Sonic Labs, formerly known as Fantom, has announced the termination of its five-year partnership with market maker Wintermute. The platform is now on the hunt for a new market maker. They are looking for one that aligns with its vision of fostering decentralized finance (DeFi) growth. The search also reflects the surge in on-chain activity.
Why Sonic Labs Ended Its Relationship with Wintermute
The decision to part ways with Wintermute came after a period of selling pressure on the native S token. This pressure saw its price drop from $0.61 to $0.53. According to the Sonic Labs team, this selling occurred after Wintermute was informed about the end of the partnership. One reason cited for the divestment was Wintermute’s need to cover a liquidity loan provided by Sonic Labs.
The sales were tracked to the wallets of Wintermute as the market maker divested 3M S tokens, reducing holdings to 10M tokens.
At current prices, Wintermute holds approximately $5.9 million worth of S tokens. However, the Sonic community speculated that the partnership ended on less-than-amicable terms, leading to the sudden sell-off. Some suggest that Wintermute may even need to re-purchase S tokens to repay the loan in kind. Wintermute has not yet clarified why the tokens were deposited to exchanges.
The termination of the contract is expected to introduce more volatility for the S token. The token primarily trades on centralized exchanges like Binance and Bybit. Market makers like Wintermute typically play a crucial role in boosting trading volumes and generating demand for assets. Consequently, the absence of such support could impact liquidity in the short term.
Sonic Labs’ Growing Decentralized Ecosystem
Despite the challenges posed by the end of the Wintermute partnership, Sonic Labs has been making significant strides in building a robust decentralized ecosystem. Recently, the platform posted a record total value locked (TVL) of over $1 billion. This achievement cemented its position as one of the fastest-growing chains in 2025.
The Sonic ecosystem includes notable projects such as:
- A native version of Aave lending.
- The Shadow DEX, which facilitates decentralized trading.
- A localized version of the Pendle yield protocol.
Much of Sonic’s growth can be attributed to inflows from the Ethereum ecosystem. Over $2.3 billion has flowed into the network, with $555 million in net inflows. Sonic remains tightly integrated with Layer 1 ecosystems through constant bridging and active turnover. It also sees smaller inflows from networks like Base and Solana.
Source: DeFi Llama
Challenges and Opportunities Ahead
While Sonic Labs has seen impressive growth in transactions, active wallets, and overall adoption, it still lags behind more established networks in terms of daily fee generation. Currently, the chain produces under $15,000 in daily fees. This figure is significantly lower than competitors like Ethereum or Solana.
Nevertheless, the chain boasts strong fundamentals, including:
- Over $484 million in bridged USDC.
- Daily decentralized exchange (DEX) activity ranges between $100 million and $150 million. The Shadow exchange accounts for over $55 million of this volume.
- More than 50,000 daily active users, rivaling other mid-tier blockchain networks.
Sonic’s large and engaged social media community underscores its ambition to build an ecosystem akin to Solana . The emphasis is on low-cost transactions and abundant liquidity.
What’s Next for Sonic Labs?
As Sonic Labs searches for a new market maker, the platform aims to find a partner capable of supporting its expanding DeFi ecosystem. This includes providing liquidity for teams, applications, and upcoming events. In turn, they will drive further adoption of the S token.
The transition away from Wintermute presents both risks and opportunities. While the immediate aftermath may lead to increased volatility and reduced liquidity, the move signals Sonic’s commitment to decentralization and long-term sustainability.
