By David van Ineveld — 01 Apr 2025

Earning (Passive) Income from DeFi on Sonic

The term "passive income" gets thrown around a lot in crypto—especially in DeFi. But let’s be honest: there is nothing truly passive about managing capital in decentralized finance. Whether you’re staking tokens, providing liquidity, or farming yield, every DeFi strategy demands attention, understanding of risk, and continuous adjustment. Calling it "passive" glosses over the real effort required to stay profitable in a volatile and fast-moving environment like Sonic.

Why Income in DeFi is Never Truly Passive

Even the most set-and-forget strategies require monitoring. Token prices fluctuate. Protocols get exploited. Liquidity dries up. Incentives shift. If you’re not actively managing your positions and staying informed, you’re likely bleeding value. "Passive" income in DeFi is a comforting narrative, but it’s not a sustainable one. Real returns come from real engagement.

Benefits of Yield Farming on Sonic in a boring (or even a Bearish Market) 📉

Market conditions aren't always exciting—and right now, things feel a bit... boring. But that’s exactly when yield farming on Sonic becomes even more valuable. Instead of waiting on the sidelines for bullish price action, you can put your assets to work and accumulate more capital. The yield earned during these quieter periods can be re-invested into $S (Sonic's native token) or other promising ecosystem assets at favorable prices. Think of it as dollar-cost averaging with your yield—a strategic way to grow your stack while the market sleeps.

Earning Yield on Sonic: Methods, Protocols, and Risks

On Sonic, DeFi activity is growing fast 🌟, and with it, opportunities to earn yield across a range of strategies. In this post I'm going to make an introduction about each method. In future posts I will make a deep dive into more advanced strategies within a specific method. Here are some of the main methods:

1. Staking 📈

Staking is often the entry point for many DeFi users. The idea is simple: lock up your tokens to support a network or protocol, and in return, you earn rewards.

How it works: Your tokens are used to secure a network or protocol operations, and you receive emissions or fees in return.
Example protocol on Sonic: Staking $NAVI on Navigator.
Benefits: Simplicity, lower gas fees, and predictable returns.
Risks: Token price volatility (if $NAVI drops, so does your real return), protocol changes, lock-up periods that limit flexibility.
Example strategy: Stake $NAVI and monitor emissions schedules and protocol updates. Consider compounding your rewards manually or with automation tools.

2. Liquidity Provision (LP) 🌊

Providing liquidity is a more hands-on strategy but can be lucrative if done wisely.

How it works: You supply token pairs (like USDC/ETH) to a decentralized exchange's liquidity pool. Traders use the pool, and you earn a cut of the trading fees.
Example protocol on Sonic: Shadow, SwapX and Metropolis.
Benefits: Earn fees on every trade in your pool, sometimes with extra incentives.
Risks: Impermanent loss (when token prices diverge), smart contract bugs, or low pool volume.
Example strategy: Provide stablecoin pairs (e.g., USDC/USDT) to reduce impermanent loss while still farming rewards.

3. Yield Farming 🌿

Yield farming is the DeFi equivalent of chasing high returns—but it comes with higher risk.

How it works: Stake LP tokens or other assets in farming contracts that reward you with native tokens.
Example protocol on Sonic: Shadow.
Benefits: Access to high APYs, sometimes very lucrative if you get in early.
Risks: Token dilution, high volatility, smart contract exploits, short-lived opportunities.
Example strategy: Claim rewards regularly and consider reinvesting them into the farm or rotating into more stable positions. Be quick and cautious.

One standout example on Sonic is Shadow's x33 token, a liquid staking derivative that gives you yield exposure without locking up your liquidity. When you farm Shadow, you can opt to receive x33 tokens, which represent a share of future yield. You can then trade, stake, or even LP with x33—making it a powerful composable asset within the Sonic ecosystem. It's a smart way to stay liquid while still earning yield over time.

4. Lending and Borrowing 💼

This is DeFi's version of banking: supply assets, earn interest; or borrow against your crypto.

How it works: You lend tokens into a lending pool (like on Aave) and earn interest from borrowers.
Example protocol on Sonic: Aave.
Benefits: Predictable interest income, capital efficiency, and relatively low maintenance.
Risks: Liquidation risk if borrowing, interest rate fluctuation, and protocol bugs.
Example strategy: Supply blue-chip tokens like ETH or stablecoins to earn steady yield. If borrowing, keep a healthy collateral buffer to avoid liquidation.

TVL Snapshot (as of April 2025):

Shadow: ~$120M
Metropolis: ~$85M
SwapX: ~$60M
Navigator: ~$95M
AAVE (on Sonic): ~$40M

Spotlight on Navigator & the $NAVI Token 🚀

Navigator is emerging as one of the best perpetual DEXs on Sonic. Traders use it to get leveraged exposure to crypto assets and recently also stocks such as MSTR or TSLA, but it also offers yield opportunities. You can stake $NAVI for a share of protocol fees, or contribute to liquidity pools that power leveraged trading. The combination of real volume and sustainable tokenomics makes it one of the more attractive yield plays on Sonic today.

Wallets Matter: Use Rabby + Ledger for Security and Power 🔐

Before you dive into any of these DeFi strategies, you'll need a wallet to interact with Sonic's dApps. While MetaMask is the most well-known, Rabby Wallet is hands-down the best choice for serious DeFi users.

Why Rabby? It's optimized for DeFi, shows you transaction previews, warns you of potential risks, and automatically selects the right network. It even shows you historical PnL and balances across dApps. It's a massive upgrade in both usability and transparency.
Pair it with Ledger: For ultimate security, connect your Rabby Wallet with a Ledger hardware wallet. This keeps your private keys offline, so even if your browser gets compromised, your funds stay protected.

Whether you're staking, farming, or LPing, this combo gives you a seamless and safe way to interact with DeFi protocols. Don't cut corners on wallet security—it's your first and last line of defense.

Final Thoughts: DeFi Income = Active Engagement 🚀

Earning income on Sonic is absolutely possible—but it's not passive. The idea of sitting back and watching the rewards flow in is a myth. Real yield requires real work: monitoring protocols, adjusting positions, hedging risks, and staying curious.

If you're ready to engage with DeFi not just as a user but as a strategist, Sonic offers one of the richest and most experimental environments out there. Pick your tools, know your risks, and get to work.

The yields are out there. But only the active will earn them.

Are you also using DeFi on Sonic? Let me know your strategies in the comments below! 👇