Creating an SNS currently entails two proposals. The first proposal for Sonic was accepted, allowing Sonic to create and initialize their SNS canisters. The proposal to start the SNS swap for Sonic was rejected, leaving the Sonic SNS in a restricted mode where it does not govern anything and where token transactions are not possible. The control of Sonic dapp canisters has been returned to the developers.
In this post we would like to emphasize that the SNS framework has worked as intended and explain the current state of the Sonic SNS.
Background & goal
The creation of a Service Nervous System (SNS) DAO is done in two phases. In the first phase, a proposal of type “Update Allowed Principals” is submitted, which approves the initiation of an SNS launch for a dapp and allows a specified principal to install and initialize the required SNS canisters . In the second phase, an SNS swap proposal is submitted. If this proposal is adopted, it triggers the start of the SNS swap. If this proposal is rejected, the SNS launch fails and the control of the dapp is given back to the developers. The developer principal to which the control will be handed back is defined in the SNS initialization.
In the case of the Sonic dapp, the first proposal was adopted. However, the second proposal, which was aimed at initiating the SNS swap, was rejected. This has led to several Sonic users and members of the community questioning what this means for the SNS. The objective of this forum post is to clarify the current situation and outline the implications.
The following diagram depicts the second part of the SNS launch flow after the first proposal has been adopted:
Current state of the Sonic SNS
Control of Sonic dapp canisters was handed back to the Sonic team
After the SNS swap proposal was rejected, the control of Sonic dapp canisters was automatically returned to the fallback controller, as specified in the SNS initialization. This can be verified on the dashboard: the control of, e.g., the Sonic swap FE asset canister (eukbz-7iaaa-aaaah-ac5tq-cai) was handed back to the designated fallback controller (vfk4j). As a result, the Sonic dapp is not under the control of the Sonic SNS.
The Sonic SNS governance is in a restricted mode
The usability of SNS governance is limited until the SNS is successfully launched. This restriction ensures that no fundamental changes to the SNS DAO can be made until it is fully decentralized. For instance, it is not possible to transfer tokens or to alter the tokenomics configuration of the SNS in this restricted mode.
In Sonic’s case, because the SNS swap proposal was rejected, its SNS governance continues to be in restricted mode. You can confirm this by calling the “get_mode” method of the SNS governance canister on the dashboard.
SNS tokens & neurons have been created but are not usable
During the SNS initialization process, SOC tokens and neurons have been created. You can see the linked minting transactions on the SNS ledger on the dashboard.
SOC tokens only exist in neurons and in the SNS treasury. However, since Sonic’s SNS is in restricted mode, neurons cannot be disbursed and the tokens in the treasury cannot be transferred. Therefore, no SOC token transfers are possible.
Because the SNS is in restricted mode, Sonic’s SNS neurons are not visible in the NNS frontend dapp, as this application only displays tokens and neurons once an SNS is successfully launched.
The Foundation abstained in all votes regarding the Sonic SNS
The foundation wants all projects and the ecosystem to succeed. In the case of Sonic, the foundation abstained from voting, because the information provided by the team was not sufficient and because of concerns raised by other community members. Indeed, the SNS creation has failed solely based on votes by the rest of the community. The foundation hopes that Sonic addresses these concerns, provides additional information, and makes a second attempt at creating an SNS.
In conclusion, the SNS framework functioned as designed. The NNS community did not approve the initiation of the SNS swap for Sonic. Consequently, control of the dapp was returned to the developer team. As the SNS has not been successfully launched, it remains in restricted mode cannot be used further. In particular, the created tokens and neurons cannot be used or repurposed. If the Sonic team would like to attempt a second launch, they would need to initiate the SNS creation process from scratch, i.e., submitting a first proposal, installing and initializing new SNS canisters, and then submitting the second proposal.