Sophon Abandons Layer 2 Blockchain, Bets on Base and…

Sophon is shutting down its zero-knowledge Layer 2 blockchain and abandoning the traditional gas token model, marking one of the most significant strategic pivots in the Ethereum scaling ecosystem as the project shifts entirely toward consumer applications built on Coinbase’s Base network.

The move comes alongside a complete redesign of the SOPH token economy. Rather than deriving value from network usage and transaction fees, future demand for SOPH will come from a buyback-and-burn program funded by revenues generated by Sophon’s upcoming financial applications. The first step will be the permanent destruction of more than 46.5 million SOPH on June 28.

The announcement reflects growing pressure across the Layer 2 sector, where dozens of Ethereum scaling networks have struggled to justify multibillion-dollar token valuations despite generating relatively modest transaction fee revenues. Sophon argues the economics of many L2 tokens have become disconnected from the reality of their underlying businesses.

Sophon Ends Its Layer 2 Experiment

After raising approximately $60 million to build a consumer-focused blockchain ecosystem, Sophon concluded that operating its own chain no longer created sufficient value to justify the cost.

The company will sunset the Sophon Chain and relaunch as Soph(+), a consumer technology studio building applications directly on Base instead of maintaining proprietary blockchain infrastructure.

The team said it reached the conclusion after pausing development for nine months to reassess its strategy.

“The value isn’t at the chain layer anymore. It moves up to the app layer, where the only things that matter are utility, taste, and distribution,” Sophon said.

Rather than spending millions of dollars annually operating blockchain infrastructure, the company intends to redirect those resources toward product development, marketing and user acquisition.

SOPH Token Moves From Gas Fees To Buybacks

The strategic overhaul fundamentally changes how the SOPH token is expected to accrue value.

Today, SOPH functions primarily as the gas token for the Sophon blockchain while also supporting staking.

Both utilities will disappear alongside the chain.

Instead, Sophon plans to fund continuous open-market purchases of SOPH using revenues generated by Pyre, its upcoming consumer financial application.

According to the company, Pyre will generate recurring income from three sources:

• Interchange fees on payment cards
• Performance fees from investment vaults
• Reserve income generated by the PYRUSD stablecoin

A portion of those revenues will be used to repurchase SOPH tokens from the open market before permanently burning them.

Unlike many crypto buyback programs that redistribute purchased tokens to holders, Sophon said every token acquired under the new model will be permanently removed from circulation.

The company will begin the transition by burning more than 46.5 million SOPH from unused staking rewards and node buyback allocations on June 28.

Base Wins Another Layer 2 Migration

Sophon’s decision also represents another vote of confidence for Base.

The company said it evaluated multiple blockchain ecosystems before deciding to migrate entirely onto Coinbase’s Ethereum Layer 2.

According to Sophon, blockchain infrastructure is entering the same consolidation cycle experienced by search engines, cloud computing and social media platforms, where only a small number of dominant networks ultimately survive.

The team cited Base’s growing developer ecosystem, focus on consumer applications and emerging support for AI-powered economic infrastructure through technologies such as x402 as key reasons for the move.

Rather than competing directly with Base by operating another Layer 2 network, Sophon concluded it could create greater shareholder and token-holder value by building applications on top of an ecosystem that already possesses distribution and liquidity.

Guardian Nodes Continue Despite Chain Shutdown

While staking will eventually disappear, Sophon’s Guardian NFT node program will continue.

Guardian NFTs will be duplicated onto Ethereum mainnet following a snapshot scheduled for June 25.

Node reward distributions will continue on Sophon until Sept. 29 before migrating entirely to Ethereum.

The blockchain itself will remain operational until at least the end of 2026, giving users time to bridge assets before final decommissioning.

Layer 2 Economics Face Growing Scrutiny

Sophon’s announcement directly challenges one of crypto’s most widely used token models.

The company argues that many Layer 1 and Layer 2 blockchain tokens continue trading at valuations that bear little relationship to the transaction fees their networks actually generate. It also criticized incentive programs that distribute ecosystem funds to attract temporary activity, saying they dilute token holders while producing little lasting demand.

FinanceFeeds recently reported on Bitcoin Suisse’s MiCAR expansion, Galaxy Digital’s investment in institutional crypto lending, MoonPay’s acquisition of AI finance platform Entendre, and Oxium’s decision to wind down operations. Sophon’s strategy illustrates a different response to the same market pressures, abandoning blockchain infrastructure entirely while betting that long-term value will come from consumer products capable of generating recurring revenues.

Industry Shifts From Infrastructure To Applications

Sophon’s decision reflects a broader evolution occurring across the blockchain industry.

Early crypto projects competed to launch new blockchains. Increasingly, however, developers are choosing to build applications on established networks rather than maintaining their own infrastructure.

If Sophon’s thesis proves correct, future crypto valuations may depend less on network activity and more on the ability of applications to generate predictable cash flows that can be returned to token holders through buybacks and supply reduction.