Why ICON Changed Its Name to SODAX and Discontinued Its Layer-1 Blockchain

The last significant news about ICON (ICX) took place during the ICO mania, where it was vying with Tron and Filecoin to acquire BitTorrent in a widely publicized auction.

Once regarded as the “Korean Ethereum,” ICON reached its zenith in early 2018, but subsequently faced challenges in remaining relevant due to strong competition and shifts in the industry narrative.

Recently, ICON has made headlines again by announcing its rebranding to SODAX and the transition of its entire decentralized finance framework from its own Layer-1 blockchain to Sonic, a network compatible with Ethereum’s virtual machine that emphasizes fast and affordable transactions.

Sonic has also undergone a rebranding, having changed its name from Fantom in 2024.

In a discussion with CoinDesk, ICON founder Min Kim elaborated on the decision to move from managing an independent blockchain to effectively delegating that function to Sonic’s infrastructure.

“When we launched in 2017, we built our own Layer-1 due to the lack of available infrastructure,” Kim stated. “In today’s landscape, owning and managing a Layer-1 network is no longer financially sensible; there are more efficient and cost-effective alternatives.”

Kim noted that utilizing Sonic’s infrastructure enables his team to lower operational costs and concentrate more deeply on developing their DeFi offerings.

“This move reduces our operational costs by millions,” Kim shared with CoinDesk. “It also alleviates inflation on our tokens, ultimately providing a more sensible financial framework.”

This approach mirrors trends in manufacturing, where companies like Foxconn and Taiwan Semiconductor thrive because tech giants like Apple and Nvidia do not operate their own production facilities.

In the same vein, ICON is no longer burdened by the significant fixed expenses and uncertainties tied to managing a complete blockchain.

“Maintaining a decentralized network with validators globally is an immense responsibility,” Kim remarked. “With eight years of experience managing our own Layer-1, we found it to be laborious, expensive, and extremely demanding. By partnering with Sonic, we can redirect our efforts toward innovation and delivering desirable products.”

Furthermore, Kim pointed out the advantages of risk management, mentioning that ICON’s DeFi layer can isolate itself from any potential infrastructure challenges that Sonic might encounter.

“There’s a significant advantage in risk management,” he explained. “If Sonic were compromised, it’s certainly problematic, but it wouldn’t directly implicate us. Sonic’s primary focus is on security and validator management, allowing us and other DeFi developers to concentrate on building applications for end-users.”

This strategic shift comes as ICON aims to rejuvenate itself amid a decrease in market presence. Once ranked among the top 20 cryptocurrencies, ICON’s ICX token plummeted nearly 99% from its peak in late 2018 and has struggled to recover, as per data, with many investors shifting to platforms more adept at leveraging the growth of DeFi and NFTs.

“Creating Layer-1 infrastructure isn’t practical for most projects,” Kim asserted. “Many have underestimated the effort and financial commitments required. There was an inflated perception among investors that ecosystems would spontaneously develop. This assumption is costly and seldom sustainable.”

Now rebranded as SODAX and concentrated on cross-chain liquidity solutions, the initiative is transitioning ICX tokens to a new token named SODA. Even though Sonic’s and SODAX’s tokens are separate, Kim emphasized that Sonic’s revenue mechanisms for fees will funnel transaction costs back to SODA holders.

“Sonic allows for 90% of transaction fees to be redirected to SODA token holders,” Kim stressed, highlighting the economic motivation behind their shift.

When asked if this outsourcing approach might signal a broader trend, Kim suggested that many current Layer-1 projects may rethink their strategies as market conditions evolve.

“Ethereum and Solana serve as excellent examples, as they concentrate solely on validator roles and network security,” he mentioned. “We are leading the shift away from launching new Layer-1s, which isn’t sustainable for most projects in the long haul.”

As the age of inflated valuations for proprietary Layer-1 platforms wanes, Kim pointed out that an increasing number of projects will refocus on product development rather than infrastructure, with ICON – now SODAX – in the vanguard.

“We’re simplifying our operations, reducing expenses, and reaffirming our original intent: to provide financial products directly to users.”