Introduction
Empowering Liquid Staking and Unstaking with Sonic​
Sonic is hailed as the liquid staking engine for Ethereum that aims to decentralize and diversify the Ethereum LSD landscape by offering a much improved user experience and enabling the creation of sophisticated LSD products that help decentralize Ethereum. It is a decentralized, peer-to-peer spot and perpetuals exchange designed for LSD tokens offering users the ability to diversify their ETH-LSD positions in a single click, enabling the lossless entrances and exits of any ETH-LSD positions, and concentrating liquidity of ETH-LSDs in one spot, thereby bolstering the security of the underlying network. Sonic aims to be the base layer for ETH-LSD protocols, enabling the creation of sophisticated financial products built on top of it - from those that utilize arbitraging opportunities to perpetuals products that leverage the base LSD assets.
Sonic introduces novel single-asset liquidity pools that concentrate liquidity of the base asset such as ETH across the entire protocol, thereby enabling the efficient redemptions of any ETH-LSD positions. This enables the near-instant and efficient redemption processing of ETH-LSD positions, removing illiquidity and bear-market risks. At the heart of Sonic is a decentralized peer-to-peer orderbook engine that is based on the CoW (Coincidence of Wants) principle. It matches the existing LSD holders who wish to exit their positions, with those who wish to enter the same position. To facilitate this trade, the LSD holder sets a customizable discount at which they are willing to forego their position. Depending on the discount set, the buyer willingly provides their native token for the LSDs. In addition to the discount, they customize several parameters such as whether to being to the unstaking of the tokens, the expiry date for their order, and more.
Sonic offers capital efficiency by using an automated balancing system to determine the holdings in a pool based on supply and demand, resulting in lower capital requirements compared to traditional decentralized exchanges (DEXs). It generates higher yields for liquidity providers by adapting to market conditions and capturing fees from users' exiting positions at a discount. Liquidity providers also benefit from stake diversification across multiple tokens, reducing risks associated with individual protocols. Users can take advantage of discounted staking prices through the existing order book and enjoy improved withdrawals with a single interface, allowing for partial or early exits and guaranteed minimum prices. The protocol integration ensures withdrawal flexibility regardless of pool liquidity.