Sonic

The S token simultaneously serves as the protocol’s native deflationary currency, the access token for network consensus and validation, and the vehicle for governance through vote-escrowed staking—each function tightly linked to either network security, protocol control, or value accrual.

This sub-VCM represents the S token's role as a token for blockspace purchases and the deflationary appreciation due to fee burning. Burnt fees originate from transactions to apps not participating in the FeeM (fee monetization) scheme.

This sub-VCM represents the value accrued from running a validator participating in the active validation set:

• Risk Exposure: the user needs to stake at least 500,000 S, possibly up to 14x this amount with delegated stakes. This minimal threshold is planned to be reduced later when the network matures.
• Access: access to the active validator set is granted if the stake complies with the 500,000 S rule
• Conditional Action: a requirement to correctly run and maintain the validator node
• Future Cashflow: validators receive emissions with a targeted APR. A portion of all fees is also captured.

Note that the target APR depends on the stake rate of the S token. Check the VCIP section for details.

Deflationary vote-escrowed token sub-VCM represents value derived from controlling the decision-making regarding resources, parameters, or updates on the protocol level:

• Locking the S token in the vote-escrow contract requires obtaining governance power. Delegation does not alienate the owner's governance rights.
• The governance power and related value can be obtained only after locking S (Risk Exposure) and casting a vote (the Conditional Action).

It should be noted that the total volume of grants distributed directly affects the deflation caused by burning the excess current funding emissions (the burning is done annually, and the total annual current funding emission is 47,625,000 S).