ICON's Transformation: From Layer-1 to SODAX
ICON has rebranded itself as SODAX and is shifting its DeFi operations to an EVM-compatible network named Sonic, aiming for cost reduction and enhanced focus on financial products.
Key Highlights:
- ICON has transformed into SODAX, now migrating its DeFi framework to Sonic, which supports the Ethereum Virtual Machine (EVM).
- This transition aims to lessen operational costs and concentrate on DeFi offerings by outsourcing its blockchain responsibilities to Sonic.
- The strategy mirrors a wider trend where numerous projects are distancing themselves from managing their own Layer-1 infrastructures.
Previously, ICON (ICX) was prominently featured during the ICO boom, vying for attention amid competitors like Tron and Filecoin.
Once acclaimed as the “Korean Ethereum,” ICON faced challenges retaining significance due to fierce competition and evolving market dynamics.
Current Developments:
Recently, ICON announced its shift to SODAX, along with the migration of its entire DeFi ecosystem from its independent Layer-1 blockchain to Sonic, renowned for its efficient, cost-effective transactions.
This pivot follows Sonic’s own rebranding from the name Fantom in 2024.
In a discussion with CoinDesk, ICON’s founder, Min Kim, outlined the reasoning for outsourcing blockchain operations:
“Back in 2017, we had to create our Layer-1 due to a lack of available infrastructure. Today, it’s illogical to maintain an independent layer when better, more affordable options exist.”
Kim argued that utilizing Sonic’s infrastructure is a savvy financial move that significantly reduces expenses and minimizes token inflation.
“It drastically cuts our operational costs by millions. This strategy is pragmatic.”
Simulating a resemblance to manufacturing giants, Kim pointed out that outsourcing tasks lets companies like Apple and Nvidia thrive while sidestepping high fixed costs and operational risks associated with managing a full-blown blockchain.
“Running a decentralized network globally is a massive endeavor. After eight years of our Layer-1, we found it taxing, high-cost, and exceedingly stressful. Outsourcing allows us to channel our efforts into innovation and develop products relevant to users.”
Kim also mentioned the added security, explaining:
“If Sonic faces a breach, it’s a distinct risk from ours. Despite the issues, the separation is beneficial for our DeFi layer.”
This strategic shift is in response to ICON’s diminished market position, transitioning from a top 20 cryptocurrency to a token that has experienced significant losses, with its ICX token plummeting nearly 99% since its peak.
“Layer-1 infrastructure isn’t suitable for most projects anymore. Many have underestimated the capital and effort needed. Investors have unrealistically valued Layer-1 projects, expecting ecosystems to organically thrive.”
Transitioning to SODAX, the project will transform ICX tokens into a new identifier, SODA. While both tokens remain distinct, Kim assured that Sonic’s cost structures would enable a return of transaction fees to SODA holders.
“Sonic redirects 90% of transaction fees to SODA holders,” Kim emphasized.
Addressing whether this outsourcing trend may escalate, Kim forecasted a shift for many current Layer-1s.
“Ethereum and Solana perfectly symbolize the focus on network security and validators. We’re pioneering a shift away from proprietary Layer-1 launches, which is unsustainable for most projects in the long run.”
As the valuation of dedicated Layer-1 platforms wanes, Kim believes that ICON, now SODAX, is guiding others to prioritize product development over infrastructure management.
