Sonic’s new upgrade doubles transaction speed – Can it push prices higher?

• The Sonic network upgrade has led to a massive inflow of liquidity on the chain, which S, its native token, could benefit from.
• Spot and derivative traders are taking advantage of the current market sentiment, placing long bets and buying the asset.

The past 24 hours of trading activity haven’t fully reflected the positive developments on the Sonic [S] chain, as the token has dropped 7.22% within this period.

Market sentiment remains strong, however, implying that S still has a chance to continue its past week’s gain of 13.95%, particularly as more liquidity flows into the chain and market participants continue to acquire the asset.

Network upgrade sparks renewed interesting

In the past 24 hours, Sonic announced an upgrade to its consensus protocol layer, known as SonicCS 2.0, aimed at improving overall performance.

The upgrade significantly improves the consensus process, doubling transaction validation speed from 16,000 to over 30,000 per second.

Memory usage has been cut by 68%, lowering hardware requirements for validators and promoting greater decentralization by enabling more validators to join the Sonic network.

The upgrade benefits various protocols on Sonic, including decentralized trading and token transfers.

Following the announcement, liquidity inflows into the chain surged, with stablecoin balances and bridged TVL (Total Value Locked) seeing notable increases.

At present, the total stablecoin volume processed on the Sonic chain has reached a record $425.96 million, up $28.41 million from its previous daily low.

Source: DeFiLlama

A spike in stablecoin demand on a chain often signals positive developments, as market participants actively support activities. This may involve buying and holding Sonic’s native token, S, or depositing funds into protocols to earn rewards.

Similarly, the bridged Total Value Locked (TVL), measuring liquidity between chains, shows $1.445 billion has flowed into Sonic’s protocols from other chains. This indicates a bullish sentiment, with participants eager to engage with the chain.

Optimism extends beyond on-chain activity, as AMBCrypto reports that both spot and derivative traders are also adopting a bullish outlook.

Sonic: Spot and derivative traders are bullish

Both spot and derivative traders are positioning themselves for an S rally.

Source: Coinglass

At press time, spot traders have adjusted their expectations for the asset and continue to purchase S. In the past 24 hours alone, traders have bought over $278,000 worth of S, closing the week with a total purchase of $742,000.

In the derivatives market, traders are placing long bets as the Open Interest Weighted Funding Rate—an indicator that captures market trends based on Open Interest and Funding Rate—has turned positive.

Source: Coinglass

With a press time reading of 0.0026%, this suggests that traders in the derivatives market are more bullish than bearish. If this figure continues to rise, S could see a major market rally.