Sonic unveiled a "vertical integration" strategy to boost demand for its S token by directly developing and acquiring key applications.

The move is aimed at shifting beyond a conventional layer 1 blockchain model and strengthening token utility and liquidity.

In a recent report by The Block, Sonic Labs said it would directly build and acquire apps that strengthen the S token economy. The strategy is intended to prevent value leakage from blockchain-based apps and internalise key economic activity.

Sonic previously followed a formula that user growth leads to more transactions, which leads to higher gas consumption, which leads to higher token value. It concluded over the past 5 years that this approach is not sufficient and decided to move away from a gas-fee model that simply sells block space. Sonic Labs said block space is no longer scarce as scaling technology advances, and explained that fee pressure has increased with the emergence of rollups, alternative layer 1s and modular architectures.

Sonic's vertical integration strategy will focus on directly controlling core infrastructure such as transactions, credit, payments, settlement, and risk markets. To do so, it plans to build systems itself or acquire and integrate high-quality app teams in the industry.