Summary
LlamaRisk recommends onboarding WBTC to Sonic. While @Ezreal raises a valid point about limited total supply on this network, the familiar nature of the asset and the bridging technology (LayerZero) result in limited onboarding friction - as indicated by this proposal’s Direct-to-AIP nature.
LlamaRisk also would like to highlight the potential for an “Aave effect” on this asset, where the onboarding of an asset to the protocol on a new network results in market capitalization growth for said asset. By onboarding this nascent asset, Aave stands a chance at becoming a network-leader for a strategically important asset that has clear PMF on many networks.
The main value proposition of onboarding this asset is to either long or short WBTC as (re)staked bitcoin is not yet a developed sector on this network. Leveraged staking trades are therefore not yet possible on Sonic, resulting in the main use cases being either increasing holder capital efficiency or enabling trading on the asset.
Architecture
WBTC on Sonic is an OFT, meaning it is bridged with LayerZero. 52 WBTC have been bridged thus far, giving it a $5.6M onchain market capitalization. OFTs are widely used on Aave at this time, so little incremental architectural risk is presented by the asset or its used bridging solution.
Source: WBTC Holders, SonicScan, June 10, 2025
The contract was deployed in February 2025. This asset class presents very limited risk as a direct token wrapper. The asset is distributed >50% into three addresses: a Shadow DEX pool, a second Shadow DEX pool, and a SwapX pool. This presents limited risk given these are DEX pools with moderately (first 75% held in 8 addresses) distributed depositors.
Market Outlook
Source: WBTC to S, Odos Router, June 9th, 2025
Liquidity for this asset is limited in a real sense but highly distributed amongst DEX pools. Most liquidity is held in Shadow WBTC/USDC.e and WBTC/WETH pools. 30 WBTC may be swapped at ±7.5% price impact. Given the nascent nature of this asset on the network, DEX TVL may become more concentrated into a few larger pools that generate additional fees from volume.
This market may grow significantly, reflecting the examples of Arbitrum ($332M) and Optimism ($41M). Other BTC-linked assets on L2s frequently reach similarly large TVLs, such as BTC.b ($355M) on Avalanche or cbBTC ($274M) on Base. It could represent a major portion of the Sonic market, which currently stands at $350M supply.
Market risk is, therefore, reasonable, but this can be reasonably mitigated through cautious parameterization.
Ownership
WBTC on Sonic is owned by a 2/3 Safe with signers:
- 0x1916D16E911e144A9dCAaBeEa2966e28823f4406
- 0x7ff6419358fbcd2B2be8f600068D2bd4b99b4Aa7
- 0x4cd834421be0344A0F0cD8cB90aAE3d6fD69cc24
This safe may:
- Modify a variety of OFT settings, including transfer fees and message inspectors
- Change ownership or renounce it altogether
These parameters are in the hands of a 2/3 Safe present counterparty risk.
Price feed
This asset may be priced through a network-specific WBTC Chainlink feed. The Arbitrum market, by contrast, uses a BTC/USD feed and so too does the Optimism market.
Parameter recommendations
Presented jointly with @ChaosLabs
Disclaimer
This review was independently prepared by LlamaRisk, a community-led decentralized organization funded in part by the Aave DAO. LlamaRisk is not directly affiliated with the protocol(s) reviewed in this assessment and did not receive any compensation from the protocol(s) or their affiliated entities for this work.
The information provided should not be construed as legal, financial, tax, or professional advice.