related lending, but its regulatory challenges need resolution. Aave and Euler can capitalize on Sonic’s scalability to increase utilization and attract more users, while Silo’s risk-isolated model could gain traction with broader adoption. Cross-chain expansions and enhanced incentives will likely bolster TVL and user activity. Overall, Sonic’s lending protocols are well-positioned to thrive, provided they address regulatory and operational risks.
Conclusion
Sonic blockchain’s lending protocols (Aave, Euler, Silo, and Stability) demonstrate significant potential within a rapidly growing DeFi ecosystem. The FeeM program’s 90% fee-sharing mechanism fosters a developer-friendly environment, while diverse protocol offerings cater to varied user needs. Silo leads in TVL and wallet adoption, but regulatory concerns and data discrepancies, suggests improvement should be made in documentation. With strategic enhancements and risk mitigation, Sonic’s lending market can solidify its position as a competitive DeFi hub, offering valuable opportunities for researchers, developers, and investors.
References
https://crypto.news/defi-protocol-euler-finance-goes-live-on-sonic/
Date of Publication:* May 27, 2025*
Prepared by:* smartymetrics*
Introduction
The Sonic blockchain, a high-performance Layer 1 evolved from Fantom, has emerged as a significant player in the decentralized finance (DeFi) landscape since its mainnet launch in December 2024. With a total value locked (TVL) exceeding $900 million as of May 2025, Sonic's ecosystem is bolstered by its Fee Monetization (FeeM) program, which allocates 90% of network fees to protocols, incentivizing development and innovation. This report provides a detailed analysis of four lending protocols on Sonic (Aave, Euler, Silo, and Stability), using data from the provided Dune dashboard I created (https://dune.com/ismarty/sonic-lending), DeFiLlama and official project documentation. Key metrics such as TVL, active loans, utilization rates, and wallet activity are examined to understand their operational dynamics, strengths, risks, and future potential.
Key Takeaways
Fee Sharing Mechanism: Sonic’s FeeM program shares 90% of transaction fees with protocols, creating a sustainable revenue model for developers.
Protocol Performance: Silo leads with a TVL of $511.3 million and a utilization rate of 50.37%, followed by Aave ($394.3 million, 16.94%), Euler ($124.9 million, 34.49%), and Stability ($2.1 million, 43.91%).
TVL Dynamics: TVL peaked in May 2025 but shows signs of stabilization, with Silo dominating the lending market.
Risk Concerns: Silo high utilization raises concern in market volatility period as it could result in massive liquidations.
Growth Potential: Sonic’s high throughput and low fees position it as a competitive DeFi hub, but protocol-specific enhancements are needed.
TVL discrepancy: The TVL sourced from dune has some noticeable discrepancy from what is displayed on defillama.
Executive Summary
Sonic blockchain has cultivated a thriving DeFi ecosystem, with lending protocols Aave, Euler, Silo, and Stability contributing to a collective TVL of over $900 million, as reported by DeFiLlama. The FeeM program, which allocates 90% of network fees to protocols, has driven developer engagement by tying revenue to on-chain activity. Silo leads in TVL at $511.3 million, followed by Aave at $394.3 million, Euler at $124.9 million, and Stability at $2.1 million. Utilization rates vary, with Stability at 43.91%, Silo at 50.37%, Euler at 34.49%, and Aave at 16.94%, reflecting diverse borrowing demands. Daily active loans peaked at over $500 million in May 2025, while wallet activity indicates growing user adoption, with 32,220 total active wallets. Sonic’s strengths lie in its high throughput and fee-sharing model, and TVL inconsistencies in Silo require monitoring. The future outlook remains positive, with potential for further protocol innovation and ecosystem expansion.
TVL: Understanding the Dynamics
The Dune dashboard’s TVL chart shows the total value locked across Sonic’s lending protocols from January to May 2025, peaking at around $1 billion in early April before stabilizing at $900 million by May 25. The growth trajectory reflects:
Early Growth (January - February): TVL rose steadily, driven by Sonic’s mainnet launch and protocol deployments like Euler in February, 2025.
Peak and Correction (March - April): A surge in TVL, particularly from Silo, coincided with high utilization rates (43.91% for Silo), but a slight decline followed, possibly due to market corrections or user withdrawals.
Stabilization (May): TVL stabilized, suggesting maturing market dynamics.
Analysis: The TVL dynamics highlight Silo’s dominance but the slight decline post-April suggests users may be reallocating funds or reacting to external market conditions. There is TVL discrepancy from what is observed with Defillama which warrants cross-verification with other on-chain data sources.
Active Loans: Understanding Active Loan Dynamics from the Daily Chart
The daily active loan chart on the Dune dashboard shows loan activity from January to May 2025, peaking at $500 million in mid-May before stabilizing around $400 million by end of May 25. Breakdown by protocol includes:
Stability: $258.2 million in active loans, the highest, aligning with its high TVL and utilization rate.
Aave: $80.4 million, reflecting moderate borrowing demand given its lower utilization rate (16.94%).
Euler: $43.1 million, consistent with its TVL and focus on looping strategies.
Silo: $933.6 thousand, the lowest, possibly due to its risk-isolated model limiting broader adoption.
Outstanding Loans by Token: WETH ($27.8 million), USDC ($74.9 million), and Wrapped Sonic ($190.6 million) dominate, indicating Wrapped Sonic as the most borrowed asset, likely due to its native utility on the chain.
Analysis: The peak in Mid-May correlates with TVL growth, suggesting high borrowing demand, possibly driven by Stability’s stablecoin activities.
Utilization: Understanding the Dynamics
Utilization rates, as shown in the Dune dashboard’s line chart, reflect borrowing demand relative to supplied assets from February to May 2025. Rates fluctuated between 15% and 60%, with current rates as follows:
Silo: 50.37%, the highest, indicating strong borrowing demand relative to its supply.
Stability: 43.91%, reflecting significant activity, possibly tied to stablecoin lending.
Euler: 34.49%, moderate, aligning with its focus on advanced strategies like looping.
Aave: 16.94%, the lowest, suggesting underutilized capital, possibly due to conservative risk parameters.
Analysis: High utilization in Silo and Stability indicates efficient capital use but also potential liquidity risks if demand spikes. Aave’s low rate suggests room for growth, possibly by adjusting risk parameters or incentivizing borrowing. The fluctuation in rates over time reflects market volatility and protocol-specific adoption trends.
Active Wallets
The Dune dashboard’s wallet activity charts provide insights into user engagement:
Total Active Wallets: 32,220, indicating a sizable user base.
Daily Active Wallets (DAU): The line chart shows DAU peaking at 2,500 in March 2025, correlating with TVL and loan activity peaks, before stabilizing at around 1,500 by May.
User Distribution (Pie Chart): 51.9% of wallets hold Stability assets, 27.6% Aave, 18.0% Euler, and a small fraction for Silo, reflecting Stability’s dominance in user adoption.
Analysis: Aave and Euler drove most activity in March, but user engagement fell sharply by May after a quick spike in activity in late April, possibly due to market conditions or reduced incentives. Stability remains stable while Silo sees mini activity.
Core Strengths: What Fuels the Sonic Chain Lending Protocols
Fee Monetization Program: Sonic’s FeeM program, sharing 90% of fees generated by users of protocols with the protocols, incentivizes development and ensures sustainable revenue, as detailed in Sonic Documentation.
High Throughput and Low Fees: Sonic’s 10,000 TPS and sub-second finality, enable efficient lending operations. Theoretically, Sonic is said to have 400,000 TPS.
Protocol Diversity: Aave offers standard lending, Euler provides looping strategies (leverage borrowing and depositing), Silo focuses on risk-isolated markets (where each asset pair operates in its own silo to prevent systemic risk contagion), and Stability focuses on stablecoin-related activities.
Incentive Programs: Protocols like Euler ($100,000 rEUL rewards) and Aave ($800k AAVE tokens) leverage incentives to attract liquidity, enhancing user engagement.
Areas for Growth
Aave Utilization: Aave’s low utilization rate (16.94%) suggests underutilized capital, which could be addressed by adjusting risk parameters or offering more incentives.
Silo Adoption: Silo’s low active loans ($932k) but high active wallet share (52%) indicate a need for broader marketing or feature enhancements to compete with Stability and Aave.
Stability Transparency: Stability’s operations, possibly tied to stablecoin lending, lack clarity, necessitating better documentation to build user trust.
Cross-Chain Expansion: Protocols like Silo plan to expand to Ethereum, Arbitrum, and Base, which could increase their reach and TVL.
Risks to Monitor
Regulatory Concerns: Stability’s potential link to Sonic’s algorithmic stablecoin, which pivoted to a UAE dirham-based model due to regulatory pressure, poses risks, as reported in Sonic Stablecoin Pivot.
TVL Discrepancy: The value of TVL obtained from the dune dashboard is far different from what is obtained from defillama which means further investigation is required.
Liquidity Risks: High utilization rates in Silo (50.37%) and Stability (43.91%) could strain liquidity during market downturns, risking liquidations.
Future Outlook
Sonic’s lending ecosystem is poised for growth, driven by its FeeM program and high-performance infrastructure. Stability’s being the least among its pairs as regards active loan suggests weak demand for stablecoin-related lending, but its regulatory challenges need resolution. Aave and Euler can capitalize on Sonic’s scalability to increase utilization and attract more users, while Silo’s risk-isolated model could gain traction with broader adoption. Cross-chain expansions and enhanced incentives will likely bolster TVL and user activity. Overall, Sonic’s lending protocols are well-positioned to thrive, provided they address regulatory and operational risks.
Conclusion
Sonic blockchain’s lending protocols (Aave, Euler, Silo, and Stability) demonstrate significant potential within a rapidly growing DeFi ecosystem. The FeeM program’s 90% fee-sharing mechanism fosters a developer-friendly environment, while diverse protocol offerings cater to varied user needs. Silo leads in TVL and wallet adoption, but regulatory concerns and data discrepancies, suggests improvement should be made in documentation. With strategic enhancements and risk mitigation, Sonic’s lending market can solidify its position as a competitive DeFi hub, offering valuable opportunities for researchers, developers, and investors.
References
https://crypto.news/defi-protocol-euler-finance-goes-live-on-sonic/
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