The Shift from Speed to Stickiness
I think we’re seeing something interesting happening in the blockchain space right now. For years, the main selling point for new layer 1 networks was being faster and cheaper than Ethereum. That made sense back in 2020 and 2021 when Ethereum’s limitations were more apparent. But now, according to Sonic Labs CEO Mitchell Demeter, that approach just doesn’t cut it anymore.
Demeter took over as CEO about two months ago, and he’s been pushing for a fundamental shift in strategy. The problem is that block space has become commoditized – there are plenty of fast chains out there now. Being quick and inexpensive is no longer a competitive advantage. The real challenge, he suggests, is keeping users and developers once you’ve attracted them.
Protocol-Level Changes for Developer Retention
What’s interesting is how Sonic is approaching this problem. They’re looking at Ethereum Improvement Proposals that have been discussed but not implemented on the main Ethereum network. Because Sonic is smaller and more nimble, they can experiment with these changes faster.
One concrete example Demeter mentioned is EIP-7903, which would increase the contract size limit from the current 49 kilobytes. This might sound technical, but it has real implications. When developers build more complex applications that can’t easily be moved between chains, they’re more likely to stay put. It creates what he calls “builder stickiness.”
I find this approach thoughtful. Instead of just chasing the next shiny feature, they’re thinking about what actually makes developers want to build and stay on their platform.
Rethinking Tokenomics and Value Capture
The fee model discussion was particularly revealing. Sonic currently returns 90% of fees to builders and 10% to validators. This was designed to make the user experience simpler – apps could pay gas fees for users, similar to how Venmo works. But Demeter acknowledged the problem: token holders don’t benefit from this arrangement.
They’re working on changing to a sliding-scale model where builders might get around 15%, validators 10%, and the rest gets burned. This creates scarcity and actually rewards token holders when network usage increases. It’s a more sustainable approach that aligns incentives across all participants.
The Bigger Picture
Demeter’s perspective on the broader market feels realistic. He thinks we’re moving through a transition where liquidity has tightened and investors have become more sophisticated. The days of pure speculation are giving way to a focus on fundamentals and sustainable business models.
What strikes me is his comparison to early technology companies like Tesla. For years, they issued stock to raise capital, but eventually shifted to buybacks. Blockchains, he suggests, need to follow a similar path from growth to value return.
Perhaps the most telling part was his emphasis on shifting Sonic from a “tech-only culture” into a real business. After seven years of building world-class technology, they’re now focusing on marketing, communications, and business development. That feels like a necessary evolution for any blockchain project that wants to survive in today’s market.
It’s not just about having the best technology anymore. It’s about building a sustainable ecosystem where everyone – developers, users, and token holders – has a reason to stick around.
