ICON Transitions to SODAX Amidst Evolving Blockchain Landscape
The last notable moment for ICON (ICX) occurred during the peak of the initial coin offering (ICO) frenzy when it was vying with competitors like Tron and Filecoin in a high-stakes bid for BitTorrent. Once regarded as the “Korean Ethereum,” ICON reached its zenith in early 2018 but subsequently faced challenges in maintaining its position in a rapidly changing market filled with intense competition.
Recently, ICON has made headlines again by announcing its rebranding to SODAX and migrating its entire decentralized finance (DeFi) framework from its own Layer-1 blockchain to Sonic, a network compatible with Ethereum Virtual Machine (EVM) that emphasizes rapid and cost-effective transactions. Sonic, too, underwent a transformation, rebranding from its original name, Fantom, in 2024.
In a discussion with CoinDesk, ICON’s founder Min Kim elaborated on the rationale behind transitioning from an independent blockchain to utilizing Sonic’s Layer-1 infrastructure. “In 2017, we had to create our own Layer-1 because there were no suitable infrastructures available,” Kim noted. “Now, maintaining an independent Layer-1 no longer makes sense due to the availability of more efficient and cost-effective alternatives.”
Kim indicated that by outsourcing to Sonic, the ICON team can reduce operational costs significantly and sharpen their focus on developing DeFi products. “This move will save us millions in operational expenses,” he shared with CoinDesk, adding that it reduces inflationary pressures on their tokens, making the financial model more viable.
This approach mirrors trends observed in manufacturing, where companies like Foxconn and Taiwan Semiconductor thrive because tech giants such as Apple and Nvidia do not operate their own factories. In a similar vein, ICON is relieved from the substantial fixed costs and risks tied to managing an entire blockchain.
“Running a decentralized network with global validators is an enormous task,” Kim explained. “After eight years of managing our own Layer-1, we found it to be tedious, expensive, and stressful. By partnering with Sonic, we can redirect our efforts towards innovation and the creation of desirable products.”
Kim also pointed out the risk mitigation advantages, stating that ICON’s DeFi layer can remain insulated from potential issues arising within Sonic’s infrastructure, thus providing a crucial separation of risk. “We gain a level of de-risking,” he clarified. “If Sonic experiences a security breach, while it’s certainly negative, it does not directly reflect on us. Sonic is dedicated to ensuring security and validator infrastructure, allowing us and other DeFi developers to focus on user-oriented applications.”
This strategic pivot comes as ICON aims to redefine its identity in a market that has seen its influence wane. Once ranked among the top 20 cryptocurrencies, the ICX token plummeted nearly 99% from its peak by late 2018 and has struggled to recover, as investors gravitate towards platforms that can better leverage the growth of DeFi and non-fungible tokens (NFTs).
Kim contended that “Layer-1 infrastructure is not practical for most projects.” He emphasized that many have underestimated the complexities and capital requirements involved. “There has been a miscalculation in the value investors attribute to Layer-1 projects, assuming an ecosystem would develop organically. This is often expensive and unsustainable.”
Now operating under the SODAX brand and concentrating on cross-chain liquidity solutions, the project is transitioning from ICX tokens to a new token named SODA. While Sonic and SODAX tokens will remain distinct, Kim pointed out that Sonic’s fee-sharing mechanisms will direct transaction fees back to holders of the SODA token. “Sonic facilitates 90% of transaction fees to flow back to SODA holders,” Kim highlighted, illustrating the economic benefits of their strategic shift.
When asked if this outsourcing strategy signifies a broader trend, Kim speculated that numerous projects currently employing Layer-1 solutions may reconsider their approaches as market dynamics evolve. “Ethereum and Solana exemplify this trend as they focus entirely on validators and network security,” he remarked. “We are leading the charge in reversing the inclination to launch independent Layer-1s. For many projects, this model is not sustainable in the long run.”
With the decline of inflated valuations for proprietary Layer-1 platforms, Kim believes that an increasing number of projects will shift their attention towards product development rather than infrastructure, with ICON—now SODAX—paving the way for this new direction. “We are returning to fundamentals, lowering costs, optimizing operations, and refocusing on our original mission: delivering financial products directly to users.”
