Most of the time, Web2 partnerships don’t mean shit. However, with Sony and Astar network's deployment of the Soneium L2, things might be different..

As the 2nd largest consumer brand (behind Samsung), Sony is the 1st Web2 company to deploy a public blockchain.

Sony’s mission for Soneium is to “go mainstream” (GM), emphasizing onboarding Web2 users through seamless app experiences and legacy products integrated with blockchain tech.  

For years, Sony has dominated categories like music, gaming, and imaging & sensing, but the biggest question remains: can Sony conquer Web3?

There's a lot to unpack here, so let's break it down by looking at Soneium's positioning in the Web3 market, the potential for Sony to transfer value on-chain, and what this all means for the ASTR token.

What is Soneium?

Soneium is a layer 2 (L2) blockchain developed by Sony Blockchain Solutions Labs, a joint venture between the Sony group and Startale Labs.

Here’s the backstory: In June 2023, Sony invested $3.5m into Startale Labs–the team behind the Astar network– to transition Startale’s existing L2 network, Astar zkEVM, into Soneium.

For context, the Startale team has developed two public blockchains:

1. Astar, an L1, deployed as a Polkadot parachain.
   1. Shiden, an L1 parachain connected to Kusama used to deploy and test new releases of Astar runtime.
2. Soneium (previously Astar zkEVM), an Ethereum L2, connected to the Polygon Aggregation Layer (AggLayer).

This upgrade from Astar zkEVM to Soneium comes with “the works” commonly included with new blockchain deployments like:

• Joint liquidity pools (e.g., ASTR-ETH, ASTR-USDC) on Soneium with deep incentives for depositors.
• Options for liquid staked ASTR on Soneium.
• Token incentives for ASTR holders.
• An incubator (Soneium Spark) offering awards up to $100k, and mentorships from the top builders and firms.

Similar to Arbitrum, the Soneium L2 will use ETH as gas. A portion of Astar’s sequencer revenue will be reinvested into Astar development and future products, and the remaining portion will be used to buy and burn ASTR.

There’s no official timeline for the migration, however, the Startale team has issued a roadmap of the different phases. At present, Soneium’s Testnet, Minato, is live (more on that later).

The plan is to wind down Astar zkEVM, and deploy Soneium in its place.

Soneium’s OP Superchain vision

As part of this upgrade, Soneium (formerly Astar zkEVM) will undergo a migration from Polygon zkEVM to OP Stack technology (version Bedrock OP).

Soneium’s adoption of the OP codebase aligns them with the ‘Superchain’ vision. The Superchain is Optimism’s plan for a network of interconnected L2s that share security and a communication layer.

This will allow developers to build composable apps that make use of liquidity and apps across blockchains no matter if the app was built on Base, Mode, or any other chain running on the OP codebase.

This essentially abstracts away the underlying chains the apps are running on, and makes everything into “apps running on the OP super chain”.

But this is only a small piece of the puzzle for Soneium.

Startale Labs’ greater multi-chain plan

The Startale team is largely prioritizing a “multichain” future by deploying multiple chains.

The current deployments cater to Solidity developers, with the Soneium L2, and Ink!, a rust-based smart contract language for Astar L1 developers.

When teams incorporate interoperability between different chains or deviate from EVM solutions they are essentially hedging their bets. But, why is this important?

Historically, EVM has been home to the majority of liquidity in DeFi, but there are other smart contract programming languages and tech stacks with more capabilities.

Nobody is certain which public blockchains will gain the most adoption in the mid to long term.  This forces teams to choose between developing on EVM -because of liquidity/adoption– or forging new paths with novel languages to increase the potential of their networks.

Startale is addressing this dilemma by providing bridging capabilities between its Polkadot-powered L1, Astar, and its EVM-powered L2, Soneium.

Polkadot might not have been the best non-EVM ecosystem to deploy to with Players like Solana (Ellipses labs, etc.) possessing a relatively active community and integrated solutions.

Nonetheless, Soneium’s move to OP’s codebase grants the team the future interoperability of the superchain and liquidity from chains including Optimism, Base, OpBNB, and more.

Sony’s Web3 track record to date

Sony has both developed and invested in Web3 products since 2018. Since then, Sony has made a total of ~10 investments in Web3, totaling $1b+.  

Some of Sony’s initial investments in Web3 have been obvious duds, including:

• Nuri, a crypto bank, declared bankruptcy in August 2020 after failing to find an acquirer and external investment. The bank is now rebranded as Bitwala.
• MakersPlace is an NFT marketplace that has had no trading volume over the last 30 days.

• Plague Hunters, a blockchain game Sony announced that it would release at the end of 2018. Since then, there has been no release news or updates for Plague Hunters.

Sony's other Web3 ventures have been relatively idle, not delivering the expected returns. However, with Soneium in the picture now, these initiatives could become "diamonds in the rough," laying the groundwork for Soneium's future success.

Let’s look at a few of Sony’s Web3 moves that could set them up big in the future.

RWAs & on-chain Infrastructure

In early 2018, Sony announced the development of a contactless crypto hardware wallet, based on Sony’s FeliCa smart card technology. The FeliCa smart card tech is already in use worldwide by public transit systems, and If they enabled crypto payments for train rides, etc. via Soneium it would be MAJOR.

In 2023, Sony acquired WhaleFin, a Japanese crypto exchange, and Amber Japan, a market maker, and digital asset trading services provider that used to operate WhaleFin.

The combo of a centralized exchange (CEX), and public blockchain, provides the Soneium team with multiple touchpoints for crypto users: (1) introduces customers to crypto by offering a CEX for swaps and crypto “on/off ramp” and (2) leverages the public blockchain as a logical place for the user to start their on-chain journey with DeFi.

But they will have to beat out current Japanese exchanges, which include:

In July 2023, Sony announced a partnership with Sumitomo Mitsui Trust Bank, to establish a joint trust and use the Securitize platform to provide digital securities to Sony’s retail clients.

A year later in July 2024, Phillip Securities invested in Hero Island, a Sony-produced movie based in post-war Japan to offer security tokens that grant holders revenue and other perks like theatrical distribution, video, and broadcast sales.

Sony Bank has also been experimenting with stablecoin issuance linked to RWAs, which could act as a potential catalyst.

If Sony is first to the punch for certain use cases, like stablecoins, it could garner the support of the Japanese government, which would be major for Soneium.

Gaming

In 2022, Sony filed a patent application for “super fungible tokens” (SFTs). SFTs are essentially sets of gaming NFTs linked to player and game metadata stored on-chain. This allows for  “loot-box” style NFTs where users can claim & trade in-game assets like skins, weapons, mods, etc.

There hasn’t been word of SFTs since, however, at the moment, Sony is running an NFT loyalty program called Playstation Stars.

Playstation Stars allows PlayStation users to participate in campaigns to earn NFTs and redeemable points for “select game titles”. It seems like it could be a pilot for a greater campaign to incorporate SFTs into major game titles on the Playstation Network (PSN).

Recently in 2024, Sony invested in Double Jump.Tokyo, a blockchain development studio, to promote its development on Soneium.

Double jump.Tokyo is the developer of Oasys, a gaming blockchain. They’ve also developed multiple single titles in collaboration with studios like Sega and Square Enix.

Similarly, in August 2024, YGG Japan, a DAO gaming guild announced the development of YAIBA, a gaming L3 set to launch on Soneium.

Creator x fan economy (connect creators to fans)

During the summer of 2024, Sony Bank launched Sony Bank CONNECT, a Web3 mobile app NFTs to its bank and digital securities users. This app could serve as Sony’s primary effort to leverage its IP and connect fans to creators.

Sony has experimented with leveraging IP for NFTs in the past. For instance, In December 2021, Sony partnered with AMC Theatres to distribute NFTs to Spider-Man fans. The company also collaborated with Universal Music Group on a similar project to create NFTs featuring music artists like Bob Dylan and Miles Davis.

Most recently, YOAKE Entertainment, a media management and talent agency announced the Idol Project, a new project set to launch on Soneium.

The Idol project will leverage Soneium to create a marketplace where fans can support creators by completing activities like listening to music or attending events.

In return, fans can earn special NFTs and tokens representing their favorite idols. Japanese idols are entertainers marketed to fall in line with Japanese pop culture and beauty standards.

Although this is less of an investment by Sony and more of an endorsement, it’s bullish!

Sony’s Web2 Porting Potential

A main part of Soneium’s GM initiative is integrating Sony’s legacy products with blockchain tech via Soneium. Let’s look at Sony’s Web2 products to determine the potential of porting value to Soneium.  

Sony Web2 at-a-glance

Sony is one of the largest multinational conglomerates. The company generated $86.8 billion in revenue in 2023, ranking as the 2nd largest consumer brand behind Samsung.

Sony’s ventures span virtually every major consumer category, including:

• Pictures: Sony Pictures Entertainment produces and distributes movies, and TV shows. Notable productions: The Karate Kid, Spiderman, Crunchyroll (the #1 anime platform).
• Music: Sony Music Group is home to one of the world’s largest record labels and music publishers. Notable artists/groups: Beyonce, Miley Cyrus, and Slayer
• Gaming: Sony Interactive Entertainment develops game consoles and offers a range of exclusive game titles. The PlayStation 2 (PS2) remains the best-selling gaming console of all time. Currently, the PlayStation 5 (PS5) is available, with gamers using the PlayStation Network (PSN) to play online and purchase downloadable content (DLC).
• Electronics, products & solutions: Sony produces products like headphones, TVs, photo and video cameras, mobile phones, and more.
• Finance: Sony offers life insurance and operates its own bank.
• Imaging & Sensing solutions: Sony is the leading manufacturer of CMOS sensors, used in its cameras, as well as semiconductors.

Initially, Japan was the largest consumer of Sony products & services up until 2021 when the U.S. flipped them as the biggest consumer.

According to Sony, the Games and Network Services segment accounted for the largest share of the company’s revenue in 2023, contributing 31.3%.

Additionally, Sony secured a 54% market share in the global game console market.

Let’s Go Mainstream (GM) Mf’er

With the ultimate plan of Going Mainstream (GM), a large part of Soneium’s pull will come from Sony integrating its Web2 products and IP with Soneium.

Simply put, Soneium gives Sony the ability to record transactions on-chain and tokenize assets using blockchain technology. This results in advanced capabilities like value transfer with near-instant settlement, and assets that can be transferred p2p as NFTs, just to name a few.

Here are some cool things Sony can do, at a glance:

• Gaming: Introduce in-game NFTs, and in-game currencies as crypto, to enhance gaming experiences.
• Storage: Create an on-chain storage solution for user data backups, archiving, and content management solutions.
• Leverage IP: Monetize existing IP with Soneium, including building communities around collectibles, interactive NFTs, and more.

Sony’s plan to leverage its existing IP is the initiative that can probably be realized the fastest, however, the initiative that will have an arguably larger impact is gaming.

Gaming

Sony can take two routes when it comes to blockchain gaming (BCG):

1. PSN-native games: Leverage PSN, existing games, and DLC by bringing key features to the blockchain—like in-game currencies and items represented as NFTs. Imagine converting COD points to crypto or trading guns and attachments as NFTs.
2. Web3-native games: Create a simple, addictive play-to-earn game—like the classics on Newgrounds, Miniclip, or Addicting Games, but with crypto rewards.

It seems Sony is taking both of these routes.

The company is already exploring the Web3-native approach with independent publishers via Oasys, and other cohorts.

As for the PSN-native approach, Sony’s patent for "super-fungible tokens,” is setting them up to leverage its already popular gaming titles like Roblox, Fortnite, and Call of Duty.

If Sony can seamlessly integrate the Playstation Network (PSN) and its games with the Soneium L2 network, then the sky's the limit.

Networks like Sui have launched portable gaming consoles, to “meet customers where they are”, and expand its reach.  

Imagine if Sony revived its PlayStation Portable (PSP) line with a crypto-enabled gaming console.

Sony already natively has access to all the resources to engineer and distribute a portable gaming device, so a portable gaming/crypto console isn’t off the table – think a PSP with a multisig wallet.

Overall, there’s a lot of potential with the gaming angle, this could be Soneium’s cash cow.

So, what about ASTR?

Tokenomics

Total Supply: 7,000,000,000 (7 billion) 8,220,000,000 (8.22 billion)ASTR

Circulating Supply: 7,190,000,000 (7.19 billion) (87.5% of Total Supply)

Inflation

Astar has a soft-capped 'yearly' inflation at ~665,000,000 ASTR per year, and an uncapped max supply.

Here’s where inflation goes:

• dApp staking program: ASTR holders can stake tokens to support specific dApps, developers are rewarded based on the stake amount, and stakers receive a share of block rewards. This is like a mix of Polkadot’s parachain auctions and Fantom’s dApp gas monetization program.
• Stakers: ASTR holders stake tokens to a specific dApp to receive tokens from inflation and block rewards.
• dApp owners: Developers receive ASTR rewards proportionate to the amount staked.
• Collators: Collators play the role of traditional validators for the Astar network. Collators spin up a node, stake ASTR, and receive rewards for producing blocks and confirming transactions.
• Treasury: The Astar team allocates a fixed amount of the cycle's soft-capped inflation to the treasury in equal amounts throughout all the blocks in the cycle.

To see how emissions are allocated for each category, check out the docs.

Utility & Mechanism Design

Let’s look at some of the use cases for Astar meant to curb inflation –making ASTR deflationary.

ASTR is used for:

• dApp Staking program: Unclaimed developer rewards from the dApp staking program are burned.
• Transactions: Users pay ASTR for gas fees to use the network. Similarly, developers use ASTR to use tooling developed on the Astar Network. 80% of the ASTR used for gas fees is burned.
• On-chain Governance: ASTR holders lock & vote on protocol updates, etc.
• Buyback & Burn (Sequencer revenue): A portion of ETH earned from the sequencer is used to buyback and burn ASTR. As long as the Sequencer revenue exceeds the cost of submitting batches of transactions to Ethereum, Layer 2’s are profitable.

After vesting the majority of the initial supply, it seems Astar is planning to increase the supply gradually through inflation while simultaneously creating more use cases for ASTR.

This should help them find the sweet spot where there's enough ASTR liquidity in the market while creating and growing the use cases that make ASTR deflationary.

Basically, as Astar usage increases (via the above mechanisms) it should reduce the supply in comparison to the token inflation.

There are a couple of ways this can happen:

• Sony migrates its legacy systems to Soneium so the Soneium network can capture and make ASTR deflationary.
• Soneium becomes the go-to public blockchain in Japan (& worldwide) for use cases like:
  • Gaming
  • Fan x Creator Economy apps
  • Tokenized assets and RWAs
• Users and developers adopt the Astar L1 network.

Astar and Soneium (formerly Astar zkEVM) activity

The Astar and Soneium (formerly Astar zkEVM) networks are practically deserts. At present, the Astar network has a modest total value locked (TVL) of $23.83m, and Soneium’s TVL is just $4.47m.

None of the apps on either chain are groundbreaking or particularly interesting, so I’m hoping that the incentives from the Minato Testnet campaign will help drive liquidity to apps like money markets and create decent rates and spreads.

At present, 1.5b $ASTR (1,544,238,318) are staked with dApps on the Astar network, which is more than 15% of the total supply.

However, it seems people are staking because it’s the only plausible use case for Astar at the moment.

On the flip side, Soneium’s most recent incubation program, Soneium Spark, experienced over 1,700 project submissions, which is 2x more than the submissions from Sonala’s Grizzlython Hackathon in 2023.

This shows that plenty of developers are capable and interested in developing apps on Soneium.

Soneium Minato Testnet & $ASTR Play

With Soneium’s Minato testnet, there’s a large chance that Astar will reward early users with ASTR.

To participate in the testnet, follow these three steps:

1. Get some Sepolia ETH on Sepolia Testnet:
   1. https://sepolia-faucet.pk910.de/ - PoW captcha. No account is required. Sends 2.5 ETH
   2. https://faucet.quicknode.com/ethereum/sepolia - Maintained by QuickNode. No account is required. Sends 0.1 ETH.
   3. https://sepoliafaucet.com/ - Maintained by Alchemy. Account required. Sends 0.1 ETH.
   4. https://www.infura.io/faucet/sepolia - Maintained by Infura. Account required.
2. Add the Minato network to your wallet.

3. Use Soneium Bridge to bridge your assets to Minato.

If you’re interested, then simply participate in the Minato testnet. If you’re REALLY interested, you should pick up some ASTR and stake with a dApp on the Astar network.

Staking today earns rewards as of tomorrow (next era), that become available to claim the following day (two eras from when staking began).

When users stake on dApp(s) during the Voting Subperiod and maintain the same number or more tokens staked through the entire Build&Earn Subperiod, they become eligible for bonus rewards.

Simply put, if you stake for ~90 days (Voting = 10 days, and Build&Earn = 81 days), you’re eligible for boosted $ASTR rewards.

Closing Thoughts

Sentiment around ASTR has surprisingly been trending down recently (except for a couple of spikes around the Soneium announcement).

Expect spikes when more bullish news hits the market (i.e. mainnet launch, airdrops, dApp deployments, etc.). However, this market is always changing and attention is expensive so the Startale team is going to have to get working asap.  

Specifically, Sony has to port over 1 or more of its Web2 businesses into Soneium for me to qualify this as a long-term play.

If Sony can successfully add on or migrate an existing service to Soneium it will:

1. Help to drive value to the network (via TVL and sequencer revenue), which helps to make ASTR deflationary.
2. Raise confidence in ASTR holders in Soneium’s ability to execute.

And when Optimism Superchain finally hits mainnet…Forget about it (Joe pesci v.)!!! Send this shit to Valhalla.

Overall, the Minato testnet is the low hanging fruit, which can help set you up for potential ASTR airdrops in the future. However, if you want to maximize your airdrop potential (& you have more conviction than most) I’d be picking up some ASTR. This play has lots of upside, unless Sony just totally fucks this up.