The Flywheel

The Positive Feedback Loop

This diagram illustrates the positive feedback loop in Sonic Index's tokenomics system. The cycle begins with the Treasury generating yield/farming revenue, which increases the protocol's APR (Annual Percentage Rate). This higher APR attracts users who then lock their tokens in the protocol. When users lock their tokens, it creates demand, which drives up the token price. As the token price rises, it encourages more bond tokens to be created, which in turn adds back to the Treasury, completing and reinforcing the cycle. This self-reinforcing system is designed to create sustainable growth by connecting treasury performance, user participation, and token value in a virtuous cycle.